An increasing number of businesses are deciding to expand into international markets, and the number is only expected to increase over the next few years. But at the same time, a large percentage of these businesses describe hiring overseas staff as a challenging process.
Alongside the process of getting to grips with a new market, understanding your target audience, and in some cases, setting up a physical overseas location, there are several challenges that businesses must face when they decide to expand globally. Setting up global payroll, establishing employee benefits programs, recruiting the right staff, and overcoming cultural barriers are all some of the key issues that companies tend to face when expanding overseas. And without the right support, it can become all too easy to end up overspending when trying to overcome them. If you are in the process of expanding your business into an international market, here are some key factors to consider that can help you save money and ensure that the process runs as smoothly as possible.
Work with a Global PEO
The best way to streamline the process and save money when expanding into a global market is to work with a global PEO. What is a PEO? A PEO, or Professional Employer Organization, is a company that you partner with in order to ensure that the hiring, payroll, benefits, and HR for international employees is taken care of. A global PEO company will be able to navigate differences in regulation and employment law in another country, will be well-versed in the cultural differences, and will have a solid understanding of how the banking and financial side of things work so that it’s easier for you to ensure that employees are paid on time, tax is paid compliantly, and your financial forecasts are as accurate as possible.
This blog from New Horizons can answer the question of ‘What is a PEO company?’ more in-depth, and it explains how exactly they can help your business with an overseas expansion. New Horizons Global Partners will work with you to streamline every aspect of your expansion into a new market, from hiring new staff members to providing employee benefits and breaking down cultural barriers.
Understand How to Register Your Business
Even if your business is well-established on home soil, you will need to register it again in the country that you wish to expand to. And, it’s worth taking some time to learn more about the different requirements for business registration before you choose which overseas market you will be expanding into. The time and effort that it takes to register a business overseas can vary hugely depending on the country. For example, it might take you less than a day to get your business registered in New Zealand, while on the other hand, the process can take over a month in Venezuela. Ensure that you have at least a rough idea of how long the registration is going to take in the country of your choice before you start making plans and setting expansion goals.
Hiring International Staff
Hiring the wrong staff for your company can be a costly mistake no matter where you do it, but it can become even more expensive when you are expanding your business overseas. This is another area where a good global PEO can help you out; they will have extensive knowledge of local areas and how to find and attract the top talent to your business. They will also be able to put together an extensive benefits package for the international branch of your business that is in line with local expectations. Take your time when hiring international staff to ensure that you get the right team together. Chances are, you will be relying on these people to support the growth of your business into a new market, and you will need a team that is dedicated, professional, loyal to your company, and passionate about what you do.
Employment and Tax Regulations
Not having the relevant knowledge of employment and tax regulations in the country that you plan to expand your business into can land you hefty fines and penalties, which can make it difficult for you to trade there in the future, or in some cases, even shut your business down permanently in that location.
Again, a good PEO can help with this as they will have a solid knowledge of the local employment and tax laws in the country that you are expanding into and will be able to help you with navigating it and ensuring that every action you take is compliant. For example, businesses that operate in China will need to make contributions to social care and housing programs for employees, which is not commonplace in the US. You will also need to be aware of the legalities of relocating any domestic employees to a different country; consider securing a visa and the individual employee’s right to work in that location.
Political and Economic Stability
Political and economic stability is essential for any business to thrive, so it’s important to consider this factor when expanding your company into a foreign market. Bear in mind that even a country that currently has the business culture, talent pool and infrastructure required to support your expansion and allow your business to thrive, could easily change with a sudden political or economic event. For example, businesses right now are naturally cautious about expanding into the UK as the terms of Brexit unfold.
Political or economic instability can arise anywhere, but some countries might be more prone to it than others due to recent or current events. That’s why it’s always best to ensure that you take your time to research the current situation, which will allow you to determine the likelihood of such events occurring and having an impact on your business.
Finally, not taking cultural considerations into account can cost your company hugely. First of all, you will need to ensure that you are setting up your company in an overseas market that is ready for the product or service that you are offering. Otherwise, you are going to struggle to see your brand take off in that market and may end up making significant losses. A good way to do this is by first testing the waters with an EOR rather than setting up your own registered company in that country. The EOR will then act as a legal employer for your company in that country which allows you to place your staff there for a short period of time and see what the initial reaction to your business is like. If the test does well, you will be in a good position to consider officially expanding your business into this market.
Expanding your company into an international market can be a lucrative choice for your business. However, operating part of your business overseas may be very different from what you are used to on the domestic front, so it’s important to ensure that you take all these important factors into consideration before you take the plunge. With the right support, a lot of research, and the right team behind you, you can make your overseas expansion a success without breaking the bank.