Protect your business by reducing risk at the early stages of expansion
If you are currently considering expanding your direct selling business into Europe, or you’re putting together a business case to expand, you might want to consider outsourcing most of your needs for the first three years. It could save you a ton of money, avoid early pitfalls and allow you to expand faster, whilst protecting your existing business. Scaling up (or down, hopefully not) is fraught with challenges, both operationally and financially. Outsourcing enables you to focus on driving sales rather than infrastructure.
Successful European expansion
The way to do this successfully is to access the services of an experienced team of European Direct Selling management experts that provide a one-stop solution. These experts remove the hassle and resource-heavy task of hiring and training locally. There’s not always a need to set up subsidiaries or offices. The resources to look after all the functions you need are available through our talent pool of highly experienced direct-selling specialists who understand the international expansion journey and have experienced it several times, working effectively as an outsourced unit.
Localised marketing, social media, operations, logistics, corporate governance, compliance, product registrations and even product development and production can all be outsourced.
So why the case for outsourcing?
After almost three decades of participating in and observing several European establishments I have noticed certain patterns. There is a three-year cycle and getting the first three years right is crucial for long-term success. Things often look very different between the first and the third year and anticipating what the business will look like down the road is increasingly difficult in today’s world. The highly dynamic nature of direct selling doesn’t make it easier.
Also, it’s not easy to fully understand the implications of tax law, VAT, product legality, localisation needs and cultural differences if you are new to a complex market. Even the European Union (which is not the same as “Europe”) is only partly harmonised. It is not one single market. We still have different currencies, legislation differences and different cultural preferences.
Very few companies manage to penetrate all the different parts of Europe successfully. It’s possible – but it is more likely that a company will crush it in one country or region, but fail to gain traction in another. Where the growth will happen is hard to predict and acting fast to support the field can make the difference between momentum and decline.
On top of that, strategies, priorities and people change. The amount of control exercised by HQ on the local business tends to move between more autonomy and more direct control. This is regardless of how well the local business is run. It is just the nature of how attention moves in international supervision of local markets. The subsidiary goes from being locally managed, which the local team was initially hired for, to be centrally managed in a matrix type organisation with dotted lines. This often tends to slow things down and reduce morale rather than lead to the efficiencies that are sought. Years can be spent getting fine tuning or trying to fix the issues that are created internally by such changes. This should be a key, strategic topic but from my experience it is often just largely ignored.
I have established and run subsidiaries, offices and warehouses in numerous locations across Europe and beyond. I have written detailed expansion plans for several companies as a consultant and done all the set-up, hiring and establishing of operations as MD or VP for international markets. I have done so with preference to a local, permanent establishment and putting together a great corporate team. But observing the above-mentioned cycles and tendencies, today I would advise a lot of companies to tread differently.
Managing through the change
Whether the business is highly successful or still working to hit momentum, the changes and upheaval that often happens three years into the game are often not beneficial to the field and can seriously affect retention of leaders and impact sales. The cost of making changes to offices, personnel or having to deal with the effects of non-compliance of things such as VAT filings or product issues can seriously affect the bottom line of the first years of business.
Hiring employees in Europe is different from doing it at HQ. Social security costs, holidays and employment law can seem daunting and complicated. Reducing headcount can be trickier in jurisdictions with a high level of employee protection and can get costly. This is often missed in the initial stages as companies rush into a new market because field leaders are pushing for it, excited about their local connections.
You would prefer a strong local presence vs Outsourcing
If you do have a long-term commitment to a substantial European presence and the budget to support it, go ahead and set up a local team, office and run. There are excellent executive search firms specialising in direct selling talent to help you find the people and specialised legal advisors available to assist you.
Hopefully I’ve helped you with just some of the considerations to factor in when preparing your case for expansion.
Still have doubts or concerns about local set up?
If you have any doubts or concerns or want to try the market first, allowing it to prove itself but with proper support and a functioning infrastructure, I encourage you to consider the option to Outsource Europe.
I can help you so please get in touch and let’s have a talk.
Janne Heimonen | +46 768 85 87 63 | janne@hyvaheimo.com
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