Whether you’re looking to launch a global business, or perhaps expand your domestic business overseas, there’s certainly a lot to consider.
If you Google ‘how to expand my business overseas’, so much information comes up it can be overwhelming. Given our position as a business that operates globally – that also helps hundreds of other business operate globally, we thought it might be useful to put together the three most important considerations you need to make to ensure you succeed overseas.
Of course, there’s a number of other challenges you will face along the way, but below we’ve determined our three most important factors based on stories from our clients and our own experiences.
Firstly, it’s important that you understand the culture of the country you’re looking to expand into.
Secondly, understanding the local regulations and compliance issues is vital – doing this properly can save you thousands down the line! It can also cost you thousands if you aren’t across this…
And thirdly, we’ll discuss why partnering with the right money transfer provider is a major factor in your financial success.
This may seem obvious, but so often people expand into countries they know nothing about. For sure, the numbers you ran might look lucrative, but that doesn’t mean your product or service will succeed in a different culture.
A great example of this is Walmart and it’s expansion into Germany. After overcoming a number of un-accounted for laws and regulations that stifled their budget before they even launched, the company put the final nail in its own coffin when they failed to understand the cultural nuances of Germany.
At Walmart in America, people gladly welcome you into the store and also pack your bags for you. This acts as a point of difference for the chain, and it’s was viewed as an important part of their success when expanding.
However, the German’s found both interactions weird, as it’s not something that’s part of their culture. Each time someone entered a Walmart store in Germany, they were instantly put off by the chain and often they didn’t come back.
This might seem like an extreme example, but if a brand the size of Walmart failed to take into account the cultural nuances of their German expansion, then it’s possible for many smaller businesses as well.
What we can learn from this story is the importance of understanding the culture of the country you’re expanding into. It’s also important that Walmart’s story doesn’t put you off – rather, it should motivate you to simply learn more about your customer.
Having an in-depth knowledge of your customer is potentially your biggest advantage.
Once we understand the culture of the country that we’re expanding into, we need to be sharp with our understanding of the relevant laws, regulations and compliance issues that we must abide by.
Every country has its own set of regulations and failing to understand them can be catastrophic.
You might not even be aware that you’re breaking a law overseas, but not knowing isn’t good enough – you will still be penalised.
So, what can be done to solve this problem? It’s important because both your domestic business and your global business are on the line.
First and foremost, seeking local expertise on tax and compliance in the country you’re looking to expand into is vital. In some cases, your local accountant might be able to guide you through your overseas expansion, but often, having local knowledge on your side pays.
From HR issues, to tax and importing costs, a good accountant that’s based in the country of your expansion will go along way to making sure you sleep well every night.
On top of understanding the tax and compliance issues your business will face abroad, a local accountant that’s based overseas will guide you through setting up the right bank accounts, and show you how to minimise the tax you will need to pay.
We discuss what’s involved with paying an overseas contractor, and the important tax implications you need to know in our blog post “Everything you need to know about making payments to overseas contractors”.
Lastly, partnering with the right money transfer provider is possibly the most important step you can take to ensure your success overseas.
Now, this part may seem bias given the fact that we are a dedicated money transfer provider. However, we’re not here to convince you to use our service just yet, we’re here to show you why using any money transfer provider can have a massive impact on your bottom line.
So often businesses use their banks to handle all their money transfers. It could be to pay international invoices or to receive money from the country their operating in.
Businesses use their banks because it’s an easy option. After all, it’s right there in their app, or online banking profile. But what they miss is how costly it really is to send, or receive money by using their bank.
Unbeknown to many business owners that operate globally, the banks often charge a huge transfer fee every time they send or receive money, and then charge a 3 – 5 percent premium on the live market exchange rate.
These expensive fees and conversion rates can seriously impact a businesses bottom line, especially if they regularly transfer money overseas, or transfer large sums at a time. These fees eat into profits in a big way.
For this reason, most businesses opt to use a dedicated money transfer provider. Doing so allows them to minimise the fees they pay on the transfers and secure a better exchange rate.
The result is more money in the bank.
And if you find the right money transfer partner like BFX, you’ll have a team of real people helping you to securely transfer your money with ease, at the cheapest rates on the market.
Expanding globally is lucrative, but it brings its challenges
There are three vital considerations you must make
Understanding the culture of the country you’re expanding into
Knowing the tax and compliance regulations of the country your expanding into
Finding the right money transfer partner
Throughout this article, we’ve detailed what it takes to expand your business into an overseas market. For sure, it’s a courageous decision, and potentially very lucrative, but in the end, knowledge is what will determine your success.
Firstly, we looked at the story of Walmart, and how they failed to understand the German culture when they expanded beyond America. With the right research and a true understanding of the people you’re looking reach abroad, you’ll can further guarantee the success of your business, and potentially minimise an imminent failure.
Secondly, we looked into the importance of knowing the tax and compliance regulations of the country you’re expanding into. To minimise your risk, having a finance professional that’s based in the country of your expansion is a smart decision that could save you thousands down the track.
Lastly, we identified that having a dedicated money transfer partner on your side is important in maximising your profits. Using your bank to send and receive money may seem easy, but it will be costly.
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