What holds companies back from going global? What obstacles do they face? As startup Tipalti looks ahead to its global expansion, these were the questions on leadership’s mind, so the company conducted a study to find out.
First, regulatory challenges are a top concern for U.S. executives thinking about global expansion, whether it’s their first time expanding internationally or they’re just growing their footprint. Trade disputes between the U.S. and China were reason for pause among 68 percent of respondents, and 70 percent said the renegotiation of international trade agreements like NAFTA made them nervous.
Second, but related, international organizations are worried about GDPR, the European Union’s new General Data Protection Regulation, which metes out steep penalties for non-compliant companies. Sixty-five percent of companies worried that they might not be compliant. Twenty-one percent weren’t sure expansion into Europe was worth the hassle; they may decide to just take a pass on that part of the world.
Third, many executives cited concerns around Brexit. Sixty-one percent said they were worried about the effect Brexit could have on their transatlantic business expansion, while 29 percent said it had negatively impacted their company’s desire to expand in Europe. Combined with GDPR, noted Israch, that could spell bad news for the U.K.
Overall, said Israch, the results showed that global aspirants don’t know what they don’t know. Only 11 percent said they felt ready and qualified for international growth.
Knowledge of local markets and tax codes were some of the biggest contributors to confidence. More than half of respondents said they were introducing new tech and/or vendors to support scalability, efficiency and their supply chain and help them work smoothly with new markets.
Adapting back-office operations around international realities and planning for a larger footprint were other common strategies, along with hiring enough help to support international growth.
Israch, however, cautioned against just hiring more accounting members to support global expansion. While growing the team is necessary to any expansion, he said, it should not be the main way companies go about solving that problem.
Instead, he said, they should look to tech to help them scale whenever possible. By automating management of multi-currencies, multi-entities, global payments and foreign transaction fees, he said organizations can minimize the number of new hires they must make to expand.
Israch said automation can also help organizations meet regulatory requirements. Instead of diverting the team from higher-impact tasks to focus on compliance, he said, organizations should consider outsourcing the regulatory burden — leaving them to focus on their core competencies.