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Discover the 5 challenges in expanding your marketing services business internationally

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Discover the 5 challenges in expanding your marketing services business internationally

The rewards for expanding a marketing services business internationally successfully are transformative.

You will have access to not only a new client base, but to a global talent pool to ensure you have the very best talent working for you which will ultimately lead to a tremendous amount of additional revenue. It is also worth factoring in the wider commercial benefits to diversifying your business’ portfolio. For example, you’ll be less affected by changing national economies (which in the current political climate is a particularly pressing concern). Internationalising your business is the next logical strategic step to take for many.

Does this sound a little too good to be true? Well, as is the case with any potentially lucrative commercial decision, there are a number of pitfalls you need to navigate along the way.

What are the key challenges you need to be aware of when considering taking your marketing services business international? To find out, I have spoken with a number of agency owners/finance leads who have scaled their business internationally to ask for their advice.

Legislative

“Tax planning needs to start before you even incorporate in some foreign jurisdictions - what is going to be the most tax effective structure for your international entity? And what about transfer pricing? Support from the UK mothership is often a strategic approach for some businesses on starting up. Get it right and you can reduce your overall tax bill, get it wrong and there’ll be nasty surprise tax bills and penalties on top. This is all before you deal with state or regional jurisdictions.” – Aaron Walmsley, Portfolio CFO & former Finance Director & Chief Operating Officer @ The Health Hive Group

“My biggest issues with international expansion are local laws and regulations, either issues with transferring cash in or out, financial or tax. Obtaining local advice which makes sense of the idiosyncrasies is not always easy!” – Alex Appleton, Interim FD @Portland

Having the correct financial and legal advice will give you the grounding to successfully launch your brand internationally. The UK is relatively nimble & easy to operate within, while, in comparison, there are numerous global jurisdictions with much tighter regulations you need to be aware of. Nothing will cut your legs from you quicker than failing to comply with the legalities of a country. Make sure you seek the correct legal and financial advice at the earliest stage possible.

Maintaining Standards

“Assuming that the reason to invest in a new market is a result of your clients’ needs then remember they are in the first instance buying your services at your quality standards with your processes. It is integral to have an individual or team from your business that you are able to second for a period of time to the new studio so that the client experiences the same quality of work from people that they trust. Once local hiring takes place, which by the way is critical if the studio is to be sustainable, your team are there to show the new troops what is expected, not just in terms of the quality and processes but the values that your company need to exhibit. This will set the new team up for future success.” – Debbie Longbottom, Chief Finance Officer @ Elmwood

“A further challenge includes the ability to influence stakeholders when you are not (often) physically there. An appropriate rhythm of meetings needs to be put in place…and these meetings matter, a lot.” – Andrew Chappin, Global Chief Financial Officer @ Hall & Partners

In any marketing agency, relationships are key. Being able to build strong relationships across the business and have clear and open lines of communication are vital in any successful organisation and finding a way to foster strong relationships internationally will only help your chances of being successful.

The reality of making any internationalisation expansion successful is not diluting the quality of your brand. Otherwise, it won’t be your brand. It is imperative you keep the roots of your brand at the forefront of any new venture.

Cultural Differences

“Whilst it shouldn’t be, most business communication is via email. Email tone and sometimes content is open to interpretation and may result in unintended outcomes. We have a face for a reason, it’s good to meet face to face with people. You are more likely to communicate if you ‘know’ someone (i.e. have met them, have a relationship with them). With margins being squeezed there is less ‘investment’ in conferences / meet and greets and this can result in increased isolation and less communication. A big challenge is therefore, ‘knowing’ your team and building a sense of team when you cannot physically be together – I have not come across a video conferences solution which is in any way an adequate alternative.” – Andrew Chappin

“England and America are two countries divided by a common language. There are so many levels on which doing business in the US is different from the UK you’d think we did speak a different language.” – Aaron Walmsley

The cultural differences should not be underestimated in expanding internationally. Ensuring your brand values are effectively replicated and therefore, what has made your brand successful enough to expand internationally are carried through. Which leads perfectly onto the next challenge…

Different Time Zones

“It’s an obvious one but can result in an elongated working day. The real challenge is how to manage this in a way which meets the dual requirements of (a) getting things done and (b) being able to switch off and recharge your batteries. Throw in different times zones (especially in the US) plus changes in UK clocks – care is needed to control diary and meeting commitments.” – Andrew Chappin

There is absolutely nothing you can do about the different time zones and, unfortunately, I don’t have a magic solution for you. What you can action though is managing your time effectively, being able to switch off and not burn out.

Forecasting

“Experience of working for a US parent, as a result of quarterly US SEC reporting requirements results in a narrowing of the reporting and forecasting window to either the current quarter or, at most the next one. Little time and focus goes into building plans beyond the next year (in 7 years in my current role I have never done a 3 year or 5 year plan). This can result in short term decision making which is right for the current quarter but may not be right 2 quarters in the future.” – Andrew Chappin

This is a very interesting insight from Andy and one which any marketing agency looking to expand into the United States should be aware of and it also highlights how different jurisdictions have different regulations and you need to adapt accordingly.

As any finance lead or agency owner will know, having a long-term vision and strategy provides your business with the guidance it needs to grow, and it is important to do everything in your power to keep your eyes on the long-term prize.

In Summary

It should be noted that preparation is absolutely key. Expanding internationally is a huge business decision and there are a number of challenges, so ensure you carry out of all the necessary due diligence and factor in the time and energy this move will require.

If nothing else is clear from this article, the rewards for expanding your business internationally are huge, but there are difficulties you need to successfully navigate.

We have partnered with Crowe UK to put on an event on International Expansion. We have a number of speakers (click here to meet them) who have taken media agencies international as well as accountancy experts to advise on the technical requirements. If you are a finance lead/business owner and you’d like to attend this event, click here.