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Should You Expand Your UK Company Globally?

Explore Global ExpansionGlobal Business Strategy
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Expanding into a new international market gives your company a chance to diversify its assets, reach new consumer markets, and achieve international brand awareness, all while gaining access to local resources, incentives, and talented labor. Brexit and the Covid-19 pandemic have uniquely positioned the United Kingdom (UK) to adapt processes and services to a more remote format critical for global expansion. Of the 78 percent of UK businesses with growth plans, 18 percent want to expand internationally.

Learn more about how to expand UK businesses globally into the right markets, and some of the top countries you should consider.

Expanding your company in the UK post-Brexit

As the UK manages a post-Brexit transition, a few critical areas of business have slowed. Companies can expect more export paperwork and complexities than before, with slower partner transactions and delayed shipping to and from the European Union (EU).

A few key changes for your company include:

  • Managing work visas for EU-based employees
  • Having to declare imports and exports to and from the EU
  • Registering for an Economic Operators Registration and Identification (EORI) number
  • Awareness of the new points-based immigration system when hiring international employees

But these changes haven’t slowed UK entrepreneurs — 57 percent of interviewed micro, mid-size, and large-size business owners say they are still looking for opportunities to expand beyond the UK, even in a post-Brexit climate and while navigating changes related to Covid-19.

Why is expansion good for UK businesses?

International expansion is the natural next phase of growth for many companies, especially if they’re established successfully in the UK and have reached the market potential there. Specific benefits of expansion vary, depending on your industry, sector, company, and chosen location. Overall, it’s a complex and nuanced transition that can deliver significant returns and raise brand awareness.

These are some possible benefits of expanding your UK business across international borders.

1. Reach new markets

Having a strong presence in multiple markets worldwide gives you more economic stability during uncertain or fluctuating times while increasing your consumer reach and access to valuable resources. Over time, expansion enriches your workforce and services, giving you a competitive edge over companies that lack a presence in your chosen market.

International expansion also lets you diversify your portfolio and access uniquely talented individuals or vendors with special skills, training, and experience that you can leverage for your company.

2. Leverage diverse resources

Global markets can give your company a direct line to valuable resources and financial incentives, some of which you can only find by expanding into new locations. Examples include the following:

  • Leadership
  • Technology
  • Raw manufacturing materials
  • Specialty labor
  • Border proximity
  • Reduced labor costs
  • Research and development
  • Production and manufacturing
  • Local incentives and tax breaks

Combined, these resources could help you operate more efficiently and at a reduced cost while still reaping the rewards of a new international market and consumer base.

3. Expand quickly and easily

Global expansion is easier than ever because of the growth in remote work and overall improvement in technology and the internet across the world.

The pandemic has enabled companies to identify weaknesses in telecommuting and develop remote-based operations, making it easier to adapt to a distributed workforce as you grow. In the past decade, telecommuting has grown 115 percent, and experts predict 73 percent of all departments will have remote workers by 2028. Additionally, 74 percent of surveyed individuals believe remote work is the way of the future. It attracts talent without restrictions and provides optimal flexibility — a belief shared by 76 percent of entrepreneurs.

Fortunately, technology is up for the challenge. Experts forecast the global technology market to reach 5 trillion U.S. dollars in 2021 and the global artificial intelligence (AI) market to reach US$89.8 billion. We’re also more connected than ever before, with nearly 4.66 billion internet users worldwide in 2020.

Ideal countries for a UK company to expand into

When considering a new market, you must factor in the region’s import and export conditions, labor force, and top industries, as well as their overall ease of doing business score. The ease of doing business score compiles data regarding how each country enables new business owners to set up shop, register property, pay taxes, and get electricity and credit. The score also considers the construction permit process, enforcing contracts, resolving insolvency, cross-border trading, and protecting minority investors.

Your UK company has no shortage of viable countries to expand operations to. The top three importers of goods from the UK are the U.S., Germany, and Ireland. In 2020, 54.1 percent of exports were to Europe, and 16.5 percent went to North America. Three ideal options for expanding your company are the U.S., Germany, and Australia.

1. U.S.

The UK sends 14.8 percent of exports to the U.S., and it’s currently the U.S.’s seventh-largest goods partner, totaling US$132.2 billion in 2019. Services trade totaled US$140.7 billion in the same year. As of 2018, the UK employed 1.46 million people in the U.S., supporting a cumulative direct investment value of more than $1.35 trillion.

The U.S. has a talented workforce — 165.49 million people strong — and is home to some of the world’s top universities, including Princeton University, Harvard University, and the Massachusetts Institute of Technology. Profitable industries include food and drink, technology, and life sciences, with healthcare and technology driving the economy. Other notable contributors include construction, retail, and non-durable manufacturing. The U.S. is a leader in research and development, with a large consumer market encompassing more than 325 million people. U.S. consumers account for nearly one-third of the world’s household consumption. E-commerce alone has climbed 24 percent since 2019.

Despite opposing views of Brexit among U.S. politicians, the U.S. and the UK have signed five product-specific trade agreements for things like mutual recognition of distilled spirit names, pharmaceutical manufacturing, and winemaking and labeling practices.

The U.S. is currently rated sixth in the world for ease of doing business.

2. Germany

Specific institutions across London, like the German Historical Institute and Goethe-Institut London, have supported strong relationships between the UK and Germany. Germany is the UK’s second-largest export market, totaling 10.5 percent of all goods exported. The most vital sectors here include mechanical engineering, chemical and electrical studies, and the digital industry and economy, including big data, AI, cybersecurity, and consumer goods. The industries are further supported by a stable economy and various investment incentives. Other notable industries include automotive, health and life sciences, and food and drink. Germany invested 62.9 billion euros into research and development in 2016.

Germany is home to the University of Munich, Heidelberg University, and the Technical University of Munich, which feed into the country’s 43.34 million-person labor force — the 16th-largest in the world. Germany has multiple trade agreements with other key markets, including the U.S., France, and China, and each state has developed informational centers for startup assistance. Berlin is considered an emerging hotspot for successful startups. The country also excels at supporting remote work, scoring high for the availability of Wi-Fi and co-working spaces.

Germany is ranked at 22 for ease of doing business.

3. Australia

Expanding into Australia is typically a smoother transition than most other countries for UK companies because the market is similar and the common language is the same. Australia also boasts a progressive tax structure, thorough intellectual property (IP) protection laws, and a wealthy consumer market. It’s the perfect place to test and develop new products and services in a controlled group — especially since nearly half of the population lives in Sydney, Melbourne, Brisbane, or Perth.

Australia is the UK’s 14th-largest export market, with trade totaling more than 15 billion British pounds in 2018. Top industries include financial services and technology, cybersecurity, infrastructure, mining, construction, manufacturing, health and education, and e-commerce. There is currently a free trade agreement (FTA) in discussion between the two countries, in addition to existing agreements, like the International Tax Agreement, Mutual Recognition Agreements, and the UK-Australia Fintech Bridge.

Though the country is more remote than others, with a smaller labor force at 13.43 million, Australia is considered a gateway to Asian markets and time zones. The country is home to the University of Melbourne, the University of Sydney, and the University of Queensland Australia, which promote a talented, educated workforce.

Australia ranks at 14 for ease of doing business.

How to expand your UK company internationally

Start mapping your global expansion with these four steps.

1. Understand your market

You should have a thorough understanding of your new market before establishing your company there, including the social, political, and economic environments. Stay aware of local legislation, tax law changes, and local issues that could impact the way you operate or source your products and services.

Of the UK companies seeking a new market post-Brexit, more than half say they’re hesitant because they lack adequate knowledge about new markets. Conduct in-depth market analysis studies for each new market you’re considering. Analyze existing competitors, local laws, and regulations, and then develop a strategy with revenue goals. Consider the average consumer there — what is their average income, and how does it compare to the cost of living? What do they value, want, need, or oppose? How can you adjust to meet those expectations? Have you successfully sold there already, through an e-commerce platform, for example? Create an international persona profile for your ideal consumer and use it to guide your marketing and expansion plans.

2. Create a business plan

Engage employees, management, and leaders across departments to gather information about your existing situation, your current needs, and any special considerations moving forward. The more input you have from each part of your company, the better you can prepare for international growth.

Create a global expansion business plan by considering the following:

  1. Analyze the risks and benefits of expansion. What are your primary reasons for expanding, and will the cost justify the process?
  2. Audit your current operations and conduct a gap analysis to identify areas for improvement and core strengths.
  3. Focus on scalability by automating processes and using cloud-based software where possible.
  4. Consider your finances and how much capital you need to secure for your expansion, as well as the projected timeline for return on investment.
  5. Gather and measure existing key performance indicators (KPIs) and establish new ones for your market.
  6. Look at employee and management performance ratings to build a strong team to see you through the transition into a new market.
  7. Delegate some of the work by outsourcing tasks to local experts and an Employer of Record (EOR).
  8. Write a formal business plan, especially if presenting to investors or financial institutions.
  9. Create a timeline for expansion, including business formation, tax registration, construction, hiring, and opening accounts.

3. Establish your company

Successfully establishing your company takes time and research. You need to immerse yourself in your new market and understand your consumer base. What problems do they have? What needs will your product or service meet? Why should they get excited about your new venture? Cultural appreciation and understanding are critical for making important business connections, marketing effectively, and opening up profitable sales channels.

Localization is the most effective way to establish your company in a market. The process relies on local experts and professionals to help you navigate cultural nuances and unique local complexities to be legally compliant and relevant with your target consumers.

Examples of localization include:

  • Translation services: Consider all local languages spoken, including both official and unofficial ones, and work with writing translators and speech interpreters as needed for all legal contracts, business relationships, employee contracts, product labeling, and marketing.
  • Visual identity: A local designer or visual marketer can help your company adapt its visual identity to the local culture, including logos, graphics, colors, illustrations, visual and video advertisements, and print advertising materials.
  • SEO and marketing: Marketing looks different in every location. Local marketers, writers, and digital SEO specialists can help narrow down your company’s ideal buyer persona and establish an effective marketing funnel for the current market.
  • Pricing and currency: While choosing a cost structure, you need a clear understanding of how to price your products or services reasonably and competitively in the local market, accounting for all competitors with similar offerings and the local average income and cost of living. Account for all local currencies when accepting online and in-store payments, if applicable.
  • Special considerations: Your chosen country will likely have specific guidelines for your product or service, like required ingredients lists, banned ingredients or processes, or required labeling or warnings on products.

4. Hire and manage employees

When hiring in a new market, you can choose between temporary contractors or full-time and part-time employees. Some European countries may also be eligible for payroll-only registration employees. Your company will likely need several of the following professionals to grow your business in the UK and beyond:

  • HR staff
  • Web developers
  • Data specialists
  • Financial experts
  • Legal consultants
  • Sales representatives
  • Construction workers
  • Writers and marketers
  • Assistants and secretaries
  • Translators and interpreters
  • Technology and IT professionals
  • Customer service representatives
  • Product and department managers

With so many employees under your umbrella, you will likely need help structuring employment contracts, running payroll, navigating global taxes, and understanding the nuances and complexities of hiring in an international market. An EOR like Globalization Partners will ensure your company remains compliant and efficient in new labor markets while managing HR tasks like payroll, onboarding paperwork, taxation, and benefits packages.

Expand your company globally with help from Globalization Partners

The U.S., Germany, and Australia are just three potential markets waiting for your company. Global expansion will help you reach a new audience, increase global awareness, and give you access to valuable resources and skilled labor to continue your international growth.

Globalization Partners is a global EOR with a presence all over the world. Our full stack global employment platform makes it simple and easy to hire and manage your international team, stay compliant, and handle HR and legal tasks — in just a few clicks. Contact us to learn more and request a proposal today.

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