Letter To The Editor: The Basic Misconceptions About Business Abroad Faced By The Entrepreneurs From Russia

CEO of quest project to “Leave the room” Artem Kramin sent a letter to the editor telling about the specifics of opening a business in different countries of Europe and the United States. The author gives tips from personal experience, which can help to avoid the most common mistakes associated with doing business abroad. Over the last three years I somehow personally participated in the opening of our branches in seven different countries, many franchisees we consulted remotely. Only this time, we opened 104 points in 39 cities of Russia and the world.

Now is the moment to share wisdom gained, as well as pine cones and shoals. Mostly, of course, the second. I tried to formulate some common misconceptions about doing business abroad, common to all Russian. I have divided the text into two parts. In the first misconceptions that you may ruin, the second — the ones that will give you additional benefits.

After reading a fair amount of books about “highly effective American managers,” you must think that Europe and the United States is such a super-efficient markets where companies are fighting for 0.5% of the revenue, saving on electricity and expensive gas. Perhaps in the scale of huge corporations and so. But small and medium businesses, in my opinion, work is not as effective as in Russia. The reasons that lead to increased costs, many. This and taxes and stringent regulation in many industries, and competition, and overall efficiency of the economy.

But there is a reason, which is not to say, and in the books you will not read this. Opening a business in Europe and the United States, you need to be prepared to ensure that all possible deadlines that you have laid will be broken and exceeded three times at least. The paper will be made as long as possible, the realtor will disappear for two weeks right before signing the contract, the Commission of the local city hall you will find the shortcomings in your premises and you will have a couple weeks to eliminate them one by one on the list. Just not provide. For our partners, opening in Europe, we give a simple recommendation.

Make a schedule open for his Russian mind, and then just multiply all terms by three — this is Europe. The result will be very close to real. Just take it for granted — you dont know and understand the local laws. Honestly, you and Russian laws dont know.

All actions related to the interaction with the state, will be further complicated by ignorance of the language. So my advice — look for a consultant. Different countries have different tax regimes, they may be different forms of ownership. The modern European market allows for the creation of the company in Cyprus with a zero rate of tax on certain types of activities, which has a current account with the Bank of Lithuania, rents an office in Italy and received payment from counterparties from the USA. Anti-globalists lose with the devastating account.

In General, detailed expert advice you will need in two cases. Establishment and business registration, preparation and submission of tax reporting. Both procedures are usually standardized and are not such a big price tag. In Europe and the USA starting a business will cost you €600-800, almost all the money will go on payment of work of the consultant. The outside accountant who will prepare the reports based on your primary documentation, will cost about €200-300 per month.

For some types of activities will have some time in the year to attract an audit from a third party, at a cost of €1000-1500. Keep in mind that your relationship with the IRS will find a direct reflection in relations with customs and visa service. Ruin them in tax — say goodbye to your visa. Quest business with tax implications — it is business as usual in the sphere of services. Tax is normally calculated on the amount of income less expenses.

The tax rate is highly dependent on country and may vary significantly. Law-abiding and orderly Europeans are amazing gouging in. Situation when people just dont come in first day on shift or goes into the fog in the middle of change, have become habitual for us. This is largely due to the specifics of our business. To work on reception in the quests we employ, as a rule, students.

And the students, they like war, is the same everywhere. Get ready for another surprise. The first time will fail physiognomy, to which you are accustomed to at home. The usual division of the people on their own and not their own, smart and stupid, rich and poor — all of this is that you can easily do by looking at the person, stops working when the Basil is from Ivanovo you appreciate Jose from Madrid or Jack from London.

Football fan from London or redneck from Texas may at first glance fall into the category of “modest and reticent young man”. Mess occurs when you recruit a person of another colour or very distant culture. It takes time to the internal system working sometimes and again start to work. In the first stage you will be tempted by the opportunity to simplify your life, taking on the work of Russian emigrants. A common language and topics of conversation are worth a lot.

However, try to resist this temptation. Recently arrived in the country are unlikely to have a large number of friends and acquaintances. And their presence will be very important at the start of your business for word of mouth and feedback from local residents, of course, if your business is not connected with the services for expats. For our partners in other countries works well with a simple rule. “for the first time take on the work of local student and work with him, if you see shoals — change”.

Good job the Keeper of the keys — so we call a person who meets and accompanies guests and tidying up the quest, not very complex, neat and sociable young man for a few shifts can be fully involved in the process. Frankly, realtors around the world is a terrible asshole. For all the time we have not met one realtor who would have done their job quickly and efficiently. The real estate market in the U.S. and Europe is built in such a way that you will not be able to communicate with the owner of the premises directly. It will always be the realtor, whose office is working in this area for a long time and has in some sense “monopoly” in the area.

All owners of the trust property to him. The realtor is always a small amount of space, and from its activity or speed for it almost nothing will change. Areas in the district will be no more, and they all will be leased. As a result, a process that in any Russian city will take a week or two in Europe and USA will be delayed for months. In rare cases it is possible to go directly to the owner of the premises, and then the conversation is very similar to what is done in Russia, the owner is really interested to pass as quickly as possible.

But seriously count on it not worth it, so lucky in a few cases. If your business is meeting guests, you have to go through another circle of hell called “license”. The fact is that before opening the doors of your institution to visitors, you must obtain permission from the local authorities to the implementation of your activities in the room that you occupy. The complexity and the price of this license depends on the type of activity. For example, the alcohol license for a bar can cost up to €200 thousand.

By the way, I recommend to hire at the stage of search of local real estate specialist who will help you with the license. It can be very helpful before you sign the lease. It is possible that the size of doorways or width of stairs is not compatible with your license. And then the repair stage you will have to spend a lot of money on all sorts of empty alteration. In our case, it turned out that the business of quests is on the same shelf with night clubs and casinos, and this means that requirements as strict as possible.

Toilet for the disabled, wide staircases, fire-resistant materials and ventilation. The Russian designer can plan for you a room, but he cant do it taking into account local requirements, which are fundamentally different in different countries. On the other hand, the advantage was that our work does not require any special licenses. We do not pay the special fees in contrast to, for example, from cafes and restaurants. We all somehow got used to the idea from TV that Russia is a huge market that want to get all companies in the world.

But lets be realistic, back this statement as true. And even, perhaps, ten times rather. Golden billion living in Europe and the United States, with salaries between €5 million and above — the dream of any entrepreneur. And here it is.

Paradoxical Russian market offers great business opportunities, serving either superrich or superpoor. But with the middle class as it is not very asked. If you sell yachts or real estate the price of one million dollars, you might not think about change of dislocation — the struggle with powerful competitors long-established market is a risky business. To open a cafe with an average bill of three dollars also makes little sense — you will compete with municipal services, generally speaking, give these menus for free. But if you are a specialist furrier or your business making sites for small businesses, Europe and the United States a gold mine for you.

Business on quests fits in the category of “high-tech”, in fact the whole process of passing the quest is automated and does not require a large attachment force, so personnel costs in our case are kept within moderate limits. The amazing thing that Im more and more convinced. Unpredictable temper of Russian life is worse than any business coach. Who in Russia has built a business that in Europe will be on the head of a powerful local.

Stories about how the store of expensive furniture the seller refuses to close the deal due to the fact that “five minutes of Siesta, and we will not be able to do everything, come back in two hours”, have become legendary among our partners. The willingness to go the extra lap to work on the weekend, to make another hot-sale — may not revolutionize, but it will give you 10-15% extra benefits, which is very important in the overall profitability of the entire business at 20%. This twofold point, which can result both for you and against. And hard to think about it more at the planning stage of your operation to capture Berlin. If your business is based on manual labor, is to think about moving to China, not in Europe.

Exemplary example in this sense — manicure and hairdressing salons. Almost all added value created in this business at the expense of staff time, and therefore the cost of services is very high. As a result, nail salons throughout Europe and USA on the whole is a small zakutochke close to the subway, which work illegally in large numbers of Thai and flip flops in terrible conditions. The turnover rate sky-high service quality — appropriate. I think the idea to open a nail salon visit each girl from Russia that goes to such a place.

However, once you begin to consider minimum wage plus hourly kill the entire economy. But if you have a high-tech business, or have an opportunity to leave all the labor-intensive part of Russia, then this is a great competitive advantage. I think that for many types of businesses you can organize an office in Europe to work with customers and promotion, leaving the main production base in Russia. For example, design Studio, development software, and even some types of production — only on the condition that your products are compact and easily transportable. Email us at [email protected] if you have an interesting story or a view on a market topic.

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