Every business reaches a saturation point when it has captured almost all the customers in the target market. The only way you can continue growth is to find additional customers in other countries. Expanding overseas not only helps to find additional customers, but it also allows you to learn from the customers and competitors in other markets and improve your products and marketing.
While expanding to other countries helps you grow your business, it does come with number of challenges and uncertainties. You have to navigate carefully to ensure success and avoid getting burned by taking on too much risk too soon. The most important challenge any business will face when expanding overseas is the unfamiliarity with the market and customer base. Every country has its own laws and regulations, as well as customs and preferences. You cannot know all the nuances of the country as well as local companies that are operating there for a long time. That is why it is imperative to work with local business entities by outsourcing number of activities.
You need to maintain a delicate balance when looking at what services to outsource. You want to maintain control of certain business operations while offloading tasks that you are not familiar with. The key to success is to retain control of the activities that are core to your business such as business strategy, product development, marketing, etc., and outsource back-office functions such as business registration, accounting, taxes, HR etc. Many of these back-office functions require knowledge of local laws and regulations. Local businesses such as My Swiss Company are likely to have better knowledge of these laws compared to those businesses that do not operate in the country. So, what business functions should you consider outsourcing? Below we list several that you are better off letting local business entities take care of.
- Business Formation – First thing any business needs to do before starting a business is to register your business entity with the local government agency. You need to prepare number of documents before registering the business. You need the expertise of local firm to guide you through the process quickly and efficiently.
- Accounting – While general principles of accounting are common around the world, every country has unique accounting rules that business operating in that country has to follow. The local accounting firm is in a best position to understand these rules and can help your business follow without running afoul to local laws. Failure to adhere to these laws can result in significant fine.
- Taxes – Business taxes are one of the most complicated business operations. It becomes even more challenging when you expand your business in other countries. Each country has its own tax laws and regulations. For example, several countries in Europe have Value Added Tax (VAT). If you are an American business looking to expand in Switzerland you should consider hiring a VAT tax representative in Switzerland who can advise you properly.
- Payroll – Payroll and other HR functions are also unique for each country. Many countries, particularly in Europe, have strict labor laws that govern how to manage your workforce. It is advisable to work with the local entity that is familiar with these laws. Failure to comply with the laws can result in heavy fine, and even business closing in extreme situation.
Expanding business overseas comes with opportunities and risks. It is best to work with the local business entities that are familiar with local laws to ensure success.
