Five Myths About Expanding And Operating Globally

Our expert Gonzalo Garcia goes myth-busting as he examines the challenges companies come up against when expanding across borders.

Within the last five years there has been an increasing trend of companies of all sizes, especially small and medium businesses, seeking to extend their footprint beyond their country of origin.

For most of these businesses this is uncharted territory; they are terrorised by horror stories from other businesses, they doubt themselves and their capacity to take this significant step and most of the time they cut their dreams short to avoid disaster (or so they think).

The truth is that in the current global economy, expanding internationally is not an option for any growing business but a must. The other truth is that if you take on this feat with the help of experienced advisors and partners this process will look less like an unachievable feat and more like an exciting success story.

I want to take a few more minutes of your time to challenge five common myths that companies expanding globally are trapped by. Hopefully, after reading this you will have a more open mind set and the confidence to ask the right questions.

Myth 1: The best way to enter a new market is setting up a branch of your existing business.

US businesses mainly ask to "register them to do business in X, Y, Z country" or set up a branch of their existing entity in such countries. The reality is that in many countries it is not possible to register a foreign business and in the majority of countries and situations the best way to enter a foreign market is not by opening a branch but establishing a fully operational local entity. In most countries, branches follow a different requirement and compliance schedule and may even be more expensive to maintain than a regular entity.

Each country has different types of entities; the most common type is the Limited Liability entity in its various forms, depending on the country. It is important to identify the best type of entity for your business' purpose and general operational objectives. It is very important to talk to your legal advisor and gather information as to which type of entity works best for your business.

Myth 2: Without big pockets it doesn't make sense to think about going abroad.

In the international arena, people are king, not money. It is who you know and who you surround yourself with that matters. There are plenty of organisations, not only in your country of origin but also in the...

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