Peter Sewell, Regional Director at Crown World Mobility, warns that some SMEs might run into trouble if they expand internationally too quickly.

 

Global mobility experts are warning SMEs and start-ups of some serious challenges ahead as businesses continue to go international far earlier in their development. The business world has shrunk in the last two decades as advances in technology and communication have made it easier for smaller enterprises to consider a global market. The result is a tranche of businesses that have a global client base – and even invested in a presence abroad – long before they have scaled up enough to cope with the complications of doing business there.

Talking to businesses across the world, there’s no doubt this is a huge trend in 2018. Traditional business boundaries are constantly being challenged as business leaders seek to explore multinational opportunities. And they are doing it earlier and earlier in their development.

The growth potential for these SMEs is massive but in the first instance they are often unprepared for the global mobility challenges which come with it. You’ll often find a one or two-person HR team overburdened with a multitude of tasks, dealing not only with personal issues from staff who are working abroad but also with ever-changing regulation, immigration issues and of course Brexit.

SMEs generally don’t have a dedicated mobility team or programme, or even a structured policy. Perhaps they outsource, perhaps they just muddle through. It’s the hidden challenge which often businesses overlook in their rush to expand and embrace a global market.

The problem has become more acute because talent pools in the UK have failed to keep pace - with many businesses forced to look further and further afield to find the right staff. This comes at a time when political change, including Brexit, could make that process more difficult.

Some of the biggest issues facing SMEs with an international presence include:

• Compliance: Whether it is understanding international tax rules, coping with ever-changing immigration laws – particularly in the US – or surviving scrutiny for Base Equity Profit Shifting regulations, the potential fines are massive. The length of time it takes to deal with immigration compliance and vetting can be a major problem for businesses too – international moves need to be planned well in advance.

• Cost of recruiting from abroad: Many businesses look to foreign talent pools to find the expertise they need, but it can be expensive. The UK government has increased the Immigrations Skills Charge applied to workers moving from outside of the EU to the UK, from £1,000 to £2,000 per person per year. This is on top of the costs of applying for a visa in the first place – and in addition to the £600 per person annual NHS surcharge.

• Cost of assignment failure: The price of a failed assignment can be huge. It costs a lot of money to send someone to work abroad, only to bring them back a few months later. In fact the cost of a poorly-planned assignment - leading to a failed assignment - can be four times the original budget. 

• Cultural awareness: Failing to understand the cultural landscape and cultural differences of an international business partner can be a real threat. It can not only lead to misunderstandings which threaten business relationships but also see assignees fail to fit into new surroundings.

• Talent retention: Keeping hold of talent is a big part of modern business but international assignments, if not handled properly, can lead to costly mistakes. If SMEs do no look after and support their people abroad then they simply leave or get head-hunted by competitors, even during assignment.

It isn’t all bad news for SMEs in 2018, however. The modern world provides real opportunities for businesses to grow quickly and to take advantage of an international market - and global mobility could yet be one of the growth areas which helps them survive it.

It is clear that SMEs need to think more about global mobility, whether that is looking for help from consultants or putting their own programmes in place far earlier. The key is in being able to forecast costs and mitigate risks as early as possible. Keeping up to date with immigration regulations is also vital.

For those who get to grips with these issues, however, the rewards can be significant. Companies that are skilled at dealing and working with different countries and different cultures have a big advantage in the modern world – and their leaders are sought after. Global mobility should not be overlooked or underestimated.

www.crownworldmobility.com

Photo: Peter Sewell, Regional Director, Crown World Mobility.

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