Expand your business globally quickly and effectively
10th September 2019
You have done it - you have built a scalable business with a product that gives a solid margin. You are the King or Queen of all you survey.
Demand is great, the cash is rolling in, your growth is phenomenal, clients love you, investors are queuing up.
But you still need to do more. You need to satisfy those investors, smash those targets and continue the path to world domination. You know there are markets out there that you have not touched. Profits to be gained, growth to be maintained and barriers to be overcome.
But how do you do it?
Global expansion of course!
You have built something that is already successful, so the next logical step is to expand internationally, right? You can benefit from economies of scale. Tap into new and lucrative markets and start selling to those 7.7 billion people in the world.
So, what are the benefits of expanding globally?
Just a few are below –
Greater sales opportunities.
Larger market share.
Ability to leverage economies of scale.
Greater shareholder value/stock price.
Multiple income streams.
Reduced impact of major geopolitical events.
Access to global talent.
How do you do it?
Well you have two options.
The first option…
Is the ‘traditional’ method.
This involves incorporating a new company in the destination(s) that you are looking to internationally expand into. Most good lawyers in the destination will do this for you. Costs range from $500 up to $50,000 dependent on the industry, share capital and regulations of the country you want to work in.
Then you will need a bank account. Most of the time this involves a trip to the country you are setting up in as part of a bank’s KYC (Know Your Customer) requirements – make sure you schedule a few days for your CFO to do this. You can comfortably spend $10,000 if it’s a far-flung destination.
Register your company. This is for the various statutory filings like sales tax, payroll, pensions, insurances and a range of other local registrations (e.g. entry on the commercial register). Once you have done this you must keep them up to date monthly/quarterly/annually as required.
Appoint a legal and/or accountancy firm to manage this. Perhaps a further $5,000 - 10,000 of professional fees to set this up dependent on local pricing. Another $6000 per year to keep on top of it all.
Then you need to hire your team – employ them. Again you will need a lawyer or an employment firm to support you with the dos and don’ts of the hiring process in country, draw up an employment contract and then to keep them retained to support you with employee disputes, terminations, maternity claims, redundancy, etc. Let’s say $4000 for the initial onboarding and $3000 a year for ad hoc or retained support services.
After you have done all this you will be good to go. It typically takes two to three months (if you are organised) to get all this in place and get your first hire on the ground.
Does that sound too resource heavy for you?
The second option…
is to engage with a ‘Worldwide PEO service’ (Professional Employment Organisation). Also known as an EOR (Employer of Record) or GEO (Global Employment Organisation).
This allows you to hire in the country or countries extremely quickly. In some cases, turn around time between offer and start date can be as little as 48 hours.
This model enables you to hire local talent and have them (co)employed locally by the PEO’s entity removing the need for incorporation. For smaller numbers of employees (30 or less) this is normally far more cost effective for the business than the ‘traditional set up’.
The reduced turnaround time is achieved as the PEO will already have an entity incorporated. They are also experts in delivering employment contracts and employee onboarding in the countries in which they operate.
A good Global PEO service will also allow you to tailor your employment agreements and company benefits packages to meet your companies needs. It’s not possible with all, however. If this is important to you (we believe it is if you want to attract and retain the best talent) make sure you consider these points before appointing your preferred Worldwide PEO supplier.
Do their clients stand by them? Client testimonials, references etc.
Are they transparent? Can you easily find details of the business you are going to contract with?
*Do they support you directly or through a partner?
Are they knowledgeable about the county they are supporting you in? What in country expertise do they retain?
Do they have 3 or more years of trading history? Tax authorities have very long memories.
If you are looking to expand globally and not sure which route is best for your business get in touch with us today and we will be happy to share some of 50 or so years of our global mobility experience and point you in the right direction. Get in touch!
*If you want to know more about the inner workings of the Worldwide PEO industry and how Global PEO’s operate please read this article.