6 REASONS WHY IT IS WORTH DEVELOPING A BUSINESS OUTSIDE POLISH BORDERS
Scaling-up, expanding, widening the scope of business into other countries… – there are many terms for this specific business decision. The process is extremely exciting, it also brings many benefits, equally however it can end in failure. In our latest e-book we write about how to get a business ready to go outside Poland: GOING GLOBAL – HOW TO DEVELOP A BUSINESS ABROAD. STEP BY STEP. The aim of this article is to highlight the main benefits of expanding a business internationally. Those are:
1. REVENUE INCREASE. NEW BUSINESS OPPORTUNITIES
With its medium size market, Poland provides good grounds to build a stable organisation, but beyond our borders there are major opportunities, which allow for significant increases in customer numbers and thus revenues. It is imperative to carry out market research to achieve this. It is important to find out which countries are best to achieve set aims. It is worth taking a look at the current climate and the demand for a company’s products or services. This analysis should be done regardless of the target market – be it the emerging markets in South America, or the more developed markets in Europe or the US. Different factors may determine the demand for your product or service. Furthermore, shopping behaviours and ways of reaching the customer will also vary depending on the country.
2. MILDER TAX REGIMES | COST SAVINGS
It is worth considering other benefits when operating in multiple markets, those are the reduction of operating or production costs through access to cheaper solutions, local opportunities, etc. Substantial corporation tax savings are also achievable when expanding into countries with preferential tax regimes, or if a specific business industry is on a list of desired types for a certain region and thus could benefit from numerous perks. Moving to or developing business in another country with a much lower tax rate simply makes business sense, especially if your long-term strategy assumes geographical expansion.
An in-depth look into how a well put together organisational chart can help bring multiple benefits (even if still only operating in Poland and especially now with the new ‘Polish Deal’) in expanding a company’s outlook towards Europe or the rest of the World. With this legal and tax possibilities also grow and a move to a particular market for further expansion may be much more beneficial than to another location. Please beware that acting hastily, can cause increased costs that can stop the business in its tracks. – Our e-book “Practical guide to international taxes for investors and entrepreneurs” provides more information about international structures, tax rates, matters that are worth paying attention to. It can be downloaded free of charge.
3. GAIN BRAND PRESTIGE
Development outside Poland increases brand recognition and credibility on the international arena. It is fairly common for Polish entities to consider moving their headquarters or establishing a local branch with which local customers interact. By taking this approach the company shows they care for their customers’ needs, culture, etc., and that the brand can be trusted. This approach will make it easier for the company to increase its reach, understand its customers and expand its audience base.
4. EXPAND TO OPEN THE POSSIBILITY OF DIVERSIFICATION
Maintaining operations solely in a domestic market can put a cap on potential profits. One of the downsides faced by companies operating in only one country is their exposure to changes in the market conditions. Expanding into international markets gives a company the opportunity to diversify its risk, making its revenues more stable. If a domestic market slows down, the benefits of the global market will help a company mitigate the effects of that economic slowdown. Daily access to experiences from international markets also gives it direct information about potential new markets or products that would have gone amiss if the business was only operating in Poland.
5. ACCESS TO TALENT POOL
Another benefit of doing business on a wide scale is access to a much larger pool of talent. For example the Middle East is a particularly good source of talent for the IT industry. By employing international teams the business supports its development, by not only diversifying its approach and way of thinking, but it also introduces a global feel to the company and changes the way it communicates. The company must face the fact that not all its employees will speak Polish, so when the company begins creating its processes, procedures and main strategic communications those will be done and conducted in English.
In addition, hiring local employees with specialist knowledge enables the business to communicate with its customers and provide a bespoke service in accordance with local customs. This will enable the company to operate efficiently from the correct time zone all the while respecting cultural customs.
6. EXPAND OUTSIDE POLAND AS A LIFELINE
If a business is starting to fail in Poland, maybe because the market has become too competitive or maybe the demand for its product has dropped, international expansion can give the business a second chance. If a business is struggling domestically, it should look away from Poland from a new customer base. Perhaps there are less mature markets where the affected product will find recognition. This advice is similar for start-ups from highly specialised industries for which Poland is too small a market, or when there is a shortage of sufficiently openminded investors – in this case moving to a new market where investors and consumers are more receptive to the industry in question can open a completely new world for the business.
On top of the benefits above, there is also an intrinsic motivation for business owners, which is linked to their desire to face a larger market, achieve above-average income or build a global brand that will be as famous and achieving astronomical valuations as Amazon ($684 billion), Apple ($612 billion) or Google ($458 billion).
It is always worth remembering however, that only a few have succeeded in achieving results of even the less spectacular kind. According to the Startup Genome Report Extra on Premature Scaling prepared by researchers from Stanford University and Berkeley, 92% of start-ups fail to develop their business. Therefore, only 8% of companies succeed. The conclusion is that it is well worth taking the time to prepare when launching outside Poland and we are here to help. To start off with, we provide this free e-book ‘Going Global – how to develop a business abroad. Step by step’, which can help you systematise your expansion planning, but it can also help you adjust your existing business. In the e-book, we write about business, legal and tax aspects that will give you the opportunity to operate more effectively outside Poland. We also discuss the main reasons of failures, so that actions can be planned in advance and protect you from falling into traps of which there are many and failing.
Blog edited by dr Anna Maria Panasiuk
Founder and Managing Partner of Panasiuk & Partners, with many years of expertise in wealth management.
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