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10 Reasons Politically Stable Markets Are Needed for Business

Entrepreneurs look for favorable markets to set up their businesses. The location factor cannot be taken for granted because no geographical area is the same. Each location has different characteristics which the business owner will have to conduct research on and make analyses.

The fact that a politically stable market is needed for favorable business operations to take place should not be arguable. Here are 10 reasons to buttress the point:

  1. To Maintain Investor Confidence

Investors from within and outside a country will consider the state of the polity before putting their money in a business that operates there. It would not be a smart move if they were to invest during unstable times.

  1. To Increase Capital Inflow

When there is a significant improvement in the political stability of a country and its business environment, there will be increased foreign investment.

  1. To Keep Consumers Interested

Shoppers and traders from outside a location would be willing to place orders for goods produced there. They would not have to worry about a high probability of something going wrong with their purchases.

  1. To Foster Partnerships

Why would a company from outside the country want to make a deal with yours if the political situation is not favorable? It would definitely not seem like a rational decision.

  1. To Ensure the Formulation of New Policies

When there is instability, it would be impossible for the government to think about creating new policies that will be favorable to the business environment.

  1. To Organize Development Programs That Aid Business Operations

Some businesses can only operate in a country that has attained a certain level of development. Political instability will hinder the execution of development programs and the acceptance of new technologies.

  1. To Create an Enabling Environment

Companies, especially small ones, can only thrive in an environment where risks are minimized and well-managed. Startups will have a better chance of surviving in such conditions.

  1. To Prevent the Forced Relocation of Businesses

Entrepreneurs would consider moving their companies elsewhere if their present location is not conducive. They may be compelled to relocate their businesses to places they consider to be better.

  1. To Enable Free Trade Agreements

A politically unstable country will not be able to enter into free trade agreements with other countries. No nation would want to make such a deal with that country as it would be considered unwise.

  1. To Build a Favorable International Image

Ranking low in the World Bank’s Political Stability and Absence of Violence Index is detrimental to a country’s image in the international scene. EMEs (Emerging Market Economies) need to aim for higher positions in such rankings for a better chance at getting deals from other countries.

Entrepreneurs would be able to choose the best location to do business with the aid of professional business plan writers who will help them in business planning. Changes in the polity of a location always poses important implications for the business environment. Economic growth can only be ensured when the country is politically stable, and the future seems to be promising for the business environment.

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How Free Trade Will Help Your Small Business

Free trade agreements make it easier for small business owners to grow and expand. When the government approves free trade agreements with other countries, small business owners should try to see how these deals can be beneficial to their companies.

International trade agreements are aimed at eliminating trade barriers and fostering a reduction in high tariffs. Regional trade agreements are better than bilateral trade agreements because they involve more countries. More countries mean more opportunities.

Free trade agreements are important for small businesses in many ways. They make international trade simpler for those involved. As an entrepreneur, if you do not have enough money or the diplomatic contacts required to enter certain markets, you do not need to worry since some FTAs make such opportunities easier to access.

 

Be Familiar with the Advantages

 

  • The reduction of tariffs will give your goods a significant price advantage over your non-FTA competitors. Preferential treatment is given to goods that are coming from countries which are part of the deal. Tariffs may even be waived.

 

  • Apart from reduced tariffs, FTAs make the processing of goods through customs easier for exporters. This is made possible through the harmonization of product standard requirements.

 

  • If you are thinking about the protection of your company’s intellectual property, keep in mind that some FTAs may be entered into with attention given to this issue. The agreements may offer expanded protection for trade secrets, copyrights, patents, and trademarks.

 

Countries that sign FTAs are under obligation to enforce laws concerning this clause. This measure has been put in place to remove unnecessary hindrances to free trade.

 

Factors to Consider in Free Trade

 

  • Financing

 

  • Taxes on your exporting operations

 

  • Currency conversion

 

  • Legal matters based on the protection of your intellectual property in the host country

 

  • Method of exportation (direct or indirect)

 

In view of the above points, financing is a very important consideration. As regards the method of exportation, the direct method entails selling directly to a buyer in the target country. You will handle the shipping arrangements. On the other hand, the indirect method involves selling to an intermediary in charge of handling shipping arrangements and other duties. You can find tax preparation experts on saigis.com if you are thinking about minimizing your tax bill and other services.

Check government websites for a list of the FTAs that have been entered into. This will help you in deciding how to expand your business internationally. Business owners will know the right countries to target, and what is at stake.

It is advisable to understand what each FTA entails. By doing so, you will know how to operate favorably. You will also know the best period to export your goods and services.

FTAs mean new markets for a growing business. You cannot ignore these revenue opportunities as a business owner trying to beat the competition, and seeking to be successful. All the cards you have been dealt by the business world should be considered, especially the steps that the government has taken to ensure a favorable environment for small companies in the country.