12:31 8 August 2022
Gearing up to enter the international market can be very beneficial for your business, but can also be disastrous if not done correctly.
To thrive overseas, you’ll need to understand the challenges involved and accept the changes such a move can bring to your business’s doorstep.
To help make sure you’re ready to take the plunge, international money specialists Clear Currency outline some of the risks involved and the steps you can take to overcome them.
1. A successful UK business doesn’t always guarantee prosperity overseas
No matter how good your business is in the UK, succeeding in a foreign country requires adaptation and innovation. Don’t make the mistake of believing that you can do everything the same way as before.
To increase your chances of success, it’s worth researching the trends and cultures of the country you want to expand into. Consider learning their language and studying their religions, values and customs. It might even be worth living in the country temporarily or visiting it regularly beforehand, to gain valuable insights and help you make more effective business decisions.
Consider partnering with an existing local business or finding an investor who can guide you and ease your transition.
2. Don’t underestimate the importance of currency risk
Expanding internationally will require you to make cross-border payments, which then exposes you to currency exchange rate fluctuations. Even the slightest change in the value of a currency can have a significant impact on your bottom line. Therefore, it is essential to think about how you are going to manage your international payments.
Failing to plan could see the flow of money between your offices falter and hamper your ability to cover overhead costs. A currency provider can help you mitigate these risks and give you access to favorable exchange rates, saving you money and time.
3. Be aware of political and world events that may affect profitability
Major political and economic events can also affect currency exchange rates. Take for example Brexit, Covid-19, rising inflation and the war in Ukraine. Each of these events has affected the value of the British pound over the past few years. Being aware of what’s happening in the world can help you make smarter investment decisions and avoid lost profits.
No two countries are the same economically, which is why it is essential to study the market of the country in which you plan to develop. Of course, no one can predict how much currency values may change, or what might be around the corner. However, Clear Currency’s team of experts can help you develop an effective forex and hedging strategy to help you mitigate financial risk.
4. Make sure an international workplace is a viable option
Having an office abroad can help your business establish a foothold in the country of your choice before continuing to expand. Depending on the length and size of your project, you may decide to buy commercial property, buy land, or lease a building.
Whichever method best suits your purpose, it’s essential to work with a local real estate specialist to help you navigate the process smoothly. Some countries limit the property rights of foreigners, so it’s important to do your research before committing to a sale.
These purchases can take several months or even years. It is imperative to take fluctuating rates and price increases into account. Clear Currency can help SMEs use foreign exchange tools, such as forward contracts, to fix a favorable exchange rate today for a date in the future.
5. Don’t duplicate your existing business model
It’s never a good idea to take your current business infrastructure and replicate it exactly when entering an international market. This is because different trade laws, tax regimes, associated costs and restrictions will apply.
You will need to find out about local shareholder percentages, salary payment customs, social security requirements and any other applicable regulations. Consulting a tax expert and a legal specialist can help you avoid any problems.
It is also important to learn about local supply chains, manufacturing procedures and operating structures. The pandemic and other recent geopolitical events have caused shortages, delays and increased shipping costs worldwide.
If you’re considering buying machinery or equipment overseas, it’s worth working with a currency specialist. They can help you implement a profitable foreign exchange strategy and guide you on the fastest and easiest ways to make and receive international payments.
6. Learn how to manage an international workforce
One of the first decisions you will need to make when expanding overseas is whether you want to outsource staff internationally and, if so, whether to hire permanent employees or contractors. However you choose to categorize your employees, you will need to know how to manage an overall payroll. All employees must be paid correctly and on time to ensure job satisfaction and retention, which means paying them in their local currency.
Clear Currency offers a convenient and cost-effective international payment solution, allowing you to pay your employees quickly, wherever they are based.
7. Choose the best FX specialist service provider
If you plan to do business around the world, it’s a good idea to compare currency providers to help reduce your expenses and ease your transition abroad.
Selecting an FCA-regulated provider like Clear Currency can give you peace of mind. You should also look for an efficient specialist, offering competitive exchange rates and not charging additional transaction fees.
Clear Currency has a 5* rating on Trustpilot. Their currency specialists provide personal and personalized service and can answer any questions you may have about completing an international transaction. You can also use their online payment platform to access live exchange rates and make secure transfers the same day.
Working with the right specialists can make it much easier to solve the challenges of expanding your business overseas and increase your chances of success.
To create a free account, go to clearcurrency.co.uk.
Call +44 (0)20 7151 4871 or email [email protected] to find out how they can help you.