Moving Abroad? 7 Steps to Global Success for You and Your Business
For many, living a life abroad would be a dream come true. For growing businesses, however, expanding globally is often a necessity. As an entrepreneur, the opportunity to do either — let alone both — means you’ve probably done more than a few things right.
But before you pack your bags, going global, like growing any business, includes new challenges. It requires foresight, adaptability and specialists to find success for your portfolio as well as your business. That’s why we spoke to experts in commercial banking and wealth management at Bank of the West, who, as a part of BNP Paribas, provide a perspective on global banking that stretches from the U.S. to Europe to Asia and South America.
Here, their specialists offer tips on making your transition a successful one.
Assessing the Opportunity
As an entrepreneur, determine whether expanding abroad is right for you.
Take into account objectives and determine if customers and partners are available abroad to execute them, says Nathalie Doré, CEO at L’Atelier BNP Paribas North America.
“It’s very important to adapt your market strategy and to think about doing open innovation,” she says, noting that local partners can both minimize risk and maximize rewards. “We advise testing launch initiatives. You can have very quick validation on your business model in real life and, if it works, initial revenue.”
It’s also important to evaluate the future of your target region’s economic climate both from a business and investment standpoint. For example, “knowing that Europe is earlier on in their business recovery, whereas the U.S. market is in more of a mature stage … can mean that 2 percent GDP growth is not always better than 1 percent,” says Wade Balliet, Chief Investment Strategist at Bank of the West.
Preparing to Make the Move
You’ve considered your business and personal finances goals and you’re ready to go global. But what’s next? According to Kristin Nelson, Bank of the West’s Wealth Management Head of Sales Strategy and Business Development, get expert help from someone with international experience that also understands what you’ve already built at home.
“The more groundwork you can do upfront and the more you can work with an international bank who has connections to get you set up from a financial standpoint beforehand, the better,” she says.
This goes from simple things, such as setting up a bank account, to the advanced, like being introduced to a sophisticated professional network.
“The local teams will often times make in-country introductions to experienced professionals to assist our clients,” says John Thurston, Managing Director and Area Manager at Bank of the West. “Through those referrals, our clients expand their networks to address potential legal, financial and regulatory concerns.”
Setting Up Your Financial Future
With your bases covered, it’s time to plan for your future. For many entrepreneurs, that means diversifying their personal and professional portfolios to address new exposure from their expansion abroad.
Balliet says that limiting exposure in your personal portfolio often means investing outside the country to which you’re moving. For example, if you move your business to Paris, you might think about putting more of your money outside of Europe in order to achieve greater global diversification. “In that case, we (make sure) their European exposure is not increasing but maybe reducing to some extent because of their new business venture, and then managing around that with the other international capabilities: Asia, Japan and the emerging markets, for example.
“We have the ability to tactically overweight and underweight investment exposure to a country or a set of countries.”
Gaining Fluency in Culture and Currency
As the saying goes, “When in Rome, do as the Romans do” — this is especially true when it comes to business. For investors entering a new market, unique culture, rules and regulations can cause serious headaches for entrepreneurs.
The most challenging aspect is often the foundation of commerce itself. It’s essential that investors have a basic understanding of different currencies in order to trade effectively. Whereas in the U.S., investors generally focus on the security itself, trading internationally involves other factors such as currency fluctuation and geopolitical considerations.
These kinds of local challenges can also affect how day-to-day transactions are handled between countries. Entrepreneurs and investors are often uncomfortable when they discover how alien basic operations in a new country can seem, according to Head of Cash Management and Commercial Card at Bank of the West Eileen Dignen.
“Clients working in certain markets tell me, ‘I’m surprised that everything isn’t instantaneous, I’m surprised that formatting is different.’ But there is no cross-border, instantaneous, real-time dollar flow and settlement that happens today without complexity,” she says. “Having a partner that knows you and can help navigate that complexity is key.”
Don’t Forget to Look at the Whole Picture
Scaling your business and portfolio globally gets complicated. That’s why keeping a singular view of all aspects of your finances is essential.
“The key is somebody has to see the global view of the portfolio,” says Balliet. “Two or three managers looking independently may be well and good on their own, but what about the overall risk of those three managers when melded together?”
For an entrepreneur, a bank with a global presence can help solve many of these problems. Companies frequently contract with more partners than they need to, according to Thurston.
“To meet specific in-country needs, many multinational companies will approach a number of different banks. However, this can result in cumbersome banking arrangements and inconsistent handling of the clients’ needs,” he says. “Instead of having six different banks to handle needs in six different countries, the client’s needs could be met more effectively with a single international network such as BNP Paribas and Bank of the West where we strive to deliver the international network locally as a single client relationship. That translates into better consistency in the products and services provided to our clients, as well as a more efficient and cost effective approach to their banking needs.”
Use the Right Set of Tools
Maintaining that global view doesn’t just happen. Entrepreneurs and their CFOs need tools that can give them the financial information they need when- and wherever they are.
“As the CFO, it’s really about understanding and having visibility into cash flows and the supply chain as they expand abroad,” says Martin Resch, Executive Vice President of Bank of the West. “Without that visibility into how the cash is moving, where it is and what currency it’s at, CFOs don’t really have visibility into their business.”
To provide this information, a modular platform that’s responsive enough to respond to the continual demands of an international CFO is ideal.
“When there’s a change in foreign currency markets, you want to make sure your foreign currency app is changing really fast, but your supply chain app may only need to change once every two years,” says Resch. “Having that separated into tactile apps that allow you to do businesses, instead of one big app, allows us to be more nimble.”
Look Ahead to Stay Secure
But no matter how advanced a company’s technology is, remaining secure means being one step ahead at all times, especially when you’re moving to an unfamiliar business landscape.
“As we say in the banking industry, we figure out how to deal with the fraudsters and then they’re figuring out the next step. We have to keep up with that pace of change,” says Dignen.
For the tech sector, where companies tend to expand internationally more quickly than other industries, it’s essential to provide robust safeguards that protect intellectual property, client information, payment details and more, says Lee Merkle-Raymond, Managing Director, National Technology Banking Head at Bank of the West.
“All of those we try to mitigate in the U.S. but when you’re working internationally you need higher levels of security — you’ve got multiple banking systems, multiple payment systems in different countries,” she says. One way to stay secure is to impose automated safeguards that may limit the size of transactions or provide extra layers of authorization if a payment is headed to a particular international destination.
That forward looking approach also spreads to how entrepreneurs should interact with their bank to begin with, working together to be at the cutting edge of all aspects of business, according to Doré from L’Atelier BNP Paribas North America.
“The pace of change is so fast today,” she says. “That’s why we like to be able to iterate. What should we launch today? It’s really about adapting because we are living in a world that is changing so fast.”