The bureaucracy associated with starting a business abroad is shocking and is enough to deter even the most confident entrepreneur. European countries such as France, where many Brits now call home, is regarded as a red tape jungle and can be quite difficult to establish a business due to the amount of paperwork involved. However, having said that, Europe is traditionally a country of small businesses and individual traders where the economic philosophy actually encourages and even nurtures their creation.
Things to Consider
It’s often wise to work for someone else in the same line of business in order to gain experience, rather than jump in at the deep end. Always thoroughly investigate an existing or proposed business before investing any money. As any expert can tell you, an overseas business venture is not for amateur entrepreneurs, particularly amateurs who don’t speak the language! You should also take into consideration the culture of your host country and the prospect of increased business travel and time away from family and friends.
Buying an Existing Business
It’s much easier to buy an existing business abroad than start a new one. The paperwork for taking over an existing business is also simpler although still complex. If you plan to buy a business, obtain an independent valuation and employ an accountant to audit the books. Never sign anything you don’t understand completely; even if you think you understand it, you should still obtain unbiased professional advice.
Establishing your Business
Most people are far too optimistic about the prospects of a new business abroad and over-estimate income levels. Be realistic or even pessimistic when estimating your income. While hoping for the best you should plan for the worst and have sufficient funds to last until you’re established. New projects are rarely if ever completed within budget and you need to ensure that you have sufficient working capital and can survive until a business takes off.
The location for a business is even more important than the location for a home. Depending on the type of business, you may need access to major air, road and rail links or be located in a popular tourist area. Local plans regarding communications, industry and major building developments, e.g. housing complexes and new shopping, may also be important.
Hiring employees shouldn’t be taken lightly abroad and must be taken into account before starting a business. In France for example, you enter into an employment contract under French labour law and employees enjoy extensive rights. It’s also very expensive to hire employees, as you must pay 40 to 60% of salaries in social security contributions. You may even want to give preference to those who speak English depending on the type of business you intend to own.