When starting your overseas business, deciding where to pick up and move is not always an easy decision. Some people feel a pull toward a certain country, whether it be a specific job opportunity, a family connection, a leaning that is rooted in your faith, or a fascination with some aspect of the country or the culture. Others of us are less tied to one particular place and are willing to consider multiple options. For those of you who fall into the latter category, this post is for you. My aim is to help you consider important issues and equip you with some tools as you think through your options.
- Cost of Living for Expats
One of the most important things to consider when deciding where to move is how much it will cost to live there. It is vital to know how much money you will need to sustain you while you get your business up and going. Figuring this out will also help you know how big your business needs to be to sustain you and your family.
We may assume a less developed country is less expensive to live in than one that is more developed. This isn’t always true. According to Mercer, a global human resources consulting firm, the most expensive city in the world to live in is Luanda, Angola, where the average local wage is less than $8,000 per year and considered one of the fifty least developed countries in the world by the United Nations. This high cost of living is caused by a lack of appropriate housing for expats and the need to import many of the goods expats living in the country require. The demand for both of these drives up prices significantly.
On the flip side, don’t assume a more developed country is equated with a high cost of living This is true for a number of Middle Eastern countries. Countries like Saudi Arabia, Qatar, Bahrain, and Oman tend to be fairly affordable for expats. Rent prices in many of these countries will be comparable or slightly higher than US prices, but subsidies on food and gas and low levels of taxation help drive down the overall cost of living.
As you are considering where to start your business, be sure to consider the cost of living. It is an important factor that may not always match up with your assumptions.
- Quality of Life for Expats
The next thing to consider is the quality of life for you and your family. Some of these will vary based on your preferences and family situation, but a number of these should be on everyone’s list. For instance, consider the level of safety for expats. While we all differ in our tolerance for risk, we need to understand what level of safety we are comfortable with and make sure our choice aligns with our comfort level. Some of us will have very good reasons for going into a higher risk environment, but make sure you and those going with you understand the implications.
The level of healthcare available also plays into the quality of life for everyone. If you have a potentially life-threatening illness or accident, can you access the level of care needed for treatment? Even something that is not typically life threatening in the US may turn into a life or death situation in a country with less access to quality healthcare. On the flip side, you may be able to increase your access to affordable, quality healthcare by moving to another country. As I write this, my wife is planning on flying to Mexico for a dental procedure that will cost half as much and offer the same level of quality as having it in the US.
If you have a family, access to quality education will likely be a consideration. Many countries have international schools run by businesses, non-profits, or faith-based organizations. Sometimes they offer very high levels of education at a fraction of the cost of private schools in the US. In places where there is little or no access to affordable, quality education, you may consider homeschooling or boarding school. Even though we had access to great schools in Kenya, we decided to homeschool in order to save money and provide the flexibility to travel throughout the year. As a business consultant, I sometimes had to travel and loved having Lauren and the boys tag along. Being able to go to the beach or on safari during off-peak months was another perk to having a flexible school calendar.
While it has a limited number of countries (only 45 in 2016), HSBC puts together an excellent interactive tool you can use to explore many aspects to quality of life for expats. I encourage you to take some time alone or with your family and consider your assumptions or expectations on quality of life and do some research to find out if your expectations match the reality in the country you are considering. If you find that your expectations will likely be unmet, you may want to consider a country where expat quality of life is more closely aligned with your desires.
- Ease of Doing Business as an Expat
A final consideration to take a look at is the ease of starting and running a business. Some countries make it very difficult for expats to get up and going, while others make it a fairly simple process. Some countries also make it easier if you have a local partner, but extremely difficult if you want to own 100% of your business. As you are thinking about where to move, it is important to consider the requirements for starting a business in the country you have your eye on. Do they require a certain amount of capital from outside? Do they require you have a local partner who owns the majority of the company? Is hiring the required number of local employees feasible for your startup?
A friend of mine just got back from considering starting a business in Indonesia. During his time there, he discovered the strict requirements for expat businesspeople. Some of the requirements include having a minimum capital requirement of 300,000 USD, employing two to five local employees for every expat, and a local partner or partners who own 49-51% of your company. With all of those conditions, he realized that it would be near impossible for him to start a company with his current level of resources. However, don’t get discouraged as these are pretty strict requirements when compared to most countries.
The country of Georgia makes it very easy to start and run a business. There are no capital or local ownership requirements. They do not require a specific number of local employees and I was unable to find any restrictions on the number of foreign founders, directors, or employees.The process of registering your business can be completed in one to three days. They also have a flat tax system with a maximum of 15% tax on corporations. I almost want to pick up right now and move there myself.
Sadly, another factor in the ease of doing business is the level of corruption. Corruption allows businesses and individuals to gain an unfair advantage over those who can’t or are unwilling to provide payoffs to advance. Even though a company may not have the best service or the lowest price, they will be shown favor by the government or others if they are willing to provide payouts to the right people. I don’t want to pretend that some level of corruption doesn’t exist in every country, but in countries where corruption is high, it can cause a significant barrier to successfully starting and growing your business, even if you are meeting the requirements and running your business well. If we choose to take part in such activities or don’t actively withhold certain goods, services, and aid from these countries, we only encourage corrupt practices by these governments. Transparency International provides a helpful list as you consider the level corruption in a particular country.
The World Bank provides great data and information on the ease of starting and running businesses in almost every country. Though it is not geared specifically toward expats, it should help in knowing which countries are more favorable towards startups and business in general.
Go Find Your Country
Now that you know the things you need to consider and the tools to help you make better decisions, you have no excuse not to push forward. Uprooting your life to another country is a decision that should require careful thought, yet you need to at least start the process for it to become a reality. Take the first step by considering a handful of countries that interest you. Decide what is most important to you and figure out which countries best meet those requirements. You might be surprised.
So go ahead and start your adventure!