What to consider when expanding overseas

Transcription

1 What to consider when expanding overseas

2 2 What to consider when expanding overseas When should businesses start planning their international growth? Ultimately, there must be a compelling business case to expand overseas and it is sensible to start planning at least 6-12 months ahead. We have put together some of the key considerations for that initial planning phase but if you are ready for the next stage of expansion please see our guide Starting up in the UK. Strategy & Due Diligence Consider where the business wants to be in 3-5 year s time and whether goals can be met through domestic growth alone. Each market has its own nuances due to economic, cultural and governmental conditions. It is important to develop a localised strategy and business plan (including market segmentation, product gap and SWOT analysis against competition) that drives local success while remaining integrated with the overall corporate strategy and objectives. Trading structure planning Consider the commercial objectives of the group with a view to developing a trading structure which looks at achieving these objectives as well as focusing on group tax efficiency. Implications around corporate tax, VAT and hybrid legislation, diverted tax profits and transfer pricing are important to understand prior to expanding into a new jurisdiction. Customer base Review the dynamics of the target customer base, including its size, growth rate and future spending power. If there are question marks over its long-term sustainability, overseas expansion may offer new opportunities for success. Budgets/Forecasts While many will never feel completely ready to expand internationally, the right timing remains important. Early losses are likely when entering overseas markets. To ensure success, businesses must confront some uncomfortable questions: Will we be able to absorb international shortfalls? Can we afford to fail? Banking Do you have the right banking relationship domestically to support you as you expand internationally? Opening a foreign bank account is often the lengthiest part of the process, and you need to make sure your bank will support you and provide proactive advice around topics like FX. Talent/Labour Pool and Recruitment Planning Consider how and where you will find the best labour in your new market and whether it will provide a sustainable and cost effective talent pool. Employers social security contributions vary significantly by country. Benchmarking around typical notice periods (3-6 months is standard in the UK), salaries and expected employee benefit packages including stock options, health insurance and pensions should be undertaken before decisions are made to expand.

3 What to consider when expanding overseas Immigration planning US businesses often choose to send their own employees into a new jurisdiction to test the market and set up operations. Obtaining visas and setting up expatriate packages is a time consuming and often costly exercise and so needs to be understood in detail prior to those individuals entering the country. Terms of Service/Sales Contracts Localisation of terms and websites including knowledge of customs duty, import VAT, MOSS and digital sales should be considered. If you are selling to consumers you will need to ensure you localise your terms legally as well as translate them into local language (if applicable). Failure to do so will allow complaints to be filed and considered on terms which you have not dictated (and worse under which you have not limited your liability). Data protection All businesses should be General Data Protection Regulation (GDPR) compliant as of May Europe has strict data protection laws which require businesses that receive or process personal data to follow strict rules regarding its receipt, retention and use. Specific consent or disclosure needs to be made to the owners of the data and data may not be transferred outside the EEA without appropriate registrations being made to ensure its protection and proper use. Systems/ERP If expansion of your business leads to operating in multiple countries with different legal, taxation and accounting standards, the task of integrating this becomes complicated. Does your current ERP system allow for this expansion? Consider a global ERP system which will enable streamlining and standardisation of operations across multiple geographies from supply chain and inventory control to customer relationship management (CRM) and financials and accounting management. Intellectual Property Consider whether your IP (trademarks, patents and design rights) should be registered in the markets in which you are operating they may not be protected by your US filings. Where do you want IP created by overseas employees to reside? Real estate Short term flexible office space is widely available overseas but advice should be taken when taking larger leased space including VAT and possible capital allowances. Obligations on tenants are not the same globally so it is important to understand what your rights and responsibilities are whilst occupying the space and after you move out.

4 4 RSM in partnership RSM works with a number of partners to help our clients succeed in their growth ventures. This might be partnering with the representatives of UK government agencies in your region or with local service providers for example, to deliver advice and guidance on the markets that you are considering. RSM acts as a gateway to the UK, which brings our expertise together with the knowledge and experience of other professional advisers operating in the eco-system. This can be invaluable at the outset of your expansion journey. RSM are delighted to be working in conjunction with the Department for International Trade and London and Partners in helping companies expand overseas.

5 What to consider when expanding overseas

6 6 How RSM can help We listen We have spent years listening to our international clients and what they are looking to achieve. After spending time with you to understand your objectives, we connect these to our knowledge of expansion processes and can help you to draw up your initial plans, highlighting any particular areas that you might need to focus on in more detail given your objectives, company profile and industry sector. We focus on transition We understand that setting up operations in a foreign jurisdiction is a daunting task, and that some activities are more critical than others to scope out and understand during a feasibility phase. Because of our team s keen focus on achieving smooth transition during implementation, we can highlight any specific parts of the set up process pertinent to your business model or market that you should focus on and map out during your planning phase. We are accessible Our specialist international team is based in Reading, around 30 mins from London Heathrow airport and we spend a good proportion of our time in the US every year helping clients to start their expansion journey. Approximately 85 per cent of our FDI client base is headquartered in the US and we make ourselves available to our clients regardless of the time difference. We facilitate Your needs will be wide and varied and RSM will cover many but not all of them. Our demonstrable experience of working with many companies growing internationally means we know most of the service providers you will need to work with and can introduce you to them, acting as your gateway into the UK.

7 What to consider when expanding overseas The RSM approach Quick, accurate and practical responses to queries through a known team Expansion support through introductions to other RSM member firms Proactive advice and alternative planning to achieve desired results Coordination with chosen UK lawyers to ensure no duplication of efforts within the set up phase Three month turnaround from engagement to operating in the UK UK only delivery, no delays from using delivery centres in different time-zones Completion of complex corporate bank account opening documentation Multiple disciplines providing a co-ordinated service all under one roof Gateway into the UK business eco-system

8 For more information contact Gayle Davies Partner T +44 (0) gayle.davies@rsmuk.com Mike Sables Partner T +44 (0) mike.sables@rsmuk.com Sam Day Director T +44 (0) samantha.a.day@rsmuk.com rsmuk.com The UK group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number ) whose registered office is at 50 Cannon Street, London EC4N 6JJ. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. RSM Corporate Finance LLP, RSM Restructuring Advisory LLP, RSM Risk Assurance Services LLP, RSM Tax and Advisory Services LLP, RSM UK Audit LLP, RSM UK Consulting LLP, RSM Employer Services Limited, RSM Northern Ireland (UK) Limited and RSM UK Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. RSM Legal LLP is authorised and regulated by the Solicitors Regulation Authority, reference number , to undertake reserved and non-reserved legal activities. It is not authorised under the Financial Services and Markets Act 2000 but is able in certain circumstances to offer a limited range of investment services because it is authorised and regulated by the Solicitors Regulation Authority and may provide investment services if they are an incidental part of the professional services that it has been engaged to provide. Baker Tilly Creditor Services LLP is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities. RSM & Co (UK) Limited is authorised and regulated by the Financial Conduct Authority to conduct a range of investment business activities. Whilst every effort has been made to ensure accuracy, information contained in this communication may not be comprehensive and recipients should not act upon it without seeking professional advice RSM UK Group LLP, all rights reserved Expires 0619