If you’re considering expanding your business into a ‘third-world’ country, you’ll face some particular challenges. Emerging Stars looks at how you can mitigate the risks and maximise the benefits of such a move.
Emerging countries can lack basic infrastructure in terms of water and energy supplies, roads and transport capabilities, and a skilled workforce. Legal systems are often complex, unfamiliar and unreliable; economic and political conditions unstable; cultural and religious habits restrictive. Traditional business strategies don’t always work; marketing can be challenging not only because of distrust but because conventional media like print, radio, and television don’t reach large segments of the population. Clearly, you need to find ways to minimise the level of business risk.
- Find a local partner. Look for a reliable, experienced business partner who is well-placed in the local community and can help guide your operations and develop strategies unique to your new market. Make sure you check up thoroughly on that person’s background, standing, and reputation.
- Understand the effects of culture and religion. Culture defines our fundamental beliefs about how the world works, and influences the way we interact, communicate, and sustain relationships. To do business in a new country you will need to be prepared to adapt to what can be significant differences.
- Build relationships. You would hope to create a long-term situation which is beneficial both for your company and for the local people. Make sure you’re providing a service or product for which there is a real demonstrated need in the area where you plan to operate. If you can get the economics right, and you’re creating benefit for your employees and your business partners and their communities, you’ll be building resilient relationships of trust and loyalty which will serve your business well.
- Leverage alternate networks. In third-world countries, there are often strong informal social networks to make up for the lack of governmental and institutional resources. If you can tap into these strongly-embedded connections, you may find all sorts of support, from financing through crowdfunding to greater spending power in purchasing co-ops.
- Avoid over-financing. There are many benefits to starting a business in the third world, and if you do it successfully you can dramatically reduce your operational costs. Partly due to conversion rates, your money is likely to go much further in poorer nations. There will be obvious additional costs with setting up in a new country, but try to keep to small-scale financing so that the business debt for your expansion will remain streamlined, straightforward and manageable.
- Have paperwork in order. Make sure you follow official procedures to register your business, open a bank account, get work and construction permits, and secure whatever other licences and registrations are required. Put appropriate insurance coverage in place, and learn as much as possible about local financial regulations and tax laws. Seek the advice of a lawyer and an accountant with experience in your chosen country. Have any contracts and agreements drawn up properly, signed, and notarised.
Allow yourself plenty of time, arm yourself with a lot of patience, remember to be unfailingly polite, and above all be prepared to persevere, and your expansion to an emerging country could bring your business many rewards.