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Ask the Experts: Scott Aldsworth

International Business Expert

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Scott Aldsworth is a Vice President at international business services firm High Street Partners. He has over 20 years of experience supporting the operational growth of both expansion stage and middle market companies and an extensive background in international business which spans a variety of industries and geographies, including Western Europe, Latin and North America, and developed Asian countries.

Scott focuses on helping Finance, HR and Legal executives establish and manage international subsidiaries by integrating payroll, bookkeeping, and tax filing capabilities, along with human resources and legal compliance services.


If you are internationalising your business and have a query, please tap into Scott's expertise.

www.hsp.com

0203 393 3325

1. Dear Scott, What does my headquarters team need to consider before expanding into new international markets? Thanks David Question from Anonymous on 01/07/2010

   Scott says:

   David, thank you for the question. Creating a presence in overseas markets is an exciting and potentially lucrative venture for many UK and EU headquartered companies. It can also be a difficult one for those new to international expansion. Beyond the operational challenges caused by differences in time zones, languages, and currencies lies a world of unfamiliar compliance regulations, tax codes, and quirky local employment laws. Rules for each vary from country to country and region to region, and the penalties for non-compliance can be stiff. Too often, the time required of the HQ team when setting up new entities diverts attention and resources from a company's core mission. They have neither the expertise or the staff to contend with the various challenges, and they run into delays and snags when managing overseas entities and employees.
   
   
   
   In order to limit the number of challenges and frustrations that often accompany global growth, every company should consider these five key points before heading into new markets:
   
   
   
   Allocate time for research. If you understand early that the process of setting up overseas entities can be protracted, expensive and painful, you won’t be caught off guard. It's important to do your homework and formulate a business plan for foreign entities, just as you would for any new market. This due diligence process can often be more difficult when crossing borders, but it’s crucial to know the business laws and norms of any country you enter. Even something as simple as setting up employees and operations in the US can be far from straightforward for UK companies. Complexities multiply when entering markets in Central Asia, the Middle East, South America and Africa. If hiring a consultant to help with this expansion is financially feasible, choose one with a proven track record in that geography. Realistic budgets and expectations are hard to come by if you don't know the business terrain, and they’re expensive when you miss.
   
   
   
   Get internal buy-in. To make expansion a success, you need finance, HR, sales, shipping and other departments working in sync and complementing each other’s focus and skills. Every department needs to understand what other groups are striving to achieve, and they need to understand that managing international business can take a particular toll on the finance staff. Get the entire company on the same page before stamping your passport.
   
   
   
   Understand the full cost of hiring. Set budgets early and know how much you are expected to spend per employee. Companies often neglect important “details” that can significantly affect their success overseas. For example, costs for employer Social Security and unemployment obligations, income and business taxes, and compliance issues can have a dramatically adverse impact on both the bottom line and your administrative time. Other employee costs may include company cars, health insurance, fees for full-time contractors, and mandatory (or expected) pensions. In your cost-benefit analysis, you need to incorporate all of these variables, which differ from country to country. Be especially mindful of contractor vs. employee status overseas as well, and bone up on employment law or get help when hiring.
   
   Know your tax obligations and understand the difference between country tax structures. VAT, for example, is an inescapable part of doing business in Europe and many other parts of the world. Rates change regularly and penalties for mistakes and non-compliance can be stiff. If you’re entering US markets, you’ll need to gain an understanding of the US tax system, as you’ll have Federal and state income tax filing and reporting obligations, along with state, county, and municipal sales and use tax filings.
   
   
   
   Manage your employees’ expectations. It can be challenging to keep employees on the same page when they are operating on several continents and in different time zones. Employees hired locally in subsidiaries may have a different view of performance benchmarks, corporate culture and acceptable business practice. Expatriate employees may require more time to achieve their goals, and they may encounter unforeseen snags. Keep communication strong, and lay out clear expectations of responsibilities and objectives.
   
   
   
   Whether your plans call for just a few employees overseas or operations in multiple countries, a clear strategy will help your organization avoid problems, putting you in a position to take advantage of the myriad opportunities that exist in foreign markets. Take your time, do your due diligence and seek out proper advice. Expanding overseas in the current economy can seem like a daunting task, but the benefits of diversifying your risk and expanding your client base in markets abroad usually outweigh the challenges.
   
   
   
   I appreciate this is a lot of information. Please feel fee to call me and I will be more than happy to offer any further assistance. Good luck.
   
   

2. Dear expert, One of my customers who Im working with is willing to start up a business in Argentina. So the main question from my side is, how the foreign - Latvian citizen can open a company which will deal with commercial transactions (between Latvia and Argentina) in Argentina? If this possible at all? I would really thankful for any information. Thank you in advance Inga Priedite Kindest regards Inga Priedīte Enterprise Europe Network Latvia Investment and Development Agency of Latvia Tel: +371-67039430 Fax: +371-67039431 E-mail: inga.priedite@liaa.gov.lv Web: www.een.lv Question from Inga Priedite on 09/06/2010

   Scott says:

   Dear Inga,
   
   Thank you for the question.
   
   A foreign company can establish a legal presence in Argentina know as a “Sociedad Anónima” (SA) subsidiary. Of course, it will depend upon the circumstances of the business to know if this is actually required. One key question will be if the company will be hiring employees in Argentina.
   
   Apologies for providing such a brief answer. I am happy to talk this through with you in more detail, providing a more precise answer. Feel free to get in contact as I need to know a little more about your business and where you plan to expand - sales@highstreetpartners.co.uk or 0203 393 3325.
   
   Thanks,
   Scott