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Running an Internet Business Overseas

Running an Internet Business Overseas

Many UK expats overseas run successful Internet businesses. This is sometimes because they’re continuing a business they already had in the UK, or perhaps more frequently because they’ve found it difficult to run a business with a local focus in their new country.

Running a locally focussed business in a foreign country is not easy, unless you’re targeting other expats or seasonal tourists as your primary customers. Selling your goods or services to local people is tricky if you are not fluent in the language and unfamiliar with the culture. That’s why an Internet business is so attractive to expats as a way of reaching a larger and probably English-speaking audience.

There are many other advantages apart from language. Usually the launching of a basic Internet business is cheap and easy because contrary to popular myth, one does not need to be an Information Technology guru to set things up. It also can mean that your working hours are flexible giving you some time to get out and experience the country you’ve moved to.

While these are all great reasons to setup an Internet business overseas, inevitably it’s not all plain sailing. There is not space in this article to discuss all the issues but let’s examine a few that are of particular interest to expats considering this step.


Location

For many years Internet businesses were relatively speaking location-independent. What this meant was that potential customers couldn’t instantly see where the business owner was physically based.

Without going into detail, greater international attention to domain names and server identifications now mean it is easier to see where people and companies are. Additionally many web based advertising facilities, which are heavily used by Internet businesses, demand detailed location addresses including country and have ways of checking this.

Now in theory this should not matter – if you’re running an Internet business say from Greece or Portugal and targeting the English-speaking world, why would you wish to hide your real location?

Yet many experienced Internet business owners will tell you that it does matter.

The reality is that many potential customers will ALWAYS seek to use businesses based in their country irrespective of the language used on the web site, prices or sophisticated offerings. Very large numbers of your potential clients will not trade via your web site if the location is shown anywhere other than UK or USA etc.

For example, large numbers of people in the USA will only buy from or sell to Internet companies located in the USA. Some will consider Canada, and a smaller percentage other Anglophone countries such as the UK or Australia, but many will not do business with sites in other countries which they perceive to be too foreign and therefore risky.

This phenomenon also applies, though perhaps to a lesser extent, to the UK.

So you may find that however great your business is, be it products or services, that you cannot secure the customers you deserve simply because you’re based overseas.

How to deal with this problem? You have two potential solutions:

a) Set up a notional business address in the UK or USA. This is easy and cheap and there are numerous services selling this available through the Internet. Some would say this is deception and unethical, but others would counter that it is only trying to overcome irrational prejudices and xenophobia. This article makes no judgement either way – it only highlights the option!

b) Make your products or offerings absolutely unique in quality and price terms so that your propositions overcome national resistance. This can and has been done successfully by many businesses but be warned – many people set their search selection criteria to exclude countries apart from the USA/UK/Canada etc. so your site could be completely invisible to many clients however good your marketing.


Loans

Although the banking world is changing rapidly, it is still the case that many overseas banks outside of major city centres have had very little exposure to Internet enterprises. Many are suspicious of such businesses, particularly when it’s an expat trying to ‘sell them’ on an idea.

This can make it difficult to obtain business development loans. If some banks can’t see a bricks-and-mortar shop and/or a van or two, they may struggle to even recognise your idea as a business.

There’s absolutely no easy answer to this one! Just prepare your case well and persevere.


Accounting & Paperwork

If many overseas banks are puzzled by all these expats frantically tapping away at their keyboards in their houses, then expect double the bafflement at times when you’re dealing with accountants and officials such as tax offices etc.

Again while many large cities have sophisticated infrastructures and vibrant Internet business communities, in many smaller towns and rural areas you may find that you’re one of the first to open up such a business. The officials around you will expect to see things they’re familiar with such as folders and lots of paper – handing them a CD-ROM and saying “it’s all on there” may end up in you being sent packing with instructions to get it all printed off.

To save yourself time check in advance what these bodies will expect from you at year-end etc. Be prepared to keep paper copies and always remember that in many countries by law if you engage in charging money for goods or services then you MUST show a legal invoice that contains certain minimum information.

You can anticipate serious difficulties if you’re asked to produce invoices and can only respond “we do it all via email and telephone”.


Payment Systems

This is fairly easy. Through organisations such as PAYPAL and others, you can open multi-currency accounts that allow you to invoice and receive payment in just about any currency on earth.

You can also convert these currencies on-line and then draw down the amounts concerned into either your local bank or your old bank in the UK if you’ve kept an account open.

Remember though that all e-payment organisations will take a percentage of the money you receive. When you convert currencies through them, they will also give you a rate that ensures they’ll make another tiny profit. Finally although withdrawals are free, you may find your bank charges a small fee for receiving the funds.


VAT

The rules for VAT vary by country and are complicated. You will need to check the specific rules of your country, as space does not permit an extended discussion here. As a general rule though, you can either opt for VAT registration or once your turnover exceeds a minimum level, registration will be mandatory. NOTE – neither Internet businesses nor expats are magically exempt from VAT laws and regulations!


Registration

Many countries have tight regulations regarding the formal registration of businesses. As an Internet business, as with VAT you are NOT exempt or a special case. Check locally to see what registration you have to complete before you start selling away in the cyber-world!


Bad Ideas

Finally, remember an old saying from the earliest days of the computing world, “A bad idea computerised doesn’t become a good idea – it just becomes a faster bad idea”. There is a LOT of truth in that one. The Internet itself does not create sound businesses.

Make sure your basic business idea is viable and will work taking into account all the usual business variables. If it would be an unsound and shaky conventional business in the UK, then trying to run it on the Internet from overseas as an expat enterprise won’t make it any more successful. Your only benefit may be nicer surroundings!



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