This is a guest article from Now Health about running an online business.
Many people own online businesses and living in a tropical country. Some started this business abroad while others moved their office to another country and simply run their already existing business in a different location.
When you’re just starting out, you need to think who your target audience will be. In many cases, targeting tourists or other expats will be easier than targeting the local economy. The differences in cultures, preferences, and language often present a major challenge for foreign businesses. Therefore, most choose to target English-speaking groups.
In today’s world, it’s simply a choice whether you want to start an online business, or not. It’s that easy, nothing but you can stop you from doing it. Targeting people who speak English or your mother language is just one advantage. Furthermore, building a website has become rather easy, the hours are extremely flexible – you’re your own boss.
It might look too easy to be true, but don’t be fooled. Running your own online business takes hard work, dedication, persistence, and motivation. Nothing comes easy.
In this article, we’ll discuss six important aspects of running an online business while living in a foreign country.
1 Legal business location
In order to sell your product or service, online businesses are not bound to a specific location. That means, no physical shop or showroom.
You might think…
..that’s a great cost-saver. I can simply sell my products while laying on the beach with my laptop, coconut, and enjoy the sound of the ocean.
Unfortunately, it’s not all that simple. People do care about one’s business location and people decide whether to buy your product based on your location. Fact is, most people look for businesses which are based in their own country.
Most people in the US would search the web for a product or service from an American registered company. That doesn’t mean that other countries such as Canada, UK, or Australia are completely taken out of the equation. Yet, they prefer American companies.
This doesn’t just count for US citizens but also most other countries. There are a few ways to counter this type of customer behavior. Here’s how:
- Register your business with a home address of the country of your biggest customer segment.
- Create an offer that’s extremely valuable, quality, and cheap. It’s hard, I know. Yet, people are affected by discounts, special promos and huge price gaps. Use this to your advantage.
2 Investment loans
In many countries, it’s been increasingly harder to receive an investment loan from the bank, especially for an internet business. Severe lack of experience in investing in online businesses, banks tend to pass on the opportunity.
Without the well-known brick and mortar setup, banks often fail to see the idea behind the business. It’s always important to have a strong investment pitch, however, even more so when it’s for an internet business!
Don’t give up if it doesn’t go your way the first time. Persistence is the way to success here.
Don’t we all love to file our quarter- and yearly documents to the tax offices? It’s an unavoidable task every business owner has to go through. You’ll probably have to deal with tax institutions in your country of residence but also in the country your business is registered in.
Figure out what documents are required to be filed at the end of every fiscal year. Make copies of all paperwork just to be sure!
One of the biggest online payment platforms is PayPal. However, Transferwise is on the rise due to the favorable exchange rates and the ability to send and receive money in your own currency. Always double check exchange rates before sending invoices or make payments!
Most large banks provide intercontinental money transfer possibilities but the only downside is that banks usually charge higher conversion fees and less favorable exchange rates.
5 Value-added tax
Every country has its own rules and regulations when it comes to VAT, making it therefore impossible to provide recommendations. Although, as a rule of thumb, realize that also an online entrepreneur is always bound to paying taxes, even though your business might feel borderless.
It’s a difficult system to get your head around and it’ll definitely take some of your time and stress in the beginning. Therefore it’s highly recommended to bring in a tax advisor to see explore your advantages and disadvantages.
In regards to insurance plans, you want to look at two different components.
- Business Insurance
- International Health Insurance
Ideally, you want to have a proper business insurance in the case of financial disasters or unexpected events that may cost a lot of money. Figure out what rules and regulations are applicable to your business structure and how you can get insurance if needed.
When living overseas, a local insurance plan from your country of origin won’t be sufficient anymore to cover medical expenses. That’s where an international health insurance comes in. Determine what you want to be covered and base your insurance plan on that. Be cautious to not pay too much for a plan you don’t really need. It’s a tricky one, as it might seem costly but medical bills in a foreign country are very very expensive. You want to be covered for such expenses!