If you’re a small or family-owned company, a decision to move part or all of your operations 
offshore is ultimately about a lot more than company economics. This is particularly true if the decision to move offshore would involve shutting down a U.S. operation. It may mean laying off long-term employees who have been loyal, productive contributors to your business. It may involve hurting the economic health of a community you care about, at least for the near future.
Let’s assume that, feelings and regrets aside, you have no choice but to move operations offshore if you intend to stay in business.
The Best Questions
As you assess the issue, it’s important to start by asking the following questions.
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Why would you move?
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Establish lower cost operations
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Achieve geographical expansion
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Align with your industry’s supply chain
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Where should you move?
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- Make a short list of countries/regions to consider
- Evaluate each in terms of labor rates, incentives, infrastructure, shipping/freight cost and time, safety, ease of travel
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How will you finance a move?
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Develop a plan and financial model
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Explore economic development incentives from countries
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Talk to your customers who have a vested interest in your location
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Search for potential joint venture partners
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How will you manage the move?
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Who will keep the U.S. operation running while others are away?
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Do you know how to find local talent?
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When do you announce the plan?
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If you plan to shut down a U.S. facility in order to shift operations, you need to consider the following:
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Legal announcements
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Morale and productivity during the transition
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Production plan (inventory build, simultaneous production, training a new workforce, etc.)
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What is the long-term goal?
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Are you prepared to own a business with offshore operations?
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How much time will you spend there?
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Do you have trustworthy, competent management in place?
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What’s your contingency plan if things go awry?
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Do you have capable staff or contractors who have experience moving operations offshore and then running them there?
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As with all decisions, keep in mind the old adage – It’s Who You Know. Use your network, industry organizations, and customers to find people who’ve “been there and done that” and are experienced in the countries you’re considering. This can involve contacting Economic Development offices in the countries where you are thinking of putting operations, as well as contacting Free Trade zones. The more people you know in the business and political community in the countries you are moving to, the better—especially when problems arise.
Another essential point is to spend time on the ground. Get to know the culture, language, business customs and important people; and make sure they know you. Introduce yourself at the American Embassy. Join a local industry organization or social club where you can build a network. Develop a genuine interest in the country, its history, its aspirations and its problems. A business is never a purely economic endeavor. You will do better if you are seen as more than a business person looking to make a profit.
Most importantly, be patient, respectful of local customs, and open to new experiences. I can attest from personal experience being responsible for a company with operations in Central America: it is a challenging but highly rewarding experience. It will stretch your understanding of business practices and force you to challenge your thinking. It will open your eyes to opportunities that don’t exist at home. While you may be closing a door on your company’s history, you are forging a new path and learning curve—for the company and yourself.
About the Author
Jennifer brings to Newport over 10 years of C-level experience. She has demonstrated an ability to take strategy from conception to execution, achieving excellent results for family businesses and private equity-owned companies. Contact or learn more about Jennifer here.
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