Andrew Henderson

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Find The Best Business Idea and Start a Business Overseas

Dateline: Jakarta, Indonesia

I had planned to stay in Jakarta for most of December before darting over to spend Christmas in the Philippines with some business contacts. Unfortunately, while the city is really cheap, the traffic is really bad and beyond my few meetings here, there’s not a lot more to see.

Indonesia is an interesting place: pleasant people, a cheap cost of living, and for single guys, a friendly dating scene. Unfortunately, it’s offset by bad traffic (at least in the big city), a coming currency revaluation, and a government whose monetary policy will surely put a damper on economic growth in the next few years.

One topic we discuss here frequently is how to start a business overseas. We talk about the best cities for young entrepreneurs to live on the cheap and other ways to benefit from emerging economies.

But how do you separate the wheat from the chaff and find the best business idea for you? Here are several tips from my extensive time on the ground observing trends and talking with overseas entrepreneurs.

Tip #1: Be on the ground

This is Nomad 101: to get the best knowledge and the best returns, you have to be on the ground. You can’t effectively scout out a great business idea without being there in person.

While sites like this can serve as a tool to provide guidance, suggest ideas, and point you in the best direction for your interests and risk tolerance, they can’t replace seeing a business idea with your own eyes. Setting foot in a new place gives you an opportunity to observe trends that are going on in that overseas country. You can read about these places all you want, but things come into focus very quickly once you can personally see what you’ve been reading about.

I’ve said that if you want to start a business overseas, it helps to have a foreign business partner. You get have the best business idea in the world, but if you can’t execute on it, it won’t matter. And it’s hard to find a “local” business partner sitting at home on the couch.

Now, I do believe that many countries make it plenty easy to start a business on your own. But government interference is only part of the equation; you also have to adapt to the culture. That can easily be done, and many expat entrepreneurs are successful, but you can’t find the right partners for your business without putting in face time.

If you have vacation time, spend it overseas scouting out the best business ideas. Leave the kids at home and make a week, or two, or a month out of it.

Tip #2: Widen your horizons

When you’re plotting a big business deal over drinks at some fancy hotel lobby, it can be easy to overlook the potential value in the person serving you those drinks. Personally, I view everyone in a new place as a potential source of valuable information. Waiters, taxi drivers, people I meet while I’m out at night; I don’t discriminate.

Start a business overseas in Makati

Makati, Philippines: I once got a great business idea from a real estate agent. He even offered me a great connection that had a lot of knowledge about how to start a business overseas there.

By the time I get into a significant conversation with someone, they know what I do, and I’ll eventually ask “what business would you start here?” You get a lot of puzzled looks, but those with something to say often offer some valuable insights.

While I got mixed results with this technique when I ran a business in a creative industry, I got great results when I oversaw a home services business. The employees I had were on the ground daily and had great insights that I could adapt for use in a more business-friendly way. I even got the initial idea for the business from several friends who complained about their service providers.

In the same way, the barista at the cafe will occasionally have an idea on how to improve service in a way the market there would like. Some multi-national chains do well merely by “being American” (and some don’t), but could be beaten by a hands-on local operator.

As they say, the best business ideas are often simple.

That’s one reason I believe so strongly in starting a business in an emerging market. The market is growing fast enough that consumers are demanding – or would be demanding – if they were offered. McDonald’s isn’t in Phnom Penh not because Cambodians wouldn’t eat there, but because they haven’t gotten around to it. Perhaps the market isn’t large enough for them yet, in which case you have an extra advantage because you as a small entrepreneur require less small and can run with far few layers of administration. While McDonald’s isn’t an acquirer of competitors, there are plenty of industries in which you could front-run larger companies and have a clear exit strategy.

Of course, there’s no substitute for your own good judgment and due diligence. You’ll get plenty of ideas that need to be re-worked, or from which you won’t get a whole business idea but merely a glimmer into another good idea. My philosophy has always been to get opinions from as many people as possible, filter out what doesn’t fit, and work the rest of the ideas together.

Step #3: Don’t be dogmatic

This was one of the best pieces of advice I’ve been given on how to start a business overseas.

Now, I think it’s great to bring winning ideas to overseas businesses. Many expat entrepreneurs have built great business overseas by mirroring ideas that worked in the US or elsewhere. Just the other day, I was buying a few friends some nice Christmas gifts when I asked the sales clerk about Amazon.com. “Amazon?”, she replied… “like the river?”

In a country of 250 million people – heck, even in a city of ten million people – there’s no Amazon. While the logistics of such a business are a bit daunting for my taste, the market in that regard is relatively open. No one local competitor has the scale or owns the market.

When I was in Vietnam, several food delivery firms were fighting for space after each being inspired by similar services elsewhere. Now that’s a sales-focused, no-inventory business I like.

However, you still have to tailor the idea to the local market. Amazon, for example, works thanks to a relatively efficient, albeit bankrupt, US Postal Service. While I can hear my anarcho-capitalist friends cringing at such a nod, at least the US Post Office delivers more than half their packages in one piece. In a developing country where such infrastructure isn’t as good, you might be better off hiring couriers at $100 a month to hand-deliver packages.

And, of course, you don’t want to make the same business mistake that Nabisco and countless others have made, which is assume that consumers will want the exact same product that you or others have sold elsewhere. Nabisco thought it had a home run with its Oreo cookies in China, until it realized Chinese people weren’t going to impulse buy a package of a dozen cookies for $1. Nor did they like the excessively creamy frosting.

Being dogmatic and saying a local culture is stupid will get you nowhere. Figure out which cultural norms the public holds dear and adapt to them. This can occasionally – temporarily – work in your favor. For instance, few small businesses in the emerging world accept credit cards for many purchases. This can reduce costs and compliance hassles.

Determine which parts of local business are there because that’s how people like it, and which parts are inefficiencies able to be improved upon. Start a business accordingly.

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NOMAD CAPITALIST

1. For over a decade, we’ve helped 1,000+ high-net-worth entrepreneurs and investors.

2. We have a trusted network of global professional agents, accountants, attorneys, and entrepreneurial teams who know the loopholes of the industry.

3. We sit down with government officials and legally get everything done for you in the shortest time.

4. Our one-stop boutique consultancy will reduce your tax rate offshore, protect your assets, help you obtain a Plan B citizenship, and invest overseas.

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