By Guy Rigby, Head of Entrepreneurial Services, Smith & Williamson
An international opportunity presents both benefits and challenges. Despite the potential, it is not a one-way street. It can be challenging to recruit, build trust and manage the cultural differences in dispersed and diversified teams, whether those teams work directly for your business or through an outsourcer or third party supplier. Whilst the benefits may seem hugely attractive, it is vital to fully evaluate your reasons for international expansion and only invest at the right time.
Here are some tips on how to take your business global:
• Plan meticulously. Identify your objectives and the specific tasks and resources required to achieve them.
• Decide who will manage your offshore operations. Define timescales and key deliverables.
• Consider operational requirements, personnel recruitment, training and retention.
• Establish IT and infrastructure needs and set KPIs to measure performance and operational success.
• Leave no planning stone unturned — the devil is in the detail no matter where in the world you operate.
• Get buy-in from your existing team. Clearly define what’s in it for everyone, what the precise benefits are and why change is required to positively impact the business in the future.
• Get everyone involved in the planning process and deal with any fears or uncertainties. Don’t let your staff think they are under threat from the new overseas operations.
• Choose the right location. Base your decision on the availability of the specific skills you need, the cost of labour, the travelling costs and accessibility, the time zone and the cultural compatibility.
• Assess the financial impact. It’s not only the benefit of reducing costs that should be considered, but the revenue-generating benefit of increasing your efficiency and productivity.
• Look at how your new location will affect your competitive advantage and bottom line.
• Ask your accountants and tax advisors about the tax implications of setting your business up overseas.
• Consider ownership structures and whether you will trade through a representative office, a branch or a separate company.
• Take legal advice to understand the landscape and comply with local laws and regulations.
• Think long term. Whilst upfront expenditure on familiarisation, infrastructure implementation and associated set-up costs may be high, this may ultimately determine the success of the venture. Cost savings and benefits may be greater later on if effective planning and a sensible level of investment has taken place at the outset.
• Don’t underestimate your costs. Factor in some headroom and allow for the costs of communication, training and travelling to meet vendors or potential team members.
• Make the most of technology and telephony to keep costs low. Call employees across the world using least-cost routing. Use Skype to talk, host video conferences and integrate databases into one accessible network.
• Hire incrementally. Hire only your core team members during a pilot or transitional period. Hire the rest of the team once the initial knowledge transfer has been completed.
• Monitor your financial position rigorously and constantly keep your risks under review. Trading in overseas locations requires stamina and constant awareness, particularly if they are in emerging or developing economies.
• Build one team. Factor in the cost of bringing your core overseas team to your head office to absorb the culture, get to know your local team and feel included.
For more information on the tips in this article please contact Guy Rigby, Head of Entrepreneurial Services, Smith & Williamson.
020 7131 8213