How to successfully set up a business abroad, my lessons after one year in Ukraine
It’s been a little over a year since I officially emigrated from Amsterdam to Kiev, Ukraine to set up my recruitment outsourcing company MatcHR. With no previous experience in Ukraine, let alone setting up a business in Ukraine, people have often asked how did you start? Now a year later it feels like a good moment to share my experience and I hope it encourages people to take a leap of faith and see the vast amount of opportunities this wonderful world has to offer us…
So where to start… It all comes down to an idea that you are passionate about and that you think can actually add value to whatever customer you want to be serving.
· Bring a technology or service that has proven itself successful in one country and roll this out in another country (ex. Rocket Internet)
· Leverage an existing cost structure to out compete or leverage an existing cost structure (ex. MatcHR)
· Set up a new business entirely (ex. Elon Musk with Paypal)
Whatever it is, make sure you are absolutely passionate about it and that it is something that you see yourself doing for at least the next few years. Do not underestimate this :).
Set the right criteria
Whenever you look for a new country to set up your business, open up a new office or roll out a service/technology, make sure that you know what your evaluation criteria for each location are. With MatcHR we provide recruitment outsourcing services on a subscription based model. We hire and train sourcers and recruiters in country X and they work as virtual recruitment teams for clients all over the world, for a fixed fee per month.
Our KPI’s to evaluate whether a country was suitable for us came down to the following six KPI’s.
1. What is the general level of English?
2. How hard is it to set up a business as a foreigner?
3. How competitive is the market for the candidates we are looking for?
4. Are we actually able to attract the right people?
5. What does the cost structure look like? (wages/office/legal etc.)
6. Is there a professional service industry?
7. Would you like to live and work for a longer period in this city/country?
This sounds easier than it actually is. Only when we noticed that we kept having discussions of “this doesn’t feel like the right location…” or “this sounds amazing I would love to set up our business there I heard it is a great city to live…” we decided to sit down and come up with these criteria to properly evaluate each location.
Do your research (duh…)
Once you have defined your criteria it is time to actually get to work. This is an exciting but very (very) important time (did I say very…?).
Based on our criteria and talking to several industry experts we quickly came down to two serious countries where we saw an opportunity to set up our company: Romania and Ukraine.
Both my business partner Maarten and I had never been in any of these countries. For both Ukraine and Romania we knew only one person but quickly developed a very effective that quickly moved us forward…
We Googled a picture that looked like it belonged to Kiev or Bucharest, posted it on LinkedIn and Facebook and simply asked for anyone with contacts in both Romania and Ukraine to help us out.
For each post we received around 15–20 tags with names that we could contact. You will be amazed by how many unexpected people will help you exploring such an entrepreneurial venture. We talked from bicycle shop owners, to CEO’s of big corporates, to cousins off long forgotten friends.
At the end of each conversation we always asked “do you know anyone else we could talk to that might be relevant for us?” which created a snowball effect. Within a month after our posts we had talked to over a 100 people for each country.
Test your assumptions
Both Romania and Ukraine looked as promising countries where we had a slight preference for Ukraine so we decided to visit both countries. We made sure that our agenda’s were completely booked to optimize our visits. I reached out over LinkedIn, Facebook and by Skype to schedule all meetings with people we wanted to meet.
We talked to accountants, lawyers, met with the people that helped us, looked for potential office space and we scheduled meetings with people we potentially wanted to hire.
It turned out that the Romanian market was super competitive and that it was very hard to attract and retain talent. Half of the people never showed up to the meetings we had scheduled because they already accepted a different job. We also realized that the cost structure in Ukraine was much more favorable and that without even having a website we were able to get very talented people interested to come work for us. “Glory to Ukraine” since we decided to set up our company in Kiev. “Bodmo!”(cheers).
Find the right people (you can trust)
When setting up a business abroad make sure to follow your gut. When you don’t trust something walk away. There are always people in whatever country you go to that will try to take advantage of you so make sure you find someone that you can trust. I was fortunate enough that the one other person I knew was also an (Ukrainian) entrepreneur that I had met at Burning Man the year before. He was able to help me find an apartment, pointed us to our first accountant, introduced us to his lawyers but more importantly was someone with whom I could discuss how to open a bank account over a meal in a not too touristy place in Kiev.
Have the right (business) partner
Living abroad in a foreign country can be very exciting. Everything is new, you meet new people and you are (still) full of energy to set up your business. However it can also be pretty lonely. Setting up a business costs a lot of time and hard work, let alone in a completely foreign country. In the first 6 months there was hardly anything else to do except for work. With my girlfriend living in New York to complicate things even further it is therefore critical to have both the right business partner and partner that support you along the way. You often want to share your experience, vent about the weird food they serve at lunch, the fact that the central heating (what?) only starts to work at the end of October, the interesting people that you have met and the unlimited amount of business opportunities you see :).
From a personal perspective if you don’t have the right (business) partner to support you, it can get very lonely. I am fortunate enough to have both but I do realize that I would never have been writing this blog if that wasn’t the case.
Just do it
A year ago I could not have imagined the current position MatcHR is in. This would not have been possible if we wouldn’t have just done it. This sounds like a cheesy slogan but a year into it I finally understand what is meant with ‘just do it’ from a business perspective. You can plan only so much but in reality, it is always different. Our initial plan was to launch on the 1st of December 2018 and we felt that the 1st of December was already pushing it.
However when our first customer, Revolut asked us that we could only work for them if we could start on the 15th of October we immediately said yes (thank you Charles :)). At that moment we had no office, no employees, no legal entity, no contract and I was sleeping in an Airbnb with no hot water. It forced us to get out of our excel’s and just execute. It was the kick-start we needed. Within a year we have grown to 20 employees, we are working for clients all over Europe and we are looking for our third office space :).
We are excited about the future and about the opportunities that lie ahead, not only for our current business but also the potential we see for other businesses in Ukraine that we would have never thought of if I wouldn’t have moved here.
That being said I do see that it is not so much about the destination but it’s the journey that counts and I am excited to see what next year will bring…