How Much Does It Cost to Start an Offshore Business?

Every few weeks, prospective clients tell me that they have contemplated starting their own Virtual Assistant company in the Philippines.

 

Some have even travelled to the Philippines, Sri Lanka and Vietnam to see if they can make their plans a reality.

So, to help you all budding entrepreneurs that want to start your own business as a virtual assistant provider, this blog is for you!

 

 

Does it really cost a fortune to build your own offshoring business?

 

To get VA Platinum started, it cost AUD $90,000 of my own cash over a 10 month period.  Then we turned cash flow positive, and so far in the last 4 months, I have returned AUD $35,000 back to myself!

I estimate that it will take 8 more months before I get the full AUD $90,000. After that, I’ll be able to take a salary from the business. Exciting!

So, ask yourself the question, are you willing to wait 22 months before being able to take a salary from the business?

We broke even from a cash flow point of view at 40 staff. Now, we are 58 strong and continue to be cash-flow positive.

If you want to know the transparent figures of how much a virtual assistant company makes, check out my blog article here: How Much Does A Virtual Assistant Company Make.

If my previous blogs haven’t hit you yet, then let me point this out: I overshare!

What can I say? I’m a guy with a big heart and I want you to succeed.

Back to the main dish, I’m making this article to show the initial investments of an offshore business.

I’ll give you enough pointers to know where to put your heart and the cash in your pocket.

Ready? Let’s start!

 

 

Office Space

 

You must be physically available at the offshore site. Fortunately, I have a great business partner who’s there full-time to run the operations.

After scouting office spaces in the CBD of Cebu, I learned about the different lease arrangements with the landlords.

The common lease agreement is that you pay AUD $206 -$340 per seat, per month. Note that a decent lease agreement must be inclusive of the following:

–    Workstations (not inclusive of the computer sets)

–    High-speed internet connection (175mbps or better)

–    Electricity charge

–    24/7 use of the office space

–    24/7 building security system (security officers, CCTV)

–    Access to any available function rooms (i.e. conference room, common pantry, etc.)

–    A custodian to clean the floor and restroom

–    An on-call internet technician

–    Any other extras (i.e. biometric-enabled doors, parking space, etc.)

There’s a security bond that’s worth 1-2 months’ rent for the maximum capacity of the room. Our new office has a seating capacity of 65, therefore our current security bond at 2 months rent would be AUD$27,950.

 

 

Workstation Equipment

 

Office lease agreements do not usually include provisions for computers. You’ll have to purchase these yourself.

I spend about AUD $760 for a complete workstation. That includes:

–    Dual monitor desktop PC

–    CPU

–    Noise-canceling headset

–    Web camera

 

Software

 

Offshore business relies on sophisticated technology.

There’s quite a lot of useful, practical, and low-cost software worth mentioning, but I’ll just mention those that I deem essential.

 

 

Cloud storage such as Dropbox, Google Drive, or One Drive

 

You would need a cloud-based software to store all your important data. It has to be secure, easy to use, and it also has to allow enough space. I saw all of these in Dropbox and this is the software we’re using.

I’m paying a yearly plan of AUD$1,050, and that’s for 3 terabytes (TB). Depending on the size of your team, you can get bigger storage.

 

Skype & 3cx

 

We are using both Skype and 3cx for internal and external communication. Both VOIP services are easy to install, don’t need much space, and are user-friendly.

We use the free version of Skype for internal use.

3cx bills at a call per minute.  For mobile numbers, they charge AUD $0.19 and for toll-free numbers, the average charge per minute is AUD $0.12.

 

Time Doctor

 

This is the software we use to monitor staff productivity. We pay AUD$8,734 per year for 51 staff. Time Doctor is easy to use and install.

 

 

Business Registration Fees

 

This has to be on the list.  Filipino laws are favourable to its working population. To avoid issues with the Department of Labor and Employment (DOLE), make sure your business is properly registered.

Processing all the paperwork is complicated and a wee bit stressful. Doing it all on your own might be good for cutting costs, but it would eat your valuable time and energy.

The good news is, you can hire a local law firm to get this processed on your behalf.  Plus, you also get legal consultation.

A third-party law firm charges approximately AUD $750 – $1300. Paying this amount saves your time and effort, and that’s worth the price!

 

 

Management Structure

 

Someone’s got to run the business, even when there are no clients, yet. I’ve shouldered the cost of my management’s salary until we got to the stage where the overhead costs can be charged to the clients.

In the first few months after opening, I hired an operations manager, an office manager, and a training manager/concierge to help me manage the business. I can’t get into detail about the salary structure but, suffice it to say, this is a huge block from your initial capital.

 

Staff’s Salary

 

How much should you pay your Filipino staff?

On average, a virtual staff member is paid AUD $490 per month. If you want to hire superstars, then it’s up to you to devise your own version of an employee compensation and benefits package.

I’ve worked out my own formula and decided to give a regular rate of AUD$668/month. How did I come up with this number? I wrote a definitive guide to paying Filipino virtual assistants. You’re welcome!

 

 

Miscellaneous

 

I’m listing a few important items to think about, as they are part of where my initial investments went.

  • Office supplies (filing cabinets, printer, etc.)
  • Lockers for the staff
  • Appliances (fridge, microwave oven, coffee maker, etc.)
  • Office furniture
  • Additional CCTV
  • Drinking water
  • Daily breakfast meal for staff
  • Office phone plan
  • Medicine supply

 

 

There are other things to consider when you start an offshore business. What I’ve mentioned above are just standard items.  I have some secret sauce that is unique to VA Platinum that I can’t share in this blog post, so let me just say, that the unique items you come up with to run your business may be the biggest strength of your company.

I’m happy to have shared what worked for me. I hope that I’ve inspired you to get your own business started.

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