If your business is booming you may well consider overseas expansion. This can be a great way to break into new markets and to increase your turnover. However, it also comes with a level of risk and major expenses. Therefore, it’s worth doing some careful research ahead of time to ensure the move is successful.
The first step is to assess the availability of viable office space and to weigh up the associated costs in-country to see if the idea is viable. If this research proves promising then consider these five key areas before you make your final decision.
Can You Afford High Speed Effective Communications?
The quality of your communication systems will be vital to stay in touch with your overseas colleagues and with your clients. Long distance and international landline calls can prove expensive, therefore a great alternative is to opt for VoIP connectivity. Not only does VoIP drastically reduce your costs, but it also gives you access to video conferencing; online chat; instant messaging; and screen share. All of which will be beneficial for staying in touch with employees overseas.
Is It Easy to Find Qualified Workers in the Area?
The next consideration is whether you will be able to hire local staff who are suitably qualified. Naturally this will come down to the business you run and whether you need specialist staff or whether you are willing to train local workers. An alternative, if you can’t find employees within a reasonable radius, is to employ workers who are home based. The advent of cloud computing has made this a viable option.
Are Local Wages Affordable?
In line with the above you will also need to examine the level of local wages and see if this fits with your profit-and-loss forecast. It may be that local wages are in fact lower than the ones in your home country, but this can vary greatly across the world.
If city based wages are high in a particular country you could always look to locate your office to a more affordable area, one where office rents may also be lower and where you will have less competition for hiring staff.
Are the Corporate Tax Rates Prohibitive?
One major consideration before opening any overseas office is to look at the local corporate tax rates to see whether that location is affordable for you. Corporate tax can vary widely across borders and it is well worth taking expert advice from an accountancy team experienced in international taxation before you make the move. It can be a costly mistake to ignore this issue and one which could ultimately eat into any potential profit.
Is There Adequate Local Demand for What You Offer?
If you are considering expanding overseas because you want to break into new territories then you should carry out local market research to find out if there is an adequate demand for the products or services you offer. Before you even set up an overseas office it is well worth trying to get at least one or two in-country contracts signed so you know there is sales potential.
If you are able to answer the questions above in the affirmative then they act as a definite indication that your expansion overseas has the potential to be a successful one. If you can, work with a government advisor or someone in-country, as they will have a much greater insight into the pros and cons of where you should be located; who you should hire; and ultimately how you stand the best chance of making your new location profitable as quickly as possible.