The current political uncertainty has not deterred firms in the Thames Valley from planning ambitious overseas expansion. That was the conclusion from an event in Reading which saw more than 40 business representatives and entrepreneurs discussing international growth plans in the next few years.
The seminar at specialist tech law firm Boyes Turner heard that Thames Valley firms are increasingly looking to establish an international presence early in their development – but also flagged the pitfalls that business leaders need to be aware of as they start to move abroad to new markets.
Featured speakers at the event at the law firm’s Reading offices included Charlotte Hultman, group commercial director of corporate and private clients and Bill Kirwan, VP of advisory services, both from Vistra; Elijah Elkins, global talent acquisition manager at global technology company Cloud Factory; and Mark Reeves, managing director EMEA at Carbon Black, a cybersecurity company.
Charlotte Hultman flagged the help available to expanding firms in many countries through government incubator programmes – but warned businesses not to expect their UK business model to be easily replicated overseas, as many companies have found to their cost.
The range of issues to be considered – particularly if a company is intending to expand into several countries at the same time – can seem bewildering, she added, highlighting establishing, in each country, a legal entity, obtaining trading licences, securing new business premises, making banking arrangements, and understanding unfamiliar tax regulations.
In addition, she said a knowledge of employment laws when hiring staff and registering local payroll was essential, in line with specific country regulations which can vary tremendously between countries.
The seminar heard that organisations should ensure they know the specific difficulties they are likely to encounter in each jurisdiction before they try to set up there. These include, for example, local rules around stock options, tax filing and accounting standards.
Attendees were also reminded that thinking ahead is key, with any firm looking internationally advised to have a detailed plan and checklist for each country and to arm themselves with detailed knowledge about each jurisdiction they are considering moving into, well before they start on the road to overseas expansion.
Without an understanding of local regulatory issues, including laws and taxes in each country, companies risk financial loss and damage to reputation. Some companies wrongly see Europe as one market, but this is not the case. It is not just language that can cause barriers but also cultural differences, as well as local regulations and formalities, delegates were told.
A specific example of a pitfall to avoid that was given is a typical 'catch 22' situation where a business needs a regional office to open a bank account, but the bank wants the regional office in place before they will open an account for the business.
Enlisting support, usually outsourced at least initially, is important, according to the speakers at the event. Mark Reeves highlighted that it is also essential to have people ‘on the ground’ in each country in order to be successful, as companies need to demonstrate commitment to the local market.
All the speakers were in agreement that it is best to hire locally as these staff will usually be more familiar not only with language and culture but also with regulatory requirements than employees transferred from Head Office.
Bill Kirwan told attendees that Brexit will also have a dramatic effect on international expansion, including, for example, the way businesses can reclaim VAT, and firms need to be prepared for this. In addition, while US companies have found it relatively easy to set up in the UK up to now, this may change post-Brexit.
Mark Blunden, partner in the specialist tech law team at Boyes Turner, who hosted the event, said: “It’s good to see that Thames Valley technology companies are considering expanding internationally, despite the uncertainty around Brexit but as always, planning ahead is the key. Technology companies all have different drivers for overseas expansion – for example opening up new markets, wanting to be where their customers are, or building teams overseas to fill gaps in their talent pool. However, they will all face similar challenges in some areas and making sure you have prepared well and done your research will give every firm the best chance of making their next international move a successful one.”