When you expand your business into foreign countries, you are aiming for a different market. This is a risky move for any company looking to increase profits. However, if the foreign market embraces your product, you will likely double your initial profit. Every country’s economy is unique. Doing business in your country may be more difficult than in another.
If you decide to start a business in another country, you will be able to benefit from their friendly economies. It is, however, critical that you investigate the new country’s profit potential for your company. At the end of this article, you will discover a few ways to increase your profit by expanding your business internationally as well as how your HR function can help in your global expansion strategy to realize profits quickly and long-term.
Access to New Market
If you have successfully dominated your home country, finding a new market is the next step. You can enter a new market by growing your business internationally. Although initially, they might not be familiar with your brand or company. However, with careful planning and brand positioning, you can quickly win over the market. Your business is on the road to competing with other global brands if it is known in more than one nation. Expanding your customer base to enter a new market also results in higher profits—one of the cities in the world with a constantly growing market is Hong Kong. As a result, incorporating your company in Hong Kong will assist you in generating long-term profits.
However, you have to keep in mind that your success depends on your workforce. If you are to gain traction quickly in new markets, having a workforce in place that can hit the ground running is crucial. Thus, bringing in staff from your head office is likely to bring better results since they already have the skills and training required to run your business. In this case, the HR function has a task to help employees transition easily in terms of getting visas and work permits, housing, moving their families, and language and cultural training.
Access to International Talents
If you do not expand your company internationally, you would think you currently have the best employees. Meanwhile, setting up a new business in a foreign country will give you access to more talented individuals. By reaching out to international talents and adding them to your team, you can benefit from their ideas and professionalism. Their skill set can also be used to grow your company. By hiring foreign individuals in your company, you bring in advanced education and diverse language skills, which could be instrumental in the growth of your organization. You might struggle in the new country if you do not employ locals. Remember, they are the ones who understand the language spoken in the new country. They will help you communicate with your customers and increase your profit in the long run.
Employment and labor laws vary in different countries. Moreover, they often change depending on different factors such as economic and political issues. For starters, you have to hire local employees in compliance with the local regulations. Thus, you need adequate legal support to ensure proper documentation when hiring as well as staying up to date with the changes. Working with a local PEO can help in these aspects, as well as ensuring you pay salaries and benefits at the correct rates.
Every country’s company registration and taxation laws are unique. If you decide to establish a company in a country with favorable tax laws, you will pay less than you would in your home country. Another benefit is the favorable exchange rate. The dollar is more expensive than many other international currencies. If you establish your business in Africa, for example, you will be taxed in the local currency. You wouldn’t have to spend as much on taxes because the dollar is significantly more valuable than most African currencies. If you live in a country where the government encourages startups, you will also benefit from a low tax advantage. However, if you are required to pay less tax, you will have more money in your purse.
However, this will only be possible if you can get the taxes right. Otherwise, you might find yourself dealing with hefty penalties if you are not careful, which is not good for your bottom line. For this reason, your HR department has to find individuals who are knowledgeable in local taxes. In addition, it is important to get all taxes right, not just business taxes, but also employee taxes. HR has to deal with expatriate tax matters such as tax protection and tax equalization.
Establishing your business in another country allows you to benefit from economic diversity. For example, if companies in your home country slow down, those in the new country will continue to thrive. Although it may impact your overall profit, it is preferable to have a growing business in a new country than to lose money in just one. Diversification ensures profit stability. Profit continues to flow when one market is performing poorly while the other is performing well.
However, whether the economy is doing well, you have to remember that competition is prevalent in almost all markets around the world. In addition, other barriers to entry such as government control and language and cultural barriers exist. The best way to eliminate such barriers to entry is to work with people who understand the markets. To this end, utilizing local talents and experts is instrumental to your success. Additionally, employing the services of a PEO can be beneficial in hiring locals as well as allowing you conduct business without establishing a legal entity.
Increased Business Growth
When you expand your business from one country to another, it begins to grow. If your business does well in the new country, you will undoubtedly consider expanding to another, and the cycle will continue. Your business will grow as long as you continue to find success in each country where you expand. Every business owner takes risks. You want to explore new opportunities, which is why you are leaving your home country. There is no limit to what you can achieve if you step outside your comfort zone.
Having business in multiple countries might be profitable, but it comes with added HR challenges. Employees in a certain country might feel like they are receiving less attention and unfair treatment as compared to individuals in another country. In addition, running a human resource department in each country of operation can be expensive in terms of infrastructure and labor costs. Gathering employee data from the different departments and transferring it to a centralized location can be daunting. To solve such problems, it is essential to create a unified department for your global business. This ensures fair treatment for all employees local and international. Moreover, investing in a global payroll helps with compliance as well as getting the salaries accurate and timely.
A competitive advantage
If you already have a competitive advantage in your local market, taking your business to other countries can only enhance it. Moving to foreign markets gives you access to new customers, connections and a chance to develop international recognition. In addition, having successful businesses in different countries stamps your credibility to the local and international customers. If your competitors insist on staying local, this sets you apart, which is likely to translate to more business and increased profits.
Gaining a competitive advantage isn’t only beneficial in getting more customers, but also in attracting new talents. People looking for work opportunities prefer working in organizations that are highly reputable. As said above, gaining international exposure paints an image of a reputable and successful organization. This appeals to individuals who are looking for growth opportunities both in the local market and in international markets. To grab such opportunities, it is important to equip the human resource department with tools and resources necessary to hire potential employees effectively to ensure long-term success in all countries of operation.
Growing your business means increasing your profit potential. As much as you want to expand your business for profit, you must first consider the country. The country you are expanding will determine whether or not you are successful. Before expanding, you should conduct market research. You would not benefit from a country with complicated rules or a government that does not support startup businesses. You must, however, complete your research before deciding on which country to expand into. In addition, your human resource department has a significant role to play in ensuring success in foreign countries. This includes hiring locals in different countries, transitioning employees as well as ensuring tax and legal compliance.