Factors Entrepreneurs Should Consider Before Establishing Business Overseas - Essay Example

When a business is established in a country, its ostensible purpose is to serve the local population. Therefore, the investor should be well-versed in the language of communication. This will ensure perfect communication as the entrepreneur will have perfect conversations with the local population. Consequentially, when the entrepreneur does not have experience in the language, it will be a hurdle to steer the business. As a fact, communication in business is the ultimate factor that will affects making contracts and closing sales.

Secondly, before initiating a business in a different country, an entrepreneur has to consider the political climate. For a business to sprout there is a need for a peaceful political environment. This will ensure people have free access to the markets to make purchases. As such, the business will have a constant demand for the products and services. However, this is disrupted when there is political tension. People will find it difficult to access the markets for products and services (Brush, 2013). This could lead a business into unforeseen losses, as it will be making meager sales. Similarly, an entrepreneur has to consider property rights in a country. Some countries have stringent rules and regulations on foreigners' concerns about property rights. Some countries deny foreigners full ownership rights to property. This could be a blow to the investors, as they will have difficulty when they want to use some of their assets in some instances. For example, when foreigners do not have full ownership rights, they are unable to use such assets as collateral for a loan.

Previously, entrepreneurs have not been vigilant and categorical about the economic situation of a country. However, when investing in a foreign country, it is prudent to consider the economic situation of the country. For example, a country that has a low debt-to-GDP ratio will be prudent (Brush, 2013). Similarly, an entrepreneur has to consider a country that has a low and declining unemployment rate. The employed people will be an increasing demand market for the products. In addition to this, an entrepreneur has to consider a country that records high rates of consumer spending. As a fact, some entrepreneurs also consider countries that record increasing incomes with lowering inflation rates. This is a positive sign that the business will make commendable progress after its establishment. Consequently, a country that records an increase in the middle class also proves a perfect prospect for a business.

When establishing a business in a foreign country, an investor needs to focus on the exchange rate. Some countries have the best exchange rates, which is a positive sign for a business. However, some countries are marred with the worst exchange rates in the world. This could be a negative sign for a business. For example, when some assets are introduced into the country, their value decreases instantaneously. On the other hand, the value of some assets will increase when they are transported into a country with a favorable exchange rate. This could affect the business in one way or another. Similarly, an entrepreneur has to focus on the economic development of the country (Brush, 2013). Countries that record an improving economy will be viable for investment. When the country improves economically, the investors will have an opportunity to realize the same. However, some countries that record stagnant growth in the economy will not assist an entrepreneur in developing the business. In addition to this, an entrepreneur has to consider the tax rates in a country. Different countries have varying tax rates depending on the scope of businesses. However, some countries impose higher rates on foreigners who have invested in the country. This could be a disadvantage to the business, as it will have to spend a substantial amount of cash on tax.

In addition to these factors, an entrepreneur should consider the transport system and infrastructure. This will have a direct effect on the supply and delivery of materials, products, and services. As such, an effective transport system will enhance the business. Secondly, an entrepreneur has to consider capital costs. This includes the expenses of buying land. Similarly, an entrepreneur should consider the rent rates in the country. Thirdly, an entrepreneur has to consider labor costs (Brush, 2013). Cheap labor helps a business to achieve its targets, as it will spend minimal amounts on the cost of labor. Fourthly, an entrepreneur should consider the proximity to the demand market and consumers. A business established near the demand market will have an upper hand in recording development. Lastly, an entrepreneur should consider the security of a country. An insecure country increases the risks of a business losing its assets through looting, burglary, and destruction.