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The challenges of international business

While the international market may be a perfect target for your business, expanding beyond your home country isn’t without its challenges. Here are a few that you’ll need to prepare for.

Language and cultural barriers. Selling to customers or working with vendors who don’t speak your native language can be a significant obstacle for any business owner. That’s why Skouras recommended hiring bilingual staff members who can easily translate back and forth.

“If you don’t have the budget for full-time translators, outsource tasks like overseas customer service and translation of promotional materials to freelancers,” Skouras said.

Beyond language, differing cultural norms may also stand in the way of a successful business expansion, if your company doesn’t respect them. Lee advised entrepreneurs to research cultural practices in the countries they plan to expand into, especially as these may relate to the company’s product or service. Foreign customers’ and business partners’ needs may not be the same as those of your domestic stakeholders, and this could affect your sales, marketing and overall business strategies, he said.

“You will have to understand the different ways people communicate,” Paris added. “For instance, in northern Europe, there is far less ‘chit-chat,’ and you might feel that the party is being blunt to the point of rudeness — this is not the case. In southern Europe, there is a lot of personal conversation and activity before business issues are addressed, and cutting to the chase is seen as being impatient.”

Tax codes and compliance issues. If you think it’s difficult to navigate the various tax codes and business regulations from state to state, try selling in another country. Paris reminded entrepreneurs that the United States taxes worldwide income, and the IRS also imposes special reporting requirements on this income. Additionally, foreign banks may be hesitant to deal with a U.S.-based account due to the administrative burden, so you might need to set up a separate, foreign business entity and bank account to make handling transactions worth while for the banks.

Paris also noted that other countries have different labeling and packaging standards that you may need to comply with, depending on what you sell.

“In the states, the instructions you include with your product will be in English — sometimes Spanish or French,” Paris told Business News Daily. “But in Europe, your instructions, even for the simplest product, will be in multiple languages, sometimes up to 24 languages. If your product is sold more regionally, you will have to consider the increase in packaging cost associated with labeling. In addition, your product will have to be certified as safe [by those countries’ standards].”

Slower pace. In America, the business world moves pretty quickly. Executives and even lower-level employees work day and night, making appointments and closing deals long after they’ve left the office for the day. David Hellier, partner at Bertram Capital and board member of ACG New York, told entrepreneurs that business doesn’t move at the same pace in other countries; building relationships is a long-term commitment.

“Overseas, doing business is as much a personal event as it is professional,” added Bill Bardosh, CEO of green materials and chemicals company TerraVerdae BioWorks. “You may be able to broker a deal just through formal business meetings [at home, but] in China and the Far East, it is necessary to spend extensive time getting to know your counterparts outside the boardroom during tea sessions or dinner banquets, for instance. Things will always take longer to be resolved overseas, but that isn’t necessarily a sign of a lack of momentum — you have to be patient and prepared for multiple interactions to build trust.”

Local competition. It’s not always easy to convince a foreign customer to purchase your company’s product when there’s a comparable product available that’s made in the customer’s home country. While some big-name U.S. chains like McDonald’s and Starbucks have clout overseas, small and midsize companies need to work a little harder to convince the international market that their brands are trustworthy and better than the competition.

“Why would [customers] buy from you over the local champion?” Paris said. “Can you penetrate the market? If you do, can you be profitable under the circumstances? Is the juice worth the squeeze?”