Two Expansion Myths Worth Debunking

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Oct 05, 2018 Sam Barnes

As Blueback Global’s Director of Sales in EMEA, I generally have two types of conversations with new prospects. In the first, a company has identified a compelling commercial opportunity internationally and needs to expand now to capitalise on it. In the second, the company has already started executing an expansion campaign on their own. They were quickly overwhelmed by the demands of managing compliance and service providers for their overseas entities. Now they need a lifeline.

Of course I’m happy to take either call. I love supporting companies from startups to top global corporations in their growth efforts. But the regularity of these conversations means there is a lingering perception gap in the market. And while no one is to blame, companies often believe one of two myths that negatively impact their expansion.

They believe –

  • There’s nothing they can do to plan for expansion until an obvious country, market, or new-hire scenario presents itself.

OR

  • If they have someone internal with a bit of expansion experience, they can manage the overseas growth project by themselves.

Unfortunately, neither is generally true and too many companies limit their success by buying into one or both of these fallacies. I’m writing this article because my job entails helping companies easily, successfully and affordably navigate expansion. Sometimes this means all-day strategic planning sessions and other times, like today, it’s about closing the information gap for well meaning companies. 

Planning for expansion before it’s imminent.

The majority of companies that anticipate international expansion don’t start the planning process until a specific opportunity presents itself. They’ll then find a supplier, job candidate, or avenue for sales and need to move fast to take advantage. But timing gets challenged internally as one team is moving out of sync with others. An excited sales or customer service leader may plan an out-of-country hire that finance or HR doesn’t see until too late. While this ambition is generally well-intended, the associated problems may be significant. Without satisfactory payroll, an established entity, or adequate statutory employment compliance, for example, a company can be in real trouble.

Last minute business or compliance issues are challenging, but generally navigable. However, the most significant issue with poor planning is that the very opportunity the company hopes to capture may be compromised. This is commonly seen with new hires. Leadership finds and woos a top candidate. They move to an offer and propose a start date. Perhaps they even begin planning a territory, or ask the prospect to start building their team.

Meanwhile, the issues of how this individual is going to join and where they will be employed are left unaddressed. The sales VP marches to HR with an offer letter listing a start date one month away. The outstanding issues are many: establishing a legal presence in a foreign location, determining employment eligibility, drafting a locally compliant employment contract, payroll setup and enrollment, identifying and setting up mandatory and supplementary benefits…the list goes on.

This scramble doesn’t need to happen!

I guide companies to plan ahead when expansion may be on the horizon. Perhaps the company is having success in the U.K. and envisions broader European expansion. Or the signs of a growing consumer class in an emerging market are promising for a company’s product. If future expansion is conceivable, there are cursory planning steps worth taking.  We can define a company’s risk vs. reward appetite to guide the entity-type options to consider. We can discuss internal capabilities and build a picture of the need for local service providers. In many cases, we can craft a near-complete picture of expansion options and establish a reasonable contract price range. This lets you organise your teams, understand timelines, allocate budget and be ready for launch when that international need presents itself.

Positioning your people and providers for success. 

Now, let’s discuss the second issue: assuming that expansion will be easy to manage if the company has someone with some international experience in-house. This has nothing to do with internal competency and everything to do with the country-by-country complexities associated with expansion.

Engaging internal resources feels like an efficient approach. But it may ultimately be short-sighted as the expertise offered by local service providers and on-the-ground talent saves time and money, reduces risk exposure and supports an operating environment that can scale fluidly.

With exception of the world’s biggest multinationals, few companies can expect to have domestic and international flavours of their payroll, accounting, legal or HR teams. Even if they do, expertise across multiple global regions, countries and jurisdictions is unfeasible. In spite of this, companies often unwisely begin expansion guided by internal resources.

Examples of this are myriad:

  • An in-house international accountant is pulled into “international HR” activities because they are the de-facto international point person.
  • A domestic HR manager opens up an international job requisition and neglects to offer the customary supplementary benefits important to top talent.
  • A disgruntled international employee departs and later raises a grievance around pension and benefits liabilities that were overlooked in a new jurisdiction.
  • In-house counsel suggests establishing an international entity when a faster and cheaper entry point (like a PEO) would have sufficed.

Operating internationally is as much about diligent adherence to legislation as it is about mindful application of norms or customs. This awareness and expertise shouldn’t just be built internally. While Blueback has worked with many clients that have first attempted expansion in-house, it is always better to seek the right help first.

Expansion holds much promise. Be ready to capitalise on it by preparing your plans, process and people early on. And when you’re ready, do it well. Find the right experts in the right contexts to get you up to speed quickly, compliantly and affordably.

If you need help with global expansion or want to discuss a future opportunity, get in touch with me today.

Contact Blueback Global Today!