Coverage of Brexit in the media has been quite extensive and visible over the last two years. Tangible and workable results less so. What this means for businesses in the UK as well as in Europe is a lack of visibility, which of course affects the ability to plan and react to changes. For business owners this is discomforting to say the least, and the question that arises is, should UK businesses continue with Europe or not?
A recent article in The Guardian explains that 29% of member firms of the UK’s Institute of Directors are seriously considering moving part of their business abroad, or have already done so. Although the decision may seem easy, it carries with it a multitude of choices and risks. What exactly are these companies up against? How easy is it to cover all aspects of a company move? What are the benefits? The below explores these points in detail.
Where to move to? Europe today looks, feels, and is much more integrated than before. But don’t be fooled: each country maintains its national character mainly by way of its people, laws, customs and expectations. Some are better predisposed to certain economic activities than others. Each state is truly unique and more or less compatible with others. That’s 27 choices for you already.
Win-win situation? The zeitgeist of our business times seems to be a permanent focus on making decisions based on money. To a large extent this is necessary, but the real focus should actually be about balancing the short-term needs against the long-term pathway. Looking solely at tax incentives and payroll costs will not provide a full picture. We should also consider the skills of the people and the general infrastructure available in that particular jurisdiction. The level of local expertise, the effectiveness and impartiality of the law courts, security of personal and business assets, and the ease of doing business, are just a few we can name. Not everything has a monetary value, and it might make sense to lose a little in the short term in order to win more in the long-term.
Party on the mothership? Moving a company abroad will, just as with people, result in a changed perspective, for better or for worse. Abroad might start to feel like the new home, so much so that one might wonder what benefit there is in maintaining the mother company in the UK. Would a clean cut and a fresh start be best? Or is it better to take small steps? A strategic plan will provide a better view and can ensure developments are tracked in an objective way. To do that, you need to integrate different perspectives, which is generally good business practice anyway. This will make the tough decision you might one day be forced to take all the more balanced.
Coming with us? Without a doubt the most valuable yet misunderstood part of any business is its people. Enough has been said about treating your employees fairly, the simple fact is that if you as a business can offer them some degree of security, they will be more receptive to your plan to move abroad. It’s not all about the money, though that is very important. Think about the challenge that some of your people would face, like speaking a new language, dealing with a new tax system, finding a new home and school. Who is responsible for registering what where, and at what point in time? How best to set up banking relationships to keep money flowing smoothly? Companies, however small, can provide economies of scale to their employees and save them a lot of time and effort.
Voulez-vous un job? Sooner or later it will be time to hire local people in your host country. To do this effectively, you will need to know the recruitment customs in the country, as well as the educational system. Motivation and expertise are not as easily identifiable as you might think, with talent being more footlose today than ever before. Permanent and temporary working are both viable options, but how do you retain that precious company know-how? Cross-border hiring is possible, but is it worthwhile? Employee protection varies across Europe, and the last thing you need is a lawsuit with all the drain on resources it entails, not to mention the reputational damage it can cause.
Universal benefits. Everything we do should be beneficial, shouldn’t it? By evaluating the risks and opportunities for your company to gain a foothold in continental Europe, you are quite correctly concerned about its long-term survival. In practice this means you are aiming to minimize its operational risk. Another benefit is enrichment of the company culture by diversifying your workforce. No prizes for guessing how valuable those new perspectives can be. You will also have the opportunity to grow the business, perhaps in ways you had not previously envisaged. Regarding cash-flow, tax, and operational costs, it might even be favorable to the business. Not everything can be planned, but exposure to a new environment means exposure to new opportunities, even if a tweak to the model is necessary.
It should be clear by now that although the decision to move a company abroad might be the only viable option for the future, the move in practice is by no measure a simple task. In this article alone there are around 50 points for discussion, in reality there will be many more. Thinking the options through instead of going with the flow requires a serious time commitment, as well as a fair dose of objectivity. Both are in short supply these days, especially with smaller firms, however a little focus in this area can go a long way.
