According to a survey conducted among members of the LinkedIn Forum for International Expansion, the number one problem for companies expanding to new international markets was not knowing where to start or which questions to ask. Are you in the same place? Read more about important considerations for companies thinking about moving or expanding to Houston.
Legal and Financial Barriers
One of the most significant issues international companies face is the process of familiarizing themselves with the government regulations and policies of conducting international business. Tax laws, customs laws and import restrictions are important to consider and executives must be aware of policy changes that may prevent them from doing business in that country. Gathering data on economic trends, political stability, currency exchange rates and foreign investment and approval procedures can help reduce the risks. The U.S. Trade Representative Office and the Department of Commerce offers information on customs policies and statistics of several markets.
A major consideration is the difference in tax compliance between countries. The different tax systems, rates and compliance requirements makes the international accounting process complicated and challenging. Understanding tax treaties between countries can prevent accidental double payment of taxes.
Distance and Time
Thanks to technology, constraints of distance and time are less restricting than in years past. While time zones and travel costs can still be barriers to entry when moving into a new country, modern technology can help build relationships and strategies efficiently and effectively. However, frequent trips to and from international office locations, even with the best of intentions are expensive both in terms of travel expenses and downtime. Be sure to factor both into your plan as they can negatively impact productivity and progress.
To mitigate frequent travel and because communities generally work best with local leadership, companies must hire and trust local managers and executives to make the best decisions for their location, without needing to check in with headquarters on routine matters of business.
Generally it always takes longer than expected to establish a new location. John Donahoe, CEO of eBay, once said that “the unfortunate reality is that it takes about 10 to 15 years to establish stable branches in a new market.” Don’t let distance and time prevent you from expanding, but also know that the success of your new location won’t happen overnight and factor adequate time and funding into your plan
The Need for Reliable Partners
Before bringing your company to Houston, remember that the business practices that work well where your business is headquartered might not work in Houston, and vice versa. Consider the impact this will have on your message and brand identity.
A best practice for reaching your target audience is to intentionally engage with the community and build mutually-beneficial relationships with local suppliers and businesses. These business partners understand the market and can guide you to the best local opportunities and decisions. . Hiring a financial consultant, advertising agency or sales rep and engaging with local marketing and PR firms are all local resources that can help with understanding the nuances of each market. Be sure to check references carefully and talk with current and former clients as a part of your due diligence in establishing these new relationships.
The vcfo Houston team has 30 years of experience in helping international companies successfully expand into Houston and the U.S., including companies like Wind Energy Transmission Texas, Himex, and Biosafe. With more than 3,500 client companies, our experience is very deep. If you’re planning to expand to Houston, please contact us to discuss the issues above and their implications, as well as any other issues you may be facing. Our deep in-market connections can help you engage the best resources in Houston no matter the area of need.