Turbulent times require an international solution

Global Access of Service and Technology Solutions System
Nationalism is resurgent. Brexit continues to be the known unknown, but is looming. The pound has fallen and shows no sign of recovering much. Inflation has started to rise. So have business insolvencies. We’re heading into the unknown of Brexit. We’re in the throes of an election that is at best diversionary.
All the indicators are scary, but despite them, much of British Business is doing what it does best. Keeping calm and carrying on. Waiting for “clarity” before taking any new action or making any investments or changes. Which is, of course, courting disaster.
As you’d expect me to say, the current uncertainties make internationalisation a top priority for businesses, especially those in the services sector. However, I’m coming from a different angle here.
The Brexit priority seems to be cutting immigration. Potential European immigrants, however, aren’t waiting for a change of policy – they’re already going somewhere else – and many who are already in the UK are looking for opportunities to leave. This is a problem for almost all businesses, even those that don’t currently employ any (and it’s not just the health service that’s dependent on foreign labour).
Fewer immigrants means it will be more difficult to hire. Some politicians seem to think that there is a vast pool of domestic labour that is being neglected by employers who would rather hire foreigners. Any business person could tell them that there is no prejudice against nationals in any company here – the vast majority of that pool of unemployed Britons either can’t work, won’t work or are unemployable. To solve the problem, we welcome and hire young, talented and hard working people from Europe and the wider world.
Following basic economic rules, a reduction in the supply of such people will increase the cost of all labour, as employers are forced to offer higher salaries to attract the staff they need from a scarcer offering. Deliberate cuts to profitability are limited, so, coupled with the higher prices now seeping through from exchange rate changes in 2016, we are bound to see an accelerating inflationary spiral.
One solution is to hire abroad, in countries where the skills you need are more plentiful and costs are lower. I’m not advising outsourcing – that takes away your control and generally increases costs – but setting up a subsidiary operation.
Entrepreneurs in the services sectors tend to shy away from this idea, or limit their interest to offshoring back office jobs. But why? The businesses that they serve, especially the younger and more dynamic ones, don’t expect local friendly face-to-face chats with their solicitor or accountant. In the modern world, everyone’s used to online access and video conference calls, and is happy if it means the service costs less or has other advantages such as 24/7 service.
Moving a lot of the work offshore to your very own subsidiary, retaining the core skills and entrepreneurship here, can ensure sustainability for the business and increase profitability.
Making new sales to an international market from that base can also guard against currency fluctuations. Companies already exporting services can, by moving the centre of delivery away from their home country, avoid any new trade barriers and guard against negative and nationalistic sentiments that may arise in their existing markets (think “America First”). Similar benefits can be had by manufacturers moving final assembly abroad.
Done the right way, creating a new overseas subsidiary can be quick and cheap to set up. In most cases, it could be trading within 6 months and be self-financing in the first year. Come on, small UK businesses, what are you waiting for?

What’s the first step to start your business?

Well the very first step is to have a great business idea!

Then you have all the bureaucratic and legal steps such as choosing the right business structure, the business name, logos, accountants, office and facilities, marketing strategy, etc. But how do you turn the idea into a profitable business? Here are some thoughts.

1 – Start by analysing your own problems

The easiest and most direct way of achieving that a-ha! moment is to come up with a product or service that you want to use yourself. Think about something that you need and cannot find the solution anywhere else. What is your need? And how do you fulfil it? The advantage of creating something for yourself is that you might find out there is a huge market for it as other people are looking for the same solution. You’re passionate about what you do because you’re solving your own difficulties and it works as a simple way of testing the quality of the idea!

2 – Execute your idea

How many times have you heard people saying – I’ve got this idea – but never tried it – they could have been millionaires by now – who knows? More important than having the idea is executing it. You have a problem, find of a solution, test it and see how much it is worth. It might not be successful the first time around, but do it!

3 – Make the time

“I don’t have the time” – make no excuses. Manage your time efficiently, define the priorities for that day and replace those 2 hours on the sofa in front of a TV to work on your project. As soon as you start, you’ll be sure whether this is something serious enough for a business or just something you could do as a hobby. If, after a while, you see it doesn’t work you haven’t lost anything at all – just a few hours of your life.

4 – Define your limitations

If your product is not for everyone that’s ok, as long as it works for some. Your “customer” (even if this is a friend whom your showing your business idea to) may feel insulted because you do not want to add another service or feature to your product/service – and that is ok if you truly believe in your project. Your limitations are set by answering the question: “Why you are doing this?”

5 -Mission possible

Plan your business in a way that you only commit to what you can do, working within your limitations. This doesn’t mean you’re just being safe, you’re being honest about it. You can promise you’ll provide your product/service to the best of your abilities but don’t fall into the trap of promising the best service they’ll ever get. Set the expectations into a realistic level.

6 –What do you REALLY need

If all the bureaucracy seems a lot to take in and is already scaring you, take a second thought: do you need all of that in the first stage? Maybe you can start in a shared space instead of a river view office with ridiculous service charges? Can you reply to your own emails and handle and all the workload for the first 3 months? Can you start straight away instead of in 6-months’ time? At a later stage, you might need a more complex plan but outline what is imperative to have.

 The best time to plant a tree was 20 years ago. The second best time is now.” – Chinese proverb

 

by Joana Miranda, Manager Admin at ICC – International Corporate Creations

5 key reasons why International Expansion drives up M&A interest and valuations

International expansion should be a no-brainer for SMEs that have achieved critical mass in their home market.   But although I’ve never seen it cited as a reason, perhaps it should be a key consideration for those anticipating eventual exit routes via M&A.

Stating the obvious, increased sales has immediate impact on revenues and profits.   Every country tries to encourage its businesses to export more, but most rely on finding agents and distributors to sell their products and services.  Companies that set up their own international subsidiaries deliver far better results.

But there’s a lot more to international expansion than just increasing sales.   For example, it offers insurance against localised recessions and currency volatility.   As a rule, countries that are resilient when others are suffering recession not only maintain their local markets, but their currency increases in value.   US and UK companies that had operations in Australia benefited massively during the 2008-2010 recession – purchasing power was maintained, and the Australian dollar rose dramatically.   As a result, sales volume increases of 10% translated to revenue increases (when expressed in USD or GBP) of over 50%.  Many companies that had expanded internationally survived when they might otherwise have sunk, and some even grew their global revenues and profits.

Even companies that have nothing to export, but a reasonably sized headcount, can expand abroad.  Setting up Shared Service Centres in lower cost economies – typically to process accounts or manage HR or IT – reduces business costs and increases profitability.  Many companies think they are too small, or have unfounded fears of complications, and may dabble in the water by going to Outsourcing.  However, if it’s big enough to outsource, it’s probably big enough to set up one’s own subsidiary to do the job – and doing that will not only give the company proper control, but typically be 30-40% cheaper.

Future expansion of those SSCs to add in more highly skilled R&D operations can then take advantage of skilled labour that can be difficult to recruit and retain in developed countries.  Such staff often prove far more enthusiastic for the company than domestic recruits, and deliver much higher productivity.

But perhaps the biggest reason of all for international expansion is that turning a domestic business into a multi-national, however small, massively increases the valuation of the company for M&A purposes.  EBITDA, the common basis of most valuations, will be higher anyway, as a result of the increased sales and reduced costs that derive from the international operations.  The fact that a business is international as opposed to being in a single country demonstrates the vision and capabilities of the owners.   Further, it also opens up interest from new potential purchasers who may be attracted by exploiting the company as a fast track route to expansion to new markets that they do not already have covered – pushing up multiples of EBITDA.

So why are there so many companies that remain obstinately insular?   Some think the costs will be too high, some doubt they have resources to cope, some still are even scared by different languages and cultures.  All of those beliefs are wrong.  Businesses should grasp the nettle – expansion can be easy.

 

Article originally published in ACQ Magazine by Oliver Dowson, CEO at ICC – International Corporate Creations https://issuu.com/smartwave/docs/gamechangers_five_sixteen/44

 

8 Do’s and Don’ts for businesspeople facing Brexit

  1. DON’T go to any seminars, conferences or events dedicated to talking about Brexit. You have better things to do with your time. I can paraphrase them all for you in one sentence – “We have no idea what is going to happen, but when we do we will have an opinion”.
  1. DON’T think that because some economic indicators are improving, Brexit has passed, the experts were wrong, we’re all still alive and it’s no big deal. It’s all still to happen…. and it could take a long long time.
  1. DO panic – or at least make plans. Business people are supposed to be permanently optimistic, but this time take a break to be a pessimist. Think what the worst scenario could be for your business, and then plan accordingly. The government won’t tell us what their plans are until it’s too late for you to take effective action.
  1. DON’T lose sleep though. At least, not over Brexit. It won’t turn out as bad as you’ve been imagining it while you made those plans.
  1. DO change any branch offices that you may have in other EU countries to subsidiaries instead. It’ll take a little time to organise and it’s better to do it now in case any new rules come in.
  1. DO discuss contingency plans for any EU staff you have in the UK and UK staff you have in the EU, before they make their own. Most politicians say that nothing will change for employees already in place, but this is a time when it’s wise not to assume anything. Your staff are your most critical asset, and they’ll be worried about this, even if they’re not saying anything to you.
  1. DON’T stop planning your international business expansion. Whatever happens, your business will make more money in the short term and be worth more in the long term if you expand your operations internationally. In the worst case scenario, you’ll have another established business base in a less volatile location. It’s short-sighted to hold back on investment – and in any case, setting up overseas doesn’t have to cost a lot.
  1. DO please ask me and my team for advice on points 4 and 5 (and possibly 2 as well!).

 

by Oliver Dowson, CEO at ICC – International Corporate Creations

My 3 enduring fundamentals of successful entrepreneurship

Technology changes, but the Art of Business doesn’t.   Methodologies come into and out of fashion, and get expressed in different ways, but the fundamentals of success are always the same.  My “Top Three” were instilled in me by one of my first employers when I was in my early twenties – and since then, I’ve validated them by reverse observation – the entrepreneurs behind every small business failure that I’ve personally witnessed since then have failed on at least two of these points.

Total commitment

This doesn’t necessarily mean working 7 days every week, but it does mean at least thinking work every day.  It’s essential to always be available – pick up every call, and answer every email, whether it’s day, night or weekend.  The best opportunities are often unexpected and come up at crazy times. Unfortunately, there are very few entrepreneurs who are both successful and lucky enough to be able to maintain that aspirational work-life balance.

Time management

Plan every day in advance to make at least a little time for everything.   If it’s quick, do it now.  Never ever let a day pass without doing at least one constructive thing to generate new sales.   Insist on quality but don’t aim for perfection – assign sufficient time to do each task well, but don’t keep polishing.  Don’t end up skimping on the next task – it could be the one that makes your fortune.

Humility

If you’re an entrepreneur, you’ll spend a lot of your time selling.   Potential customers don’t like hard sells and they particularly hate exaggerated claims.  You’re human and your product or service isn’t perfect – admit it.  Just aim to be the best person you can, managing the best company you can establish, selling the best product your company can make – and remember to ask everyone, especially every customer, how you could improve.

 

by Oliver Dowson, CEO at ICC – International Corporate Creations