Expansion is the end goal of most businesses, and many business owners see international expansion as the holy grail. They assume that if they can break into markets overseas, their business will continue to thrive. In many cases, that’s true but international expansion is no easy feat and many businesses fail when they attempt it. These failures are usually a result of mistakes on the financial side of things.
Managing business finances is tough at the best of times but once you introduce different laws and regulations, communication hurdles, and volatile international markets, things get really difficult. However, as long as you are well prepared before you launch your campaign for expansion, you stand a much better chance of succeeding. These are some of the most important financial considerations you need to make when taking your business overseas.
Understand The Legislation
Every country has its own rules about business taxes, minimum wages, pension funds and all sorts of other financial issues that affect businesses. Trying to make sense of all of this legislation can be difficult but it’s important that you do. If you make mistakes and accidentally end up on the wrong side of the law, you are likely to end up on the receiving end of some big fines. Certain countries have very strict rules about foreign businesses trading and any infractions could lead to your business being ejected from the country. So, spend your time doing some research first and if there are things that you don’t understand, consult a lawyer and get some advice before you move forward.
Consider Additional Operational Costs
There are a lot of additional operational costs involved with overseas expansion. It’s not the same as expanding your business at home because you have to pay for all of the extra costs associated with operating overseas. For example, if you want to send money to Japan from Australia, there will be charges associated with that. It’s important that you think about how you will move funds around and account for the exchange rates etc.
Managing the language barrier can also incur added costs. You will need to pay to have your website translated, for example. Interpreters will be required for meetings with suppliers. If you are operating over multiple countries, you will need to build a strong virtual team, and there are added costs associated with that too.
It’s these small costs that people tend to forget, which is why they end up running into financial issues after they expand the business.
Plan For A Long Term Investment
People make the mistake of seeing international expansion as a way to make some quick money, but that isn’t what it is at all. It’s a long term investment and you will be putting money into your new venture for a while before it starts to become profitable. If you don’t plan for this expense to be a long term one, you will soon find yourself in financial trouble.
Unless you keep these financial rules in mind when expanding overseas, you are likely to run into some big problems.
If there are things that you don’t understand, consult a lawyer and get some advice before you move forward. You can find great lawyers available in the United Kingdom available at LegalVision UK.
thanks to the photographer Gerd Altmann at Pixabay
