Article
10 min read
Author
Owen Yin
Published
August 31, 2022
Last Update
July 23, 2024
Table of Contents
Why should you expand to a global market?
Key considerations for global expansion
How to plan your global expansion strategy
Do it quickly and compliantly with Deel
What happens when your business growth exceeds domestic borders? The next logical step is to take your business operations overseas so that you can reach your strategic goals, uncover new revenue streams, and build your brand reputation in new markets.
Even the pandemic didn’t stop most businesses that had planned to go global - the benefits of business expansion apparently outweigh the risk that the coronavirus poses to the global economy and doing business in general.
What are the benefits of expanding into overseas markets? How do you create your new market entry strategy? Is there an alternative to opening a local entity in the target country? We’ve created a guide to help you navigate through the expansion process and choose the most suitable option for your business.
Global growth comes with a number of benefits for your business. Here’s why so many companies consider international expansion.
Crucially, the benefits of global hiring go beyond addressing the skills shortage; businesses can expand strategically into key regions and offer unparalleled flexibility to employees who value the ‘digital nomad’ lifestyle.
—Shannon Karaka,
Head of Expansion ANZ
As your business outgrows your home market, you’ll face several challenges while establishing global business operations, building international teams, and operating risk-free in foreign markets.
Here’s an overview of the main considerations for companies planning their international expansion strategies.
Whether you’re a startup or a big corporation and whether you're planning mergers or setting up EORs, reaching new markets requires a well-thought-out global expansion initiative. Here are the steps to take when creating an international business expansion strategy.
There isn’t a single right path to expanding to different countries: identifying the right strategy for your business takes extensive research and careful planning. It's important to choose a market entry strategy that aligns with the structural model that best fits the company's goals and resources.
These strategies vary in terms of their level of control, involvement in the local market, and level of risk, and may involve:
To make the right decision, you need to familiarize yourself with local compliance and tax laws. This way, you can make sure you have the financial and legal expertise to handle employment contracts, benefits, financial reports, tax documentation, and any other local requirement while setting up an entity.
It’s also critical to develop an exit strategy because leaving a market can sometimes be just as complicated as entering it. Collecting paperwork for opening a subsidiary can take up to four months, depending on the country, and closing it may take just as much time. Not to mention your responsibilities toward your employees.
Whatever your expansion strategy is, you will need experts you can trust to run your local business according to the plan and take care of your new customers. Building a global workforce and acquiring the best talent out there may be challenging, but it helps you create a solid foundation for international success.
Identify the vital positions that you need to fill and key the employees you can’t afford to lose. To complete these tasks with success, you should:
When expanding to a new country, you need to choose how you’re going to hire workers in new countries. Typically, you have three global hiring options. You can:
Hiring independent contractors is a quick and cost-effective way to build a global workforce. However, as a client, and not an employer, you don’t have control over how and when the contractor works for you, and you might struggle to gain intellectual property of the worker’s deliverables, depending on local laws.
Advantages | Disadvantages |
---|---|
Lower employer costs | Employee misclassification risks |
No need for training and onboarding | Limited control over work schedule |
No tools or equipment provision required | Issues with intellectual property ownership |
Faster hiring | Fluctuating availability |
Flexible hiring for a fluctuating workload | |
Outsourcing compliance, global payroll, and other employment legalities to an EOR can help you resolve the challenges of onboarding international workers quickly while managing their daily schedules. EORs ensure locally compliant contracts, employee benefits, taxes, and more, so you don’t have to spend time learning about local laws in every country you hire from.
The most common use case is to employ remote workers in other countries where the employer may not have an employing entity. This can dramatically expand access to talent globally for pretty much any company.
—Steve Hoffman,
Senior Strategic Partnerships Manager
Advantages | Disadvantages |
---|---|
Saved time and costs on global employment | Less control |
Expanded talent pool | Changes in company culture |
Lowered compliance risks | Lack of understanding of the structure |
High employee data security | |
Improve your employee experience | |
Adapt to the future of work |
Planhat is a customer success platform that helps companies manage client growth for customer success, product-led growth, and more by automating the admin for customer lifecycles.
Planhat has been remote-first since the beginning, with one founder living in the US and the other in Sweden. They soon realized that it made sense to hire globally, so they started looking for an efficient hiring solution.
“With Deel, we can grow and cooperate together, they have the flexibility to support us in whatever we need. It’s become a true partnership with people we enjoy working with,” says Sanna Westman, Head of People at Planhat.
Learn more about how we helped Planthat build a remote-first, global team.
Advantages | Disadvantages |
---|---|
Direct access to a new market | Length of the process |
Alignment of company culture | Significant initial investment |
Control over the new company’s business activities | Cultural and scheduling differences |
More credibility in the new market | Increased bureaucracy |
Better partnership opportunities | Difficulty in finding the right talent |
Resale potential if things don’t go according to plan | |
Foreign Direct Investment (FDI) opportunities | |
Diversification of workload |
Ready to open your own entity to continue operating in a foreign market? Learn about the steps you need to take, from initial research to tax registration.
As business expansion is a costly undertaking, you should have secured funding options before you take the first steps.
If you work with investors, make sure your strategy is well-thought-out and corroborated with data and research, so you can make a compelling case for expanding to a new market and get their buy-in.
If you don’t have investors, look into other financing options, such as crowdfunding or debt-based financing, and create a budget. Thorough research will help determine when your initial investment could start paying off, so you can plan expansion activities accordingly.
Whether you need strategic partners on-site to expand the business, or you want to partner with organizations to provide competitive perks to your employees, identifying the right allies on the ground will help you jump over the expansion hurdles more easily.
Outsourcing payroll or HR to trusted local companies kick-starts operations in new markets as soon as possible. Local experts already have the required market knowledge so it will save you a lot of time and effort, especially when it comes to obtaining necessary permits, collecting documentation, drafting contracts, and onboarding employees.
Employee well-being strategies may be one of the most neglected parts of global expansion for many companies. Their main focus is on the technical aspects of doing business, and if they don’t tackle this issue in time, they may face low employee retention and employee happiness index.
During your target market research phase, you should be able to identify the most desirable employee benefits and perks in specific countries, other than the statutory ones. Determine how you can include them in your overall employee compensation packages to ensure competitive and attractive remuneration. Ideas to consider:
Provide suitable tools and effective communication channels for your global (and remote) workforce. In global teams, it’s critical that people are enabled to work properly across cultures and time zones. It’s helpful to set up clear processes on how to communicate an issue, who to reach out to if your manager isn’t available, and more. Employee handbooks containing vital workflows and “rules” are also a useful way to speed up new hire onboarding and ensure everyone has access to all important information at all times.
Make sure you include different team-building activities in your plan and educate yourself about various ways to boost your remote team’s morale and keep them motivated and appreciated. That’s what brings productivity and results to the whole business.
Deel allows you to hire in over 150 countries, in almost 100 of which we own entities.
Our huge network of more than 200 legal partners and local payroll managers ensures full compliance no matter where you hire. With over 100,000 team members managed across 150 countries, we offer unmatched expertise and 24/7 support to empower your global growth.
Ready to learn how Deel works? Book a 30-minute demo with our expert team and come prepared: this is your space to ask any questions!
Need more time? Think about how risky is your target market. Instead of registering your own entity, consider lower-risk and lower-cost options like hiring contractors or EOR employees. Learn when each option works best.
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