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How to make a success of your business abroad
Moving your business to new territories
Table of Contents
Last update: December 7, 2020
Moving your business abroad, to new territories, possibly across a continent gives you a much bigger market to play with. Of course the financial reasons are apparent, taking this decision usually only comes as a result of existing sales or a strong presence. But selling your products, services, or business abroad is one thing, setting up and having boots on the ground is entirely another. There’s a lot to consider beyond business, families, languages, partnerships, sales, and marketing.
Here is some of our advice based on the clients we’ve helped.
Localise your business practices to your target market
Don’t expect your existing business model to remain the same. Be open to change and absolutely avoid the thinking that what works at home will work for your business abroad. Embracing change as the business climate is better understood in the target market can lead to better profits at home. There are challenges faced, such as access to mobile technology, that will mean new ideas will have to be discussed.
But external, client facing localization is just as important. To support your employees, they will need every tool at their disposal if they are going to make a success of an international project. This can be from the social networks used in the target country, (WeChat in China, for example) to the currency symbols used on your pricing pages.
Grow your business abroad with a local admin or partnership
Partners in local countries bring brand awareness to your business, it’s that simple. Make list of potential partners and talk to them about their business and what they can do to help. You will overcome a list of issues if you put your trust in a reliable partner
- Translation costs will be mitigated
- Sales letters and direct marketing actions will be closer to your targets
- Sourcing talent in the area will be easier
- You won’t have to worry so much about language issues
The biggest barrier for a business to overcome is communication. Cultural differences and consumer behaviour make frustrating markets even for established businesses. To get your foot in the door, language and communication is the pillar of it all.
Think you’ll beat out the incumbents on service quality? If you sell on price, what’s the point of the project? Without the ability to communicate with potential partners and clients, without language you will not earn trust. Start thinking locally.
Don’t rely on inbound, get someone on the job
Many people quickly jump to technology, for obvious reasons due to its immediate penetration into markets where you may not eve have a local presence. But the key technology that will define the success of your project will probably be the humble telephone.
It’s easy to look at global megaliths such as AirBnB and believe that the internet will bring in the profits to your business model. You remember how your business started, so don’t expect anything different abroad. Get the best salesperson in your company to vet and hire a local rep and get them on the phone.
Larger businesses acquire there smaller counterparts only for the door-to-door sales that those companies have sweated through to grow their businesses in the first place. Having a hunter, that dedicated salesperson to chase down leads, create new contacts, and hit the phones to bring in early adopters is essential, forget inbound, don’t rely on web forms, reach out.
A barrier isn’t always what it seems
The term barrier to entry is widely used on this topic. It plays on the challenges; incumbent businesses, culture, competition, behaviour. But there is a sliding scale here. Lower barriers to entry imply greater challenges and greater opportunity. If there is no barrier to entry, you could assume there is a reason. High barriers to entry imply the market is alive, business are trading, and the competition is high, just like in your domestic markets, it shows that cash is flowing. Look at the competition, if it’s not there, think long before you decide to enter the market.
Global and local go hand in hand
Groupon, though an international powerhouse, relies heavily on local business. This means presence is required to make connections in local markets, and higher investment and setup costs. Behind the snazzy apps and fast webpages, there is a huge underbelly of more traditional operations that bring value to local customers. We’re reiterating the need for local presence but this is fundamental to businesses abroad.
Tax compliance
BEPS (profit shifting) and GAAP (generally accepted accounting principles) are under scrutiny. As tax authorities slowly turn the screw on the tax structures of multinational businesses, startups are forced to follow suit. For all of the right reasons, having a local tax professional to handle duties in each location of your international operations is insurance against hefty fines.
If there’s one takeaway from this article. It’s that you shouldn’t rely heavily on your existing team to make your business abroad successful. It puts pressure on business at home, and it’s less likely to make an impact on your target destination.
A 5 step plan to opening your business abroad
Success at home means the only place your business can go to expand is abroad. We have helped many companies relocate to Spain, and in our experience, these are the 5 steps a company should take to make a success of their business abroad.
Step 1. Choose the right destination
This involves a huge amount of research. If you have already decided on a place. Why? Have a look at other markets and see if your investment would be better spent elsewhere. As Emanuel Lasker said: “If you’ve found the perfect move, look for a better one”.
There are a few things which off-hand should, and must be considered.
Talent
Your business lives and dies by its employees. Having an on-shore talent in your target destination will give you options in recruiting in future. In most European countries you will find an English speaking workforce that is skilled. Further afield, it might be difficult to source sufficient talent for your projects.
Stability
Politics can have both a positive and negative effect on business. Have a good look at the local news in your target territory. Recent and upcoming elections, government leaning and public opinion, a great place to look at economic health is the Economist’s Big Mac index (the perfect indicator of Purchasing Power Parity). Also find out how the government is performing, what their attitude is to offshore companies, and what their global reputation is. If there are big changes coming in a country, you should know about them.
Infrastructure
Both technological and logistical, the infrastructure of your target destination should be researched. You may wish to open up a call center in an offshore location, so be sure that there is sufficient infrastructure for your product to be viable and that there is a stable internet. For salespeople and production teams, transport and road networks are fundamental.
Step 2. Research Business Practices
Take a look at the ease of doing business index before opening your business abroad. It’s a great reference that will give you at-a-glance information on just how costly (in both time and money) your international project will be.
Business practice in foreign markets has a lot to do with social and cultural interaction, which comes down to the fine nuances of punctuality, gift-giving, and negotiating styles. Having at least one person, an intern from the area will help with conducting meetings on a local level. Part of the sales strategy should really include how to conduct interviews and how to deal and negotiate in local markets.
Weight the cost of establishing a presence and a team in a local market against the cost of acquisition. A three-year cost and revenue projection will allow you to directly compare against the immediate tickets you’ll make with an acquisition. This is the key trade-off that most businesses looking to expand abroad will face. Do you want the profit for yourself or are you willing to put your faith in a partner. There are no fixed rules on this as every situation depends only on the situation of the market and each individual business.
Step 3. Get legal advice
At Globexs we’ve helped businesses set up in Spain and we know the lay of the land, how to process administration quickly and move things along. Depending on your country of choice, you need to have expertise in place to manage local business regulation. Don’t try and wing it alone, be very understanding of how things work locally.
The first thing to do when you launch in your chosen territory is to register your business under it’s given economic practice. This could be an offshoot of your existing business or something new entirely. Again, the ease of doing business index measures the complexity of the legal systems for businesses, and of course, there is a spectrum of loopholes and legal considerations which differ in every country.
No matter how good, proactive, knowledgeable your legal team, they won’t be able to navigate the thickets of regulation in some overseas countries, we’ve seen it before. There are elevated costs when payments are made internationally, and there are also tax considerations. Having local legal expertise is essential if your business abroad is going to succeed.
Step 4. Network network network
Strategic advice from your local government agencies such as the Chamber of Commerce will give you key insights into doing business abroad. Their consulates are integrated into most countries and their services will provide key information on your destination from branding, to barriers, to regulation.
On a more practical note, building a list of contacts to start you off before the wheels even touch the runway is easier now than it’s ever been. Use social media strategies and set aside the budget for advertising. You can be hyper-precise about the customer you want to target. So start building your contacts before you or your team land. You may even run social media campaigns to get your team followed and in touch with key people from the country or the area. From here, the quickest thing you can do is to get in touch, prepare meetings and hit the ground running. Networking is key when opening your business abroad.
Step 5. Get your HR team onboard, or else.
If there’s one group that is going to make it or break it, it’s HR. They will decide budget, accommodation, working hours, cover, legal expenditure and most likely the marketing budget. Your HR Director should be 100% a part of the operation.
Your international sales team need every weapon available to make a new business abroad work. Arm them with everything you’ve got, meticulously planned and budgeted for. Make your HR team aware of what is going on and what they can do to help. This can be from providing assistance to employees families, helping out with the recruitment strategy for the overseas business, all the way through to implementing re-integration programs for employees returning from a shift overseas.
Opening a company abroad with Globexs
Globexs is a service company for expats and international entrepreneurs. We provide the legal framework and the right infrastructure for opening your business abroad. We help you to do business successfully abroad. Our specialization is Spain. Our head office even been located in Valencia also offer relocation services in Belgium, the Netherlands and France.
Your international sales team need every weapon available to make a new business abroad work. Arm them with everything you’ve got, meticulously planned and budgeted for. Make your HR team aware of what is going on and what they can do to help. This can be from providing assistance to employees families, helping out with the recruitment strategy for the overseas business, all the way through to implementing re-integration programs for employees returning from a shift overseas.
Globexs rentals
Globexs offers a wide range of flexible temporary expat rentals in all price ranges. Contact us for more information.