Moving up a gear to enter the international market can be of huge benefit to your business, yet can also spell disaster if done incorrectly.
To thrive overseas, you’ll need to understand the challenges involved and embrace the changes such a move can bring to your company’s door.
To help ensure you’re ready to take the plunge, international money specialists, Clear Currency, outline some of the risks involved and steps you can take to overcome them.
1. A successful UK business doesn't always guarantee prosperity overseas
No matter how well your business runs in the UK, becoming successful in a foreign country requires adaptation and innovation. Don’t make the mistake of believing you can do everything the same way as you did before.
To bolster your chances of success, it's worthwhile researching the trends and cultures of the country you’re looking to expand into. Consider learning their language and studying their religions, values and routines. It could even be helpful to live in the country temporarily or visit it regularly beforehand, to gain valuable insight and help you make more effective business decisions.
Contemplate partnering with an existing local business or finding an investor that can provide guidance and make your transition smoother.
2. Don’t underestimate the importance of currency risk
An international expansion will require you to make cross-border payments which then exposes you to fluctuating exchange rates. Even the slightest change in a currency's value can have a significant impact on your bottom line. Therefore, it's essential to consider how you are going to manage your international payments.
Failure to plan could see the flow of money between your offices falter and impede your ability to cover overheads. An FX provider can help you mitigate such risks and provide access to favourable exchange rates, helping you to save money and time.
3. Be aware of political and global events that may affect profitability
Major political and economic occurrences can also influence exchange rates. Take for example, Brexit, Covid-19, inflation rises and the war in Ukraine. Each of these events has affected the value of the British pound over the last few years. Being aware of what's going on in the world can help you make smarter investment decisions and avoid profit losses.
No two countries are the same economically, which is why it’s vital to research the market of the country you’re considering expanding into. Of course, no one can predict how much currency values may shift, or what could be around the corner. However, Clear Currency’s team of experts can help you develop an effectual FX and hedging strategy to help you mitigate financial risk.
4. Make sure an international workplace is a viable option
Having an overseas office can help your business get a foothold in your chosen country before further expansion. Depending on the length and size of your project, you may decide to purchase a commercial property outright, buy land, or rent a building.
No matter which method best suits your goal, it's vital to work with a local property specialist to help you navigate the process smoothly. Some countries limit property rights for foreigners, which is why it's important to do your research before committing to a sale.
Such purchases can take several months or even years to complete. Factoring in fluctuating rates and price increases is imperative. Clear Currency can help SMEs utilise FX tools such as forward contracts, to fix a favourable exchange rate today for a date in the future.
5. Don’t duplicate your existing business model
It’s never a good idea to take your current business infrastructure and replicate it exactly when moving into an international market. This is because different business laws, tax regimes, associated costs and restrictions will apply.
You’ll need to find out about local shareholder percentages, customs for paying salaries, social security requirements, and any other applicable regulations. Consulting a tax expert and legal specialist can help you avoid any issues.
It's also important to learn about local supply chains, manufacturing procedures and operating structures. The pandemic and other recent geopolitical events have caused shortages, delays and increased shipping costs across the globe.
If you're considering purchasing machinery or equipment overseas, it's worth working with a currency specialist. They can help you implement a cost-effective FX strategy and guide you on the quickest and easiest ways to make and receive international payments.
6. Learn how to manage an international workforce
One of the first decisions you’ll need to make when expanding overseas is whether to outsource staff internationally, and if so, whether to hire permanent employees or contractors. However you choose to classify your employees, you'll need to know how to manage a global payroll. All employees must be paid correctly and on time to ensure job satisfaction and retention, which means paying them in their local currency.
Clear Currency offers a convenient and cost-efficient international payment solution, allowing you to pay your employees promptly, no matter where they are based.
7. Choose the best FX specialist service provider
If you plan on doing business worldwide, it’s a good idea to compare currency providers to help you reduce expenditure and ease your transition overseas.
Selecting an FCA regulated provider like Clear Currency can give you peace of mind. You should also seek a specialist that is efficient, provides competitive exchange rates, and won’t charge additional transaction fees.
Clear Currency has a 5* rating on Trustpilot. Their currency specialists provide a one-to-one, personalised service and can answer any questions you have about making an international transaction. You can also use their online payment platform to access live exchange rates and make secure, same-day transfers.
Working with the right specialists can make it far easier to overcome the challenges expanding your business abroad presents and increases your chances of success.
To sign up for a free account, visit clearcurrency.co.uk.
Call +44 (0)20 7151 4871 or email edp@clearcurrency.co.uk to find out how they can help you.
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