International vs. Local: Which Business is Best?
Business owners are known for their strategic minds and ability to sift through information and find solutions to problems. One of the things that often comes up as they start new businesses is where they will base their operations and why. Starting a new business out of your home takes a much different approach than launching a business overseas. International businesses sound more complex and scary, but when you start peeling back the layers, they aren’t always as you’d imagine. And operating a local business isn’t always as simple as you’d think either.
Running an international business still takes many of the same steps as running a local business and this means that whether you run one in the USA or in the UK or Europe, you’ll still need to complete many of the exact same steps. What does this mean then? Is it better to run an international business or a local one? And the truth is that the answer to that is yes. It’s better to know your business goals and to determine which kind of business will help you reach those goals more effectively. So here are some of the advantages and disadvantages of running both local and international businesses.
The Advantages of a Local Business
Running a business out of your home or in the same town you live in has some big advantages. First, you probably already know the language. This makes communication a breeze and means that all of the materials you create can be in your first language. Another advantage of running a local business is that you have people nearby whom you can ask about regulations and other compliance requirements. Getting started usually means filing some paperwork with your state, as well as getting proper business licensing depending on what you’ll be doing.
Other advantages include the ease of finding local talent, understanding the local market already, and even knowing what kinds of tax write-offs you could get for your business.
The Advantages of an International Business
Don’t let those advantages make you think that international business has nothing to offer you. On the contrary, there are plenty of advantages to running an international business. These businesses have access to more tax breaks in other countries that aren’t available in the USA for instance. When you run an international office, you may even get refunds for things like paying VAT in UK. Additionally, they offer incentives to new startups who want to do business in their country.
They know it stimulates growth in the economy and want to work with businesses that will help grow their nation. An international business gives you access to a talented and affordable talent pool as well. Your dollar will go further for things like marketing and design when you hire individuals who don’t need all the benefits and bells and whistles required for doing business in places like the USA.
Disadvantages of Local Business
There are only so many people in your target audience when you are a local business. Once everyone has been reached, your business may start to slow down or come to a standstill. In places like the USA, another disadvantage is the bureaucracy and hoops you need to jump through to get your business up and running. There are regulatory agencies like OSHA and the FDA that oversee so many different industries.
Disadvantages of International Business
Figuring where to base your business can take a lot of research. This research can take months to years to sort through. Other disadvantages include language barriers, getting Visas, and other immigration challenges when you want to base your business somewhere else. International business also comes with a different set of requirements than having a business based in your home country and you must think about taxes in two different places. Many international businesses leverage accountants and tax lawyers to help them sift through all the challenges.
All in all, neither business option is best, and both of them are the best simultaneously. The important thing is to know your business goals and how operating a local or an international business can help you reach them. If you want affordability and foreign investors along with low regulation, then an international business may be best for you. If you’d prefer the ease of knowing your local market and the language, then a local business might work better as well.