Expand your business overseas quickly and efficiently: 5 Tips
It’s easier than ever today for businesses to expand into international markets. A company with a great product is eager to make it available overseas. Still, there are important financial, tax, legal and organizational requirements to address when doing business overseas—and these requirements differ from country to country. As a growing company, you want to build revenue and capture market share, not spend time dealing with bureaucracy. For the past 15 years, we at Global Upside have helped hundreds of companies grow at home and successfully step into foreign markets.
Here are five tips to help make sure international expansion is seamless and compliant:
1. Build a strong foundation from the start. Entrepreneurs start business because they have developed an exciting new product or service. When the business begins to grow, the pace picks up and suddenly there are all sorts of regulations to deal with—even more so when moving into international markets. Innovators sometimes don’t like to be distracted with regulations, and the issues are sometimes neglected. Unfortunately, the impact of noncompliance may, silently, grow until it becomes a crisis. The need to fix one or several years of compliance issues can delay or even prevent an important event like a fundraising round, partnership, or new investment. Installing a strong financial and human resource infrastructure from the beginning- one that can scale as the business grows- is a strategic asset that allows you to grow smoothly and maximize opportunities.
2. Find a strong international banking partner. All banks are not equal when it comes to global capabilities and services. You may have a local bank that has helped your company through early growth, but operating in multiple countries involves a lot of activity within and across borders, often at hours when you prefer to be sleeping. Some of the largest U.S. banks may not be big enough or experienced enough in certain overseas markets to deliver all the services you need there in a timely fashion. It’s also important to remember that the US has certain filing requirements for overseas bank accounts, so your right hand always needs to know what your left is doing.
3. Know your taxes. You will need to be aware of what national and local taxes apply to your business, from both a filing and a payment perspective. Registering local operations in overseas markets may lead to local corporate income tax requirements.
4. Get local support. Don’t forget to investigate all the opportunities for local support when opening a facility or an operation in a foreign market. In many countries, there are national and local government-supported economic development agencies, offering aid and support, which can range from substantial financial support for a manufacturing facility, to small items like a pair of tickets to the local opera. Often, different agencies within a single country will compete with each other to persuade a company to locate in their territory, just like when these agencies persuade you to locate in their country. This is not only a financial benefit; officials at these agencies can bring a lot of local intelligence that can help you build your business, staff smarter, and find valuable local contacts.
5. Understand local employment practices. Employment terms are different in every country. For example, the U.S. allows “at-will” employment, and companies formalize job offers with an “offer letter”. Most countries require “employment contracts” that spell out the job responsibilities and other terms. When staffing, you’ll need to be competitive with local companies on benefits, vacations, and other criteria. You may take pride the corporate culture you’ve built at home, but you’ll likely find that the one you create overseas will vary somewhat, and take on some characteristics local to each region.
Making the effort, up front, to understand the challenges and find the best solutions for international expansion will save your company precious time and money later. Once you’ve developed a strategy and process for entering a foreign market, you will find that there may be economies you can reap from centralizing certain functions in one location. The old saying, “Think Global, Act Local” still applies—it just needs to be implemented intelligently and with foresight.