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Article Author:

Expanding Internationally? Start with a Strong Strategic Plan

Launching a venture in a foreign country is just like starting any enterprise—it’s complicated and challenging. However, an international expansion has the added challenges of navigating a different culture and business environment.

Companies that decide, "We’ve got to be in China" and take the "ready-fire-aim" approach really stub their toes. Here are some key steps to planning your expansion into China and other foreign countries.

1. Determine your strategic plan. Take the time to map out what you want to accomplish with your foreign enterprise and how you’re going to do it.
2. Make sure you have the necessary human resources. Ask yourself, "Do we really have the people to execute this?" You need people in your U.S. home office who can carve out a substantial amount of their time to manage the foreign enterprise. You will also need people on the ground in that foreign country—people in whom you have confidence and who understand your strategy and can execute it in that country.    
   
   This is where companies make the most fundamental mistakes, both in the people they hire in foreign countries and in the amount of time the core management team devotes to managing the overseas enterprise. Some companies find that what they thought was going to be a manageable commitment turns out to be an endless series of long plane rides and overseas trips to try to help manage the business they’re starting.
3. Determine your "all-in" cost. Decide how much you’re willing to put at risk from an investment standpoint. The "all-in" cost is the true cost to your company over at least a three-year period. Do you have the financial resources to sustain that investment?
4. Get help from your business advisors. Get help from your business advisors. You will need assistance from a combination of service providers to set up your infrastructure and operations—experts in both the U.S. and foreign country.
5. Secure the necessary capital. Banks have difficulty securing their loans in foreign countries, so it’s challenging for a U.S. bank to loan money for assets that will be owned in another nation. However, some banks are starting to provide lines of credit in China for U.S. companies. 

Questions about setting up overseas operations?
Contact Paul Oetter at 312-980-2920.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.