Expanding internationally can be a big challenge for your business and there are many things to consider when taking the leap. If you’re undecided if international expansion is for you, here are our top five reasons why we think you should.
Successes Of Other Brands
Luxury fashion brand Burberry expanded from the UK into the US and its operating income and revenues doubled between 2007 and 2012. Retailer Topshop has also reaped large profits from its daring decision to break into the US marketplace.
Pret has been in the UK for over 30 years, and in the US market for 16 years. The sandwich chain is now a $200 million business, with 65 Pret shops in New York, Washington, Boston, and Chicago.
McDonald’s not only expanded to the UK, but also internationally. The American fast-food chain reported that its second-quarter profits and sales in 2017 were stronger than analysts had forecast, sending its shares to a record intraday high.
Other American brands that have expanded to the UK include Clean & Clear, Colgate, Yankee Candle, Heinz, Airbnb, LinkedIn, and Pringles.
By doing your research, you can learn from other companies’ successes and failures to ensure that your international expansion runs as smoothly as possible.
By having a presence in more than one country, your business won’t be reliant on just one country's economy for its success or failure. So, if your domestic growth has stalled, other countries can provide your business with fresh customers potentially in an area with less competition or where demand for a product or service is higher.
There is a lot of market research available around international consumer trends, that will help when making the decision of where best to expand to.
Since the Brexit vote and US election results, a study has revealed that 42% of UK businesses are more inclined to expand operations overseas. Whilst another study found that 83% of small and medium-sized US businesses considered overseas expansion as the top priority.
If you’re thinking of heading to the UK, bear in mind that in 2016, London was voted global city of opportunity, topping 30 global cities for economic clout and intellectual capital and innovation. This makes it an ideal place to expand to! And if you’re concerned about Brexit, this report by the Telegraph shows that Brexit has failed to make a dent in the UK, as one of the top places to do business.
London also provides excellent transport connections to North America, Europe, and Asia, making it an ideal choice for setting up your headquarters.
By expanding from the US into the UK, or vice versa, you will not face a language barrier. Although the spelling and meanings of words can differ, a common language is shared on both sides of the Atlantic. Due to the close ties between both countries, it’s often a lot easier to understand the cultural differences in order to tailor your product or service to that market.
Check out our blog on ‘Top 5 reasons for international expansion failure’ for the key areas to be aware.
Cities around the world are known for their industry, with San Francisco being an American creative hub, as Brighton is in the UK. London is known not only as a leading tech hub in the UK but also in Europe. Whilst Silicon Valley, in California is a world-renowned technological hub and is home to Google, Facebook, and Apple.
It’s always worth keeping your eye on the markets, as cities on both sides of the pond are rapidly developing and are keen to develop into emerging business hubs.
Manchester, UK (in particular) is emerging as the UK’s next tech hotspot, according to commercial estate agent Colliers International. 40% of the company's inquiries reportedly come from tech companies that are looking to set up in the area. The company believes the city is well-equipped for such an industry, with 63,000 people working in tech-related roles compared to other towns and cities in the north of England.
By expanding your business into a city that's known for your industry, you are likely to find a skilled workforce and a plethora of opportunities.
When you’re considering expanding into another country, there can be many hurdles to overcome and a lot of legislation to get your head around. Fortunately, market entry specialists like us can help!
There are also plenty of international expansion incentives available to companies, such as tax exemptions, which are granted if you are able to meet the requirements of the US-UK income tax treaty.
If a UK company wishes to expand into the US, it should be noted that because the United States has a decentralised system of federalism, regulatory practices can differ significantly from state to state.
For US companies expanding into the UK, they will need to register via Companies House, potentially register for value-added tax (VAT) and handle tax and National Insurance contributions for employees via the PAYE scheme.
There is a large amount of support and funding available, such as trade fairs, market research, and product and service development. We’d recommend registering to attend some of these events so that you can seek out some professional advice and begin to network with likeminded individuals.
So, there you have it, our top five reasons for international expansion. There’s a big wide world out there to explore for your business, that’s full of new opportunities that you should grab with both hands.
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