As an Australian entrepreneur with a business in Latin America, I’m often asked why I made the decision to set up shop overseas, rather than on home turf. Incorporating a business on the other side of the world certainly isn’t for everyone, and I wouldn’t recommend taking on the responsibility of doing so without weighing up the pros and cons, but there are significant benefits to doing business abroad. You can transform your prospects, enjoy higher returns on investment, and get ahead of local and international competition, to name just a few.
Below, I share my reasons for moving abroad to do business in more detail, and offer some words of advice for savvy entrepreneurs considering doing the same with their ventures…
Outmaneuver the competition
Perhaps one of the biggest reasons to expand your business in another territory is to outmaneuver the competition, particularly in an emerging niche. I have seen time and time again great businesses fail to get off the ground because a competitor had more resources and marketing power behind them, despite them offering a lesser service or product. If you know that you’re on to a winner with your business and products but are concerned that a competitor will swallow you up, expanding into a new market could offer breathing room.
On more than one occasion, I’ve witnessed businesses go from turning over $50,000 per year in the United States to becoming million-dollar organizations when expanding into Latin America – not because LATAM has a better economy (it doesn’t – in fact, several countries are still developing with high levels of unemployment) but because of strategic positioning and fewer competitors. It makes sense – if you can operate in a market where you know you are going to be number one, it’s easier to form working relationships with key buyers and make your mark before other companies cotton on to your success. As happened with my own company, starting in Latin America eventually allowed us to offer back-office support services in Australia, as we had worked hard to build a solid reputation in global B2B circles.
You may even decide to incorporate in Latin America as a starting ground for your business, and then utilize some of the region’s many free trade agreements and blocs to venture into other markets, whether that’s Europe, North America, Asia, or Australasia.
Tap into lucrative markets
I’ve worked with hundreds of businesses expanding into other markets, and one of the most common reasons for them doing so is to tap into lucrative opportunities. A FinTech company may think that Silicon Valley is the best place for them to launch their new brand, when in actual fact, incorporating in Mexico and taking advantage of the region’s growing FinTech culture could be the key to success. Indeed, FinTech ecosystems in the region have experienced growth rates of approximately 50 percent, and are showing no signs of slowing down. There are now more than 300 FinTech companies operating out of Mexico alone, with Japan’s SoftBank realizing the potential of LATAM, announcing a $20 million investment into Mexican startup Clip earlier this week. That’s just one example of venture capital success.
In my experience of starting a business in Mexico, tapping into the country’s FTAs (Mexico boasts more free trade agreements than any other country in the world) and understanding the country’s family-oriented culture is the key to success – and there are firms who can help. If you want to reduce your overheads and maximize your potential returns, you could rent virtual offices and hire remotely without stepping foot in the country, allowing you to ‘test the waters’ before making a full market entry and investing into staff, marketing, and offices.
Become part of thriving startup hubs
In countries around the world, real change and innovation are taking place, and looking outside of the usual spots (United States, United Kingdom) will afford you more opportunities. Should you choose to enter into a market where there’s a technology hub, or a healthcare hub, for example, you can nestle in with local rising stars, and be around the talent and investors you need to take your business to the next level. Chile offers investment opportunities in the startup sector, for example, as so many new businesses need capital to get their ideas off of the ground or scale software projects to become household names and generate millions.
Of course, choosing to expand into a hub with tonnes of startups in the same niche can have its downsides – you’ll have to work harder to make the right impression, and encourage talent to work with you rather than a competitor – but I know from first-hand experience that it can be a great way to take your business to the next level. Work hard, surround yourself with experienced employees and like-minded entrepreneurs, and you’ll be destined for success.
Dabble in new industries
In a market like the United States, banks and investors have a stronghold on financial services and technology, but in a market like Latin America, where almost half of the population is unbanked, there are major opportunities to exploit. The same is true in virtually every industry – tourism, healthcare, hospitality, food, recruitment, marketing, sales, housing, and legal are just some of the industries that require the expertise of a Western entrepreneur. In emerging markets like LATAM and Asia, that expertise could make a huge difference, and with the right strategy, reward you financially.
There are a number of non-tech startups to watch out for in 2019, covering industries like travel, health, consumer goods, and business services, but they’re just the tip of the iceberg. There is a number of sectors where the right entrepreneur and business proposition could result in million-dollar business valuations – deciding whether you’re ready to make the next step is what will set you apart from your competitors, and cement your future in the industry.
Over the years, I have taken some real risks to get my business to where it is today – and one of those was expanding into an unknown market. I can’t say that my journey has been easy or that you can make a success of a new business in a new country overnight, but with the right attitude, the right product or service, and hard work, you can do it. Best of luck!