Host: Let’s consider a real case. A Russian-speaking company works abroad where it has recently relocated. Could you name top-5 initial challenges and potential threats that should be delegated to a third-party to manage?
Vitalii Mikhailov: Well, let me add some more context to this hypothetical then by saying that it is an online business, not bound to a location and able to relocate.
First off, it is the founders' passports. Banks worldwide have varying levels of trust for passports depending on where they were issued. First and foremost, the founders need to have a residence permit. Every beneficiary or owner or founder — basically, every person that has ownership over the business must be a legal resident of the country. Without a legal residence permit, 80% of doors simply won’t open for you. And this principle is applicable to virtually any country where a business relocates.
Once a residency permit is obtained, the founder is able to register the company and to set up personal and business accounts as well as corporate accounts. These are grassroot level steps. In the CIS, the market is more financially developed than European or even American markets. So these steps may seem easy and primitive, but the context is different thus making these steps considerably harder than back home.
Once the company is registered, the founder must understand how tax is paid. In Europe, the VAT works differently. The approach is the same, but the amount is different. Additionally, the choice of jurisdiction must be informed, as different locations offer different rules for how business is run.
Language is paramount, too. In Europe, the English language is not widespread at all. If the founder assumes they will manage their business in English, in Italy, for example, it simply is not the case. In Hungary the red tape is overwhelming. In my experience, Estonia and Lithuania are the countries where English is spoken most widely and government-related operations are most digitized.
The founder needs to have a good long look at how a destination country works before they choose to relocate their business there. Everything from government affairs to basic everyday interactions with an accountant needs to be considered and assessed in terms of simplicity and accessibility. If business feels difficult at home already, then going global may be truly staggering.
Host: What case comes up first where EasyStaff helped a Russian-speaking company settle abroad?
Vitalii Mikhailov: In 2017 I was setting up business operations for CDN, i.e. Content Delivery Network. Its roots are Russian, but it would later be sold to G-Core Labs from Luxemburg. My task was to set up their presence in the UK where I took care of all things legal and reconnected their UK corporate with their clients and suppliers. And after that, the company was sold.
Hiring a competent professional with appropriate experience is crucial here. Their past cases make you as a company informed of risks and regulations. The reason CDN was sold successfully is because the product itself was backed up with established financial and legal components in compliance with European law.
The same is true for KiwiTaxi which I mentioned earlier. The company is also of Russian descent, and I was hired to make it international. The core of the product had to be relocated to outside of Russia due to currency control and other obstacles at home including finance and legal. So KiwiTaxi had to be localized for the foreign market it then became part of. And this was the very first product developed by me that is thriving to this day. But I don’t manage it anymore, of course.
Host: Fantastic, Vitalii! Thank you very much for joining our podcast today! It’s been amazing learning from you about how Russian-speaking companies can work abroad. This was the Hussle podcast, and our guest today was Vitalii Mikhailov, the founder and CEO of EasyStaff. Once again, thanks for joining us!
Vitalii Mikhailov: Thank you for having me, Arseny! This is my first podcast, and it seems to have been quite alright.
Hussle by Red Barn:
https://redbarn.ru/audio/kak-russkoyazychnoj-kompanii-rabotat-za-rubezhom/June 11, 2024