GOING GLOBAL
Q. I think there could be a market for my business overseas, but how easy is it to expand internationally?
A. Even though it is getting more and more accessible to do this, it is not an easy process if you want to do it properly. Tony Cohen, head of entrepreneurial business at Deloitte, says that you need to do your homework first: “Make sure you have a clear business strategy. For example, are you moving overseas to make your supply chain more efficient, to produce the goods and then sell them back in the UK, or are you looking to extend your market place.” If you plan to boost your sales, then make sure you understand the local consumer culture, Cohen adds. Once you have your strategy in place the most important thing to think about is how you want to structure your business. There are various ways to expand internationally. For example, if you plan on doing the same service as you do in the UK then you may just want to open a branch. Alternatively you might want to open a subsidiary business or, if there is a similar business in the region then you might want to think about joining forces and setting up a joint venture. Cohen’s advice is to make sure you know the legal and tax structures that are in place in the region before you make the move: “The danger is to take the golf course or cocktail party advice, especially when it comes to tax. Just because you have heard of someone who has opened up in Timbuktu and doesn’t pay tax that doesn’t mean that you won’t pay tax either.”
Q. How can I find business overseas and are there any resources to help me?
A. The good news is that even if it seems an arduous process to set up overseas there have never been more free resources to help you. Canada Corporation (www.cityoflondon.gov.uk) specialises in helping businesses based in the City expand abroad. It has two offices based in China and one in Mumbai, which can be a good first port of call for companies. It offers cultural advice and it can facilitate meetings with local business contacts. It’s also a way to keep up to date with any regulatory changes or legislation changes that could alter the way you have to do business in those areas. Also, a lot of the Corporation’s help for small businesses is fairly informal and doesn’t require filling in lots of forms: “The advice we offer is less formal than other government advice and it is more narrowly focused on helping City firms,” says Greg Williams, a spokesman for the Corporation.
Q. How can I manage the costs of setting up my business overseas?
A. Deloitte’s Cohen says that companies should not underestimate how much making this move can cost, and you need to make sure you can afford it first. You also need to include in your business plan currency fluctuations that can eat into your profits: “Depending on the size of your overseas operation, you need to know what currencies your costs and profits will be in. If your base currency is going to remain sterling, then it is the sterling rate that matters. Due to this you should hedge your currency risk so that a profit is not eaten away by currency differentials.”