People have always looked beyond their surroundings, looking to succeed in unfamiliar markets and expand their empires.
Unlike our ancestors, who sailed into the unknown, we now have a wealth of knowledge and access to technology making navigation a great deal easier. But despite these modern advances, running a successful business internationally remains a challenge, with each global market having its own risks and vast opportunities to explore.
At RSM we recently conducted a survey of middle market businesses and of the 200 companies we spoke to only 14 per cent are not considering international expansion in the immediate future, due to political uncertainty and the current economic climate. However, 70 per cent of the businesses surveyed have already taken the opportunity to expand overseas or are in the process of doing so.
If you’re looking to build and develop your company in the ever-growing international market, the right knowledge, advice and guidance is key. There are different risks associated with each international market, so knowledge is crucial when navigating potential pitfalls and utilising opportunities along the way to help to make your business grow. Never assume things are the same year on year or country to country. The value of quality, tailored assistance and management is immeasurable but wholly necessary to ensure your business continues to grow globally.
Through our research, businesses highlighted three key areas to research prior to expansion into overseas markets: the local political environment, IT security risks and the potential local demand for products and services. With this in mind, and with global mobility becoming increasingly common, we have put together key considerations and practical advice to help you ensure that your business prospers from global growth.
In the next few issues of Northern Insight, we’ll be looking at the following three key areas to explore before embarking on your international expansion, options for which should all be researched and planned thoroughly with experienced advisers.
Exploring the global economy
The first step you should take in your international journey is understanding and planning.
Economic uncertainty leads to business uncertainty and there is a lot of it to go around both domestically and internationally. The increase in trade tensions between major economies and the rise in political populism has impacted, either directly or indirectly, upon macro and micro economic indicators.
With this backdrop, it’s hard enough to plan your business strategy in just one or two markets, let alone across continents, different time-zones and varied cultures. It’s therefore vital to be aware and ready to act should key economic and geopolitical indicators change significantly in relation to your sector, industry or business.
Additionally, strengthening your knowledge of the markets before embarking on your international business operations will ensure that you make the most of the opportunities available to you. Understanding the macro elements of international business will prepare you for the challenges you will face and will help you to decide which markets will provide the biggest opportunity for you.
Managing international compliance and risk
Once you’ve armed yourself with a strong understanding of the market to help you navigate an international expansion, you can then move forward. Effective global compliance and governance are the second steps to ensuring your business is on the right path. A detailed and tailored look at both the risks and possible pitfalls of growth allows you to avoid common traps and be prepared for every eventuality. Be sure to draw on existing, and build new, market knowledge. Link this knowledge to your compliance and risk management and allow it to inform your business strategy.
Sustainable growth
Cross-border joint ventures have many different and complicated moving parts. Understanding the difference between expanding internationally and acquiring a business is just the beginning, so you’ll need to be able to navigate the many options available to you and ensure you balance your business overseas effectively.
In addition to this, the recognition that a business is only as strong as its staff is key, so your employees are one of your most crucial assets. International growth will depend on on the mobilisation and incentivisation of staff, making the right decisions for them and understanding any common concerns they may have. Understanding not only how to encourage your workforce but what makes them tick is also essential to a strong business.
Look out for the next issue of Northern Insight where we’ll look at exploring the global economy in more depth.
For more information on how we can help you expand into international markets, please contact Rachel Fleming at rachel.fleming@rsmuk.com or visit www.rsmuk.com/ideas-and-insights/global-growth.
