Setting sail globally: launching internationally in an interconnected world

Expanding internationally is an exciting prospect for companies looking to reach new markets to propel growth. However, it's important for businesses to balance the plethora of growth opportunities against the often overlooked preparation required to mitigate risks and challenges of venturing into new territories.

US businesses with ambitions to enter UK and European markets may have undertaken reams of market research or be led by customer demand or talent acquisition – while a handful may be inspired by a desire just to seize the day.

But across a number of sectors and sizes – from VCs to brand agencies or start-ups to fully established companies – there are some key considerations for US businesses when they are looking to undertake international expansion.

Be realistic, start small

If businesses are dipping their toes into a new jurisdiction, it's best to start slow and explore the market before fully committed. They need to focus on the most important compliance requirements. For example, if they are a financial sector company, it's imperative to be clear on the licensing and regulatory requirements and, similarly, an e-commerce company would need to focus on consumer legislation in Europe.

Analyze the driving force for expansion

Before venturing into a new market, businesses need to carefully assess the reasons behind their expansion. Whether it's for organic growth, strategic opportunities, branding, international sales or access to talent, an understanding of those motives will help shape the approach.

Internal preparation

Businesses looking to expand internationally should establish a dedicated project team and clearly define roles and responsibilities for each stage of the international expansion plans. Effective communication within the project team is essential to ensure alignment between legal and business aspects.

What internal preparations should a project team undertake?

• Preferred jurisdiction. Thoroughly research and plan the location that best suits expansion goals. Consider factors such as market potential, legal framework, business environment, and regulatory requirements. Balancing legal compliance with commercial opportunities is key and there may not be a completely right or wrong answer.
• Realistic timeline. Understand the timeline for critical activities such as setting up bank accounts, notary services, transferring share capital, and hiring employees. Be aware of country-specific challenges and immigration requirements that may impact your timeline.
• Prioritization. Assess your resources and capacity to implement the desired expansion plan. It's important to be realistic about what you can achieve while still effectively running your domestic business. Balancing your existing operations with the demands of international expansion is crucial.

Common concerns

Businesses will likely need to address a number of common concerns when expanding internationally, often around cultural adjustment, applicable laws, jurisdictional requirements and legal interpretation and enforcement.

• Cultural acclimatization. Evaluate if any adjustments are necessary from a legal and cultural perspective. Ensure your brand name is appropriate in the language and culture of the target market, striking a balance between brand consistency and cultural sensitivity.
• Applicable laws. Explore the breadth and depth of the applicable laws in the target market, both regionally and country specific. This includes understanding regulatory frameworks, compliance requirements, and potential legal risks. Balancing legal obligations with commercial objectives is essential.
• Jurisdictional requirements. Assess whether the business model can work within the legal framework of the target jurisdiction. Consider any industry-specific regulations or restrictions that may impact your operations. Balancing legal compliance with commercial viability is crucial.
• Law interpretation and enforcement. Understand that laws can be interpreted and enforced differently in different jurisdictions. Seek legal advice to navigate any variations and ensure your contracts and agreements align with local legal practices while protecting your commercial interests.

Compliance and business strategy

Aim for idealistic compliance with international laws and regulations, but also be realistic about the challenges and expectations. It doesn’t have to be perfect from day one, especially for smaller operations. Work closely with legal experts to develop a compliance roadmap that aligns with business strategies, financial budgets and timeframes. Balancing legal compliance with commercial goals is essential for sustainable growth.

Understand the international market

Gain a deep understanding of the international market you are entering. Identify what legal aspects are critical to your business, such as privacy regulations, licensing authorizations, or commercial agreements. Balancing legal requirements with commercial opportunities will help you make informed decisions.

Osborne Clarke comment

Remember, achieving successful international expansion requires a delicate balance between legal considerations and commercial needs. By seeking expert advice, conducting thorough research and maintaining open communication between legal and commercial teams, businesses can navigate the complexities and increase their chances of sustainable international growth.

If you already have an international presence or perhaps are considering support with your growth plans and would like to chat, please make contact.