European expansion: is it right for your business?

The six-point checklist for expanding into Europe. Xanthe Vaughan Williams writes.

A little international expansion goes a long way for a growing business. For starters, it provides a great deal of flexibility about how you present your organisation. Fourth Day, for example, has five offices across four different countries, which makes us sound quite large. Every office, however, contains fewer than ten people, which makes us seem quite small. It’s the best of both worlds – an international team that is nonetheless sufficiently close knit that everyone knows everyone else.
Secondly, as a service-based company, we’ve found that more than one office is a big help in terms of balancing our income and workload. This is particularly true of our Manchester and London offices, where spare capacity in one place can easily be used by the other. Internationally, we have had the opportunity to secure business across borders and to make referrals between offices. In our case, we have found that our European offering can be attractive for US companies venturing into Europe.

We’ve expanded slowly but steadily over the past 14 years and have learned a few things that might be helpful if you’re considering taking the plunge into a new territory.

1. Do you really need to set up a company?

In most other European countries, setting up a company requires a minimum capital investment, often of around 20,000-30,000 euros. The £1 companies that we can create in the UK just don’t exist. And what’s more, this capital will remain tied up – you can’t spend it. So try it out first – if you aren’t sure whether it will work, start small and minimise your risks. You’ll also minimise those accounting headaches that come with a new company.

2. Plan your corporate structure carefully

When you do reach the setup stage, things get a little more complicated. Ideally, you should have someone on the ground who knows how business works in the country but you need to think about their position. Are they an employee? In which case, what will you do if they leave? Or are they a shareholder? In which case the same question applies. A partnership? Co-operative? Whatever structure you decide on, draw up a plan for both success and failure. In the case of success it’s important that you reap the benefits as well as your new country manager. If it fails you need to ensure that you don’t find yourself requiring the services of expensive international lawyers.

3. Learn about tax

It’s dull but it’s SO important. Find out about taxes on salaries; when someone tells you how much they earn, is it before tax or after tax? Which tax? How many taxes? There are at least 15 different employer taxes in France, for example. Corporation tax, holiday tax (yes really) – just make sure you do the research.

4. Employment law

Another basic essential. Working time directives, expected weeks’ holiday, sickness benefit, maternity leave. And if it goes wrong, dismissal processes. Any one of these can come as a nasty surprise if you aren’t concentrating when you employ someone.

5. Office accommodation

Like the company itself you may not need this right away, but when you do, it matters. It’s not just about convenient location, but also about what the address says to your potential customers, which other businesses are there, and whether it’s somewhere that will attract employees. Don’t just leave this to whoever’s over there – make sure that it fits in with your brand.

6. Brand

On the subject of brand, have a think about how you’ll preserve yours when the new entity exists overseas. At Fourth Day we have found that being small and communicating a lot, helps, as does the use of centralised web design and presentation templates. However, unless you’re Starbucks, it’s inevitable that an overseas office will develop a personality of its own, so give some thought to how you’ll manage this.

It does take work to set up and maintain an overseas office, but it’s hugely rewarding. We’ve found that it has allowed us to grow without losing our close-knit working culture, and without exposing ourselves to a high level of risk. It gives employees the chance to work abroad and provides everyone with the opportunity to learn about cultural differences. If you go into it with your eyes open it can bring you great opportunities. And it is almost guaranteed to provide you with some great stories to tell.

Xanthe Vaughan Williams is a director at Fourth Day PR.

Praseeda Nair

Praseeda Nair

Praseeda was Editor for from 2016 to 2018.

Related Topics

International expansion