How to Budget for International Expansion
Expanding overseas is something businesses across all sectors hope to one day achieve, as it demonstrates a greater demand for the company’s products and services and its success. It will be an exciting and challenging time once your company is ready to grow overseas but there are important mistakes to avoid. One of these is when businesses don’t take into account all the costs involved in international expansion. That’s why you need to consider all the following when drawing up a budget for growing your business abroad.
Depending on your business, expanding overseas will require an increase in production and/or services to meet the greater demand. This will of course lead to a hike in costs which you will need to prepare for to ensure you have plenty to offer the new international market. Whether your production costs include sourcing and buying more materials and equipment, to computer software and more, make sure you do a thorough audit of existing costs and multiply this based on your plans to create a good estimation.
Setting up a new base in a different country is unlikely to cost the same as it does in your home country. In some cases, overheads such as renting office space, purchasing furniture and equipment will be lower than expected, though for others they will be much greater. The differences in cost need to be factored in to create an accurate budget, so ensure you do plenty of research into this pricing so you don’t end up making a loss.
Employees and Termination
Along with overheads, you will need to pay any staff employed in the countries being expanded into as well. Even if you don’t set up base in the country, it’s likely you will need to hire and pay for more employees to deal with various aspects of the expansion and the increase in product or services being offered. From marketers to parcel delivery drivers and local contacts, staff wages will increase. Plus, be aware of the employee rights and financial impact, as depending on the country, terminating an employee’s contract can result in your business having to pay large amounts of compensation.
Remember that when doing business in another country they will almost certainly use a different currency. This can affect the cost of everything, from paying staff and buying equipment to what parcel delivery companies will charge, due to differences in exchange rates. In some cases it will work out cheaper but in other instances it can be more expensive, so it is worth incorporating exchange rates and their fluctuations into your budget. Set aside an emergency amount in case one currency experiences a big fall in value, for example.
Customs and Taxes
Exporting goods abroad will incur VAT and customs duties which need to be considered. These will vary depending on the country they are going to, what is being sent and how much, so it is important to be aware of what these costs will be. Every country will charge its own taxes on foreign goods too, further increasing costs. It may be worth hiring an accountant to take care of this and ensure everything is done legally, though their salary will also need to be included in your budget.
An increase in production and customers will also mean greater parcel delivery. Especially when exporting and expanding abroad, customers will want to trust that their orders will arrive on time and in perfect condition. Whether you work in a B2B sector and require business parcel delivery or the commercial industry and B2C, Whistl parcel delivery services can help.
Start Expanding Abroad with Whistl
If your business is thinking about expanding overseas then here at Whistl we can help. From little to large parcel deliveries, we offer international services and complete global coverage for a smooth expansion. Simply fill in a contact form with your details and we’ll be in touch about helping your business grow overseas successfully by using our parcel delivery services.
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