There is a lot of itching in the legs. Up to 900,000 British SMBs are planned to expand abroad by 2025. Title attractions are easy to identify: new markets and high profits. The EU is just across the water and the world’s third largest economy. Meanwhile, the World Citizenship Report 2022 ranks Singapore as the best place in the world to do business. The world is full of opportunities but the best position for you to move your business will depend on the nature of your business and the way it is going to evolve. Any action is going to be extremely disruptive and fraught with potential problems, it is very easy to get addicted to the possibilities and be blind to the difficulties, which is why a detailed feasibility study of costs and returns is crucial. Here are a few key considerations to help you make that make-or-break decision.
There are many factors that will influence your decision about location but one of them can be cost and ease of transportation. Even if your business is not dependent on the transportation of goods and materials, easy access to an international airport is still going to be important.
Office / storage costs
This is an area with huge savings opportunities. London is the most expensive city in Europe for prime office property, with an average annual cost of 1492 euros per square meter. Within three hours by plane from London, the Portuguese capital, Lisbon, that cost drops to 300 euros per square meter. Office space in Prague is about 90% cheaper than in Hong Kong. If you want to take your business further, say India, the potential savings are even greater.
There are very few countries in the world that don’t want your business, although of course how badly they want it will depend on what you’re offering, but whatever your business, it’s important to shop and find out what incentives are available. One-third of the world’s top start-up cities have different incentives in Europe and each country in the EU. Holland is the number one country in Europe and Central Asia for economic opportunities and proposes to reduce corporate taxes for research and development. If you set up your business in France but all your income is associated with a US address, you will be exempt from all corporation taxes. Germany provides direct grants for set-up costs and funding research and development, as well as offers loans of up to 25 million euros for eligible costs.
New Zealand often tops the ‘Ease of Doing Business’ index with its impressively simple, one-day approach to setting up a business and its ‘Entrepreneur Work Visa’ lets you set up a business as a first step in living. Unlike New Zealand, Hong Kong issues entrepreneur visas without the need for a minimum capital investment. The level of investment and ease of obtaining a business visa are important factors in determining the location of your foreign business.
Is your target location a healthy business environment? Have a demand for your product or service? Will it need to be rebranded to meet the cultural differences? What is competition? Ideally, you are moving to a destination where there is no competition or low quality, enabling your business to deliver an obviously better product.
Access local talent
Another opportunity for substantial savings. For example, STEM graduates make up 53% of the workforce available in Portugal between the ages of 20 and 30, which means you can employ your technical skills for about one-third of your costs in Paris or Berlin. It says it may be wise to maintain a percentage of your core workforce in order to maintain company policy. You also need to be sensitive to cultural differences and work practices, so as not to cause crime or create a bad work relationship with your new employee. A cultural advisor may seem like a luxury, but they can save you from facing serious labor problems further down the line.