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INTERNATIONAL EXPANSION 101KNOW BEFORE YOU GO
In today’s global market expanding overseas is no longer a luxury ...
... it’s a necessity.
American businesses are aggressively pursuing international expansion to increase revenues
and win new customers.
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However, there are challenges that come with international expansion.
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The VP of Sales walks into the Head of HR’s office.She has two signed offer letters to hire new sales people in France (or Zimbabwe or anywhere).
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The company doesn’t have an office in France (or Zimbabwe).
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Sound familiar?
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You need to take a lot of things into consideration in these situations.Entity options, contractors, employees, employment contracts, local requirements, expat management ...
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... and as each country is different, there’s never a one size fits all answer.Getting it wrong can be costly for your business
For example, a US-based company hired an “independent contractor” in Columbia.
After five years, the company needed to terminate her due to economic reasons.
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But the worker went to a labor court and claimed that she was, in fact, an employee.
The court ruled in her favor.
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The result?
The company had to pay accrued vacation time, a 13th month paycheck and other compensation to the employee, as well as being on the hook for
various back taxes to the government.
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The result?The company had to pay out accrued vacation
time, 13th month paycheck etc. to the employee as well as being on the hook for various back taxes
to the government.
Read this for more information on contractor classification.
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If you want a textbook international expansion, follow these 10 best practices ...
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1DEFINE YOUR MOTIVES
AND DO YOUR HOMEWORK
Is international expansion right for your business?
What are your goals in setting up international operations?
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2START SMALL AND DON’T OVEREXTEND YOURSELF
Start with 1-2 key goals in a small slice of a foreign market.
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3CREATE A DETAILED
PLAN FOR SETUPDetermine early on how you will structure
your company overseas.
Understand permanent establishment risk.
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4RESIST THE URGE TO STANDARDIZE
Entity setup will vary by country.
Depending on your activities, a branch entity may make sense in some markets, whereas a
subsidiary may make sense in others.
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5KNOW THAT ALMOST EVERYTHING WILL BE
DIFFERENTHiring employees, issuing stock options, opening a bank
account, filing taxes, setting up insurance and other benefits for new staff – every country has completely
different requirements for each.
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6DON’T UNDERESTIMATE THE EFFECT OF CULTURE
Learn and respond appropriately to different customs in a business setting.
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7PREPARE REALISTIC BUDGETS
AND CONTINGENCY PLANSSpending can start out restrained, but mushroom in the future.
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8RECOGNIZE THAT YOU’LL
NEED INITIAL AND ONGOING SUPPORT
HQ finance and HR need to be involved. Create transparency among HQ functions and local management.
Outsource functions where possible.
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9BE PATIENT
Rapid growth can mean rapid failure; planning can facilitate success.
A best practice is to double the amount of time you anticipate you’ll need to become operational.
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10GET HELP
Complying with constantly changing target-country regulations is complicated and time-consuming. Get
expert help so you can focus on what’s important — your company.
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Following the 10 expansion best practices will help ensure
you have smooth sailing as you expand your operations overseas.
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For more expert advice, listen to our webinar on expanding
internationally.
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GLOBAL LOCATION FRONTIERSWHERE TO GO FOR YOUR BUSINESS TO GROW
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