In the connected age, the importance of ‘thinking internationally’ in business is only understated until it is understood.
This was the primary reflection I noted a couple of weeks ago having joined colleagues from the HLB International network, London-based firm Menzies LLP, to speak at a networking engagement they hosted titled ‘Trading across new Borders.’
While we are all fully aware of the question marks that remain over trading arrangements between the UK and the EU, and how the coming days and months will shape the context of those relationships, it is clear that common goals and a shared emphasis on collaboration remain the focus for businesses across all markets, not just those in Europe. We are all exploring the same opportunities and navigating the same challenges.
Here are some of the common grounds shared by businesses from different markets, when it comes to getting your house in order for expansion across new borders.
No two local markets are the same when it comes to tax. The differences can be mapped out through in-depth in-country analysis against the proposed business model in advance of setting up in a new territory. For example, while the United States ranks highly as a place to do business, the federal tax rates are a flat 21% and it is only when you begin to delve into different state and city taxes - each of which have their own nexus laws - that you can have a clear picture of how these obligations can influence your expansion plans.
Similarly, corporation tax in Ireland (12.5%) is relatively low when compared to the European average of 20% but qualification for the rate depends on a number of circumstances around how you conduct business in Ireland, as a base, and overseas.
It’s important – and sometimes overlooked - to find the right banking solution when approaching a new market. This might involve looking at a bank with international reach to give extended visibility across other markets. Similarly, the company’s ‘home’ bank may be able to provide international support in certain territories. It is worth exploring the options that best suit your strategy and support your existing business framework.
It goes without saying that any company looking at trading across new borders should have an in-depth understanding of competition within the market, but that doesn’t solely apply to trading. Recruitment is becoming more and more challenging, both locally and internationally, with increased competition between International markets and businesses within each sector all moving to attract top talent by offering increased employee incentives, competitive pay and bonuses.
It’s crucially important for businesses to understand the market valuation for their sector, along with the variable policies and legislation for employers within each market that could impact on their global recruitment strategy.
The obstacles associated with IP can often be deemed as something of a final hurdle, in that they commonly affect outputs such as branding. Having a trade registration or patent in one jurisdiction doesn’t automatically qualify you to freely use it in another. Ultimately this means you may not have the right to use a name in a specific market, which could compromise the market launch of a business or a product. In order to land and expand, make sure you have your homework done on Intellectual Property legislation in the target market.
Find the right partner
The rapidly evolving landscape of Business globally presents enormous opportunities for ambitious companies who want to explore new ground and grow internationally. To achieve these goals, it’s important to be mindful of the watch-outs from the beginning, so to avoid any difficulties further down the line.