Business Mums may take over the world – literally! Based on what I have seen on Facebook Mums-in-Business groups and what I know Accru’s clients are doing internationally, I can envisage amazing opportunities for Business Mums in overseas markets.
However, as I pointed out in my last article Plan before you Expand, expanding your market reach overseas doesn’t automatically equal expanded profits. You need to make sure you ask the right questions and do thorough research and preparation first. Also crucial is that the timing is right for you and your family.
See Plan before you Expand for tips on what you can do to start researching the viability of overseas expansion such as:
1. Study the market
2. Consult government organisations
3. Join business associations
4. Start small and test the waters first
5. Examine your finances and banking facilities available
If you’re getting serious about expanding beyond the Australian market, you’ll also need to consider different company structures, tax and legal issues, banking systems, employment laws and import/export regulations. Here are some tips on these types of issues.
- Determine your overseas company structure – Do you need a physical presence overseas or can you simply operate 100% online from Australia? What kind of structure is recommended – a wholly owned subsidiary, joint venture, branch, representative office? Do you need a local partner overseas? Will you need to move one of your staff over there to keep things on track, or can you manage everything from Australia? How will your business cope if you start moving staff away from their local core duties? The structure of the business should be a top priority – research things like finding and hiring new employees and putting them on your payroll system, opening overseas bank accounts etc. Your business can’t proceed overseas without these basic things in place.
- Recognize that you’ll need business support – Every country has completely different requirements and regulations for hiring employees, opening finance facilities, filing taxes, setting up insurances etc. You will need an accountant or financial advisor to help negotiate leases and contracts, determine how to pay foreign suppliers and set up accounting and tax reporting processes. Even where you have in-house knowledge of all the cross-border compliance issues, there often isn’t time to apply it well. Outsource these business functions where you can – you can’t hope to do everything yourself as well as try and make some money and keep your local customers happy!
- Use your professional contacts – Do your due diligence and make use of your contacts’ local knowledge and experience to identify trustworthy partners in your target market – use your gut and trust your instincts (but ask for help if you need!). Accru can introduce you to overseas affiliates we have worked with for many years to help you understand the local environment, and they in turn can introduce you to their relevant contacts.
- Secure solid contracts – Your company will be subject to unfamiliar regulations and, depending on your agreement with distributors, you may have significant legal exposure. Keeping that in mind, get solid contracts with the companies you’re working with, preferably contracts that you can enforce in Australia. Got any lawyer friends? You may need to find one… Again, Accru has contacts that can help you in these areas. Having a reliable lawyer is golden in these unpredictable and “new” business ventures.
- Seek tax advice early – As always, know your obligations up front. There is no point going into this new venture if you end up with a whopping tax bill (from the ATO or from overseas) that wipes out your profits. Every country has different tax legislation and reporting obligations, and each deals very differently with Australia. Ask your accountant for advice and build these tax obligations into your cashflows and forecasts, so there are no surprises down the track. Depending on the jurisdiction, you may find you can’t get tax relief for losses on foreign exchange, or you may be taxed on gains which you won’t have recognised in Australia.
In our experience as accountants and advisors to businesses trading internationally, it’s important to get these things right upfront. See Accru’s International business news blog and Accru Asia website for more information on these topics.
If I can point you in the direction of our international associates and specialists here at Accru that can help you start your international journey, please get in touch.