Europe represents about 20% of the world’s purchasing power, making it a tempting market for anyone who is looking to expand internationally. With a single currency and the free flow of goods and services through the economic unit, the European Union is an excellent place to find new customers and revenue. Below we’ve pulled together four important tips for your European expansion.
1. Understand Cultural Differences
Before expanding into a new market, immerse yourself in the local culture. Meet with business leaders in informal meetings to understand how they approach the working world in their country. Seek out companies who have expanded to these markets to discover the nuances they encountered. By doing these things, you will have a better understanding of how business works in this new country.
2. Find Underserved Customers
When Square, a U.S. mobile payments company, began looking at the United Kingdom as a possible site for expansion, it was already one of the most crowded fintech markets in the world. However, unlike many companies, Square's target customer is not large businesses. They target small to mid-size businesses, especially those that do not take credit cards. In Europe, it is estimated that about half of the small businesses in the UK do not accept credit card payments, making it a great market for Square to enter into. When expanding into a new country, it is important to find a market where your competitive advantage will allow you to shine brighter than the competition.
3. Carefully Consider Your European Headquarters
Despite having relative unity in the European Union, each country still has a different culture, language, and way of doing business from its neighbors. When deciding which market to expand into, carefully consider the strengths and demands of your business.
Cities that specialize in specific industries attract a talent pool of high-quality workers, making it easier to find and retain valuable employees. For example, despite Brexit, London remains one of the most important financial hubs. Additionally, take into consideration how local regulations can enhance or inhibit your business. For example, Denmark's free-market approach makes it one of the easiest countries in the world for starting a business.
4. Utilize International PEO to Simplify Expansion
The benefits of expanding into Europe are tremendous, however, it can sometimes be costly and difficult. If you decide to establish your own local business entity, initial startup fees combined with the time it takes to find the right permit applications, pay the right fees, and get the right licenses, can end up being very costly.
That's why companies should utilize an International PEO (Professional Employer Organization). International PEO allows you to employ locally as if you had established your own local entity without the cost and time of actually establishing one. This solution ensures compliance with local taxation, payroll, and labor regulations, so you don’t have to waste time and money researching compliance yourself.
If you’re ready to take your business into Europe, consider using a trusted in-country partner like Velocity Global. Give us a call to learn more.