Starting A Business Abroad: What’s Your Business Model?

Posted on 07. Dec, 2009 by Emmanuelle Archer in Blog, Expat Entrepreneurs, Expat Life
1 comment

Your mind is made up. The time is right, and you have the motivation to succeed: you’re going into business for yourself.

Chances are you already know what you want to do. Now you need to turn your idea into a “real business” – for, as Pam Slim would say, hating your job (or not having one) is not a business plan.

The first step? Choosing your business model.

I know that sounds all technical and complicated, but don’t run away quite yet! “Business model” simply means where the money will be coming from.

Renting rooms and serving breakfast to B&B guests in exchange for money is a business model. Doing translations from home and being paid by the word is another business model. Selling your services by the hour, while being paid a flat fee for public speaking, and selling information products online is yet another business model.

Each model has its pros and cons, so let’s take a closer look at the most popular types of expat businesses.

Expat Business Models

Brick-and-mortar

Ex: Restaurants, bars, B&B, retail shops

Pros:

• Well-established, straighforward business models
• Information and advice about this type of businesses is readily available
• You can easily observe what your competitors are doing, and adopt their best practices.

Cons:

• You’ll need to sell a lot to cover the high overhead (lease, staff, equipment, stock)
• Lots of red tape (licenses, permits, health inspections, worker’s comp, etc). Varies a lot from country to country, so make sure you’re aware of all the requirements – not just the ones that seem obvious to you
• Tiring, physically demanding businesses that will leave you little time for yourself or your family
• You’ll need an excellent knowledge of the local culture, ways of doing business, and language

Overall:

This type of business is better suited to permanent residents than to expats who move on every few years. Make sure you have enough savings to support yourself while getting the business off the ground, and don’t overestimate how much profit you will make. Be prepared to go without a vacation, weekends off or lunches with friends for the next forseeable future.

Expat-related services

Ex: Relocation services, real estate, translation work, guided tours

Pros:

• You understand your clients’ needs and lifestyle, and you know where to meet them
• Great potential for referrals if you become the go-to person in your own community and/or local expat circles
• Allows you to be of service to fellow expats, and to share your interest in your host country with them
• Minimal overhead

Cons:

• You need an excellent command of the language
• You need local connections and a good understanding of how they do business
• You cannot take your business with you when you relocate

Overall:

Expats are ideally suited for these types of businesses. You’ll still need to market your services and build strong local networks, though. Once again, things will be easier (and you’ll appear more credible) if you have been in the country for a while.

Location independent / “portable” careers

Ex: Consulting, design services, copywriting and other freelance services / online-based businesses

Pros:

• Flexibility: you can design your business to suit your lifestyle
• You can work from anywhere in the world, and have clients located anywhere in the world
• You don’t need to speak the local language fluently, if at all – you can choose to work only with clients who speak your mother tongue
• Minimal overhead

Cons:

• You’ll need very reliable phone and internet connections
• You’ll have to market your services intelligently to differentiate yourself from all the other service providers out there
• Online-based business and marketing evolve very fast; the learning curve can be steep

Overall:

This business model is perfect for expats who change locations every few years (accompanying spouses, for instance). You can be quite successful, provided you’re prepared to run your company like a business and not a hobby. Remember that it gets lonely when you’re in front of a computer all day, and that time differences between your location and your clients’ can be tricky to manage.

Entrepreneurial ventures

Ex: Start-ups, innovation-based businesses, social entrepreneurship

Pros:

• High potential for growth and wealth creation
• Your cross-cultural background can help you spot untapped opportunities, in your host country or back home
• Possibility to sell your business after a few years and move on to something else
• Potential to seek venture capital or other sources of funding

Cons:

• High financial risk
• High failure rates
• Strong business acumen and leadership qualities required

Overall:

If you have a talent for spotting and exploiting market opportunities, this is the business model for you. Entrepreneurial ventures can make you wealthy; just make sure that you have the wherewithal (and the nerves of steel) to withstand the level of risk involved.

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Emmanuelle

Images by ĐāżŦ (top) and InspirationDC (bottom), both via Flickr Creative Commons“