After conquering the local market, the next step is to venture into international business. Investing overseas helps you to diversify your portfolio and opens up new opportunities that are not available where you live. It gives you a higher growth rate, more investment options and protects you from the effects of a slowdown in your country.
However, foreign investment comes with many challenges, both financial and administrative. It’s not easy for your business to take off in a foreign country without experiencing some difficulties along the way. But this should not discourage you from investing overseas; there is more to gain financially if you play your cards right.
Whether you are looking to buy property, start a business, invest in securities, or import products, here are a few things you need to do first.
Identify the Most Promising Investment
Going into a foreign market with focus on a specific investment might work to your disadvantage. Be dynamic and open to new ideas to accommodate other profitable opportunities. Before you settle on any specific venture, you need to apply the following strategies:
- Test whether your investment makes financial sense by carrying out a financial feasibility study
- Do enough market research to understand financial patterns, market forecasts, economic feasibility and the market’s personality
- Evaluate the possibility of engaging in partnerships with local investors who are conversant with the country’s market
- Learn about trademark protection and intellectual property to ensure your business is protected by the relevant governmental authorities
Avert Currency/ Liquidity Risk
Considering that you are investing your local currency in a country that uses a different currency, there will be many risks involved in the conversion process. The major concern is currency fluctuations affected by events that are difficult to control or foresee.
Before you convert your currency, you need to be well-informed on the exchange rates. This implies following the news and keeping an eye on financial trends in the country you are looking to invest.
In most cases, using a reliable foreign exchange service can help you to avoid currency risks. For instance, UK investors can use this guide to moving money to NZ.
Get Independent Legal Advice
Considering the diversity of laws that govern asset ownership and foreign investment around the world, it’s important to comply with all legal obligations. There are numerous legal loopholes that could bring your business down if you are not prepared. You need to look for an independent lawyer who will be on your side during the entire asset negotiation process.
An attorney clarify any confusing clauses, represent you during negotiations and fill you in on matters you are not conversant with. The choice of your legal representative will determine how successful you are when buying a foreign asset.
Gauge the Impact of Foreign Income Taxes
It’s crucial to research about tax obligations prior to any overseas investment. Before you invest your money, learn about the political terrain, the ease of doing business as a foreigner, and other business policies. Seek the assistance of a qualified tax advisor to ensure you are not being double taxed.
Learn How to Overcome Culture Shock
Foreign investment means dealing with new cultures, customs and geography. Without the right understanding of these factors, your business or investment will struggle a lot during the teething stages. The worst-case scenario is losing your investment if your business fails to break even in the long run. Don’t be in a hurry to invest your money before you have a clear understanding of what you are getting yourself into.
Bottom Line
Investing overseas has many benefits for any individual or business looking to expand exponentially. However, prior market research is crucial whenever you want to venture into a different country.
