A growth team for successful business expansion needs to be built with a plan for compliance to local regulations from the start.
As the peak of the COVID-19 pandemic passes and companies emerge from their survival modes, many are looking tentatively to the future, and assessing their growth plans to see what might be possible.
While any strategy will undoubtedly need to be adjusted to take the economic backdrop into account, firms still need to keep an eye on getting the basics right. Even as some countries temporarily relaxed their requirements to allow companies room to respond to COVID-19, getting compliance right is a critical precursor to any plan.
Companies investing time and effort in this area have a significantly better chance of recovering strongly and growing.
"Government schemes allowed a variety of industries to delay compliance and reporting," says Leila Szwarc, Global Head of Compliance and Strategic Regulatory Services at TMF Group. "But ultimately they cannot be put off forever. As priorities are realigned, compliance needs to be included in high-level strategy."
There is no single blueprint for building a compliance framework. It stems first from a company's view of the systems and structures it requires to run its new business and how these dovetail with global operations. Existing arrangements might be drawn upon. However, assuming they can be extended and replicated wholesale in new territories is a common misconception.
Failure to comply with local laws – tax, employment or privacy, for example – could well mean that recovery plans will scarcely make it out of the starting gate.
Further, there must be constant monitoring of the changing requirements of individual jurisdictions. This is exemplified by rapidly evolving privacy regulations, which are being rolled out at varied rates across different locations. Developments may affect working practices, cultural norms and skillsets in each company office.
Commercial clarity essential
While the COVID crisis has put many expansion plans on the backburner, Szwarc says new ventures aren't being abandoned, merely delayed.
When they are resurfaced, getting the right legal structure will be paramount, enabling companies to register, employ people, open bank accounts, secure tax numbers and get ready for other core functions.
As you grow, Szwarc warns against mirroring headquarters' existing structures. "There's a commercial misconception you can send anybody to set foot in a new territory and expand your business, but that is definitely not the case. You need people with specific talents, networks and knowledge."
What the authorities want
Local advisors are key to helping the growth team navigate complexities, especially in the post-COVID-19 environment, reconciling them to what the business wants to do.
While there are variations in requirements from country to country, the general purpose of the law is broadly similar. Businesses sometimes focus on the many differences when they should be looking at the overarching principles that will make it easier to instil a wider compliance culture.
Understanding the big picture - and the specific items laid down within jurisdictions - will help companies manage compliance requirements better. And this is ever more important as companies look to expand internationally in the post-coronavirus world. There is little room for risk taking or for getting it wrong.
A comprehensive and vigilant approach to compliance should help to keep the venture running smoothly, not just initially, but in the longer term too.
"Every client we deal with is in a hectic pace and doing the best they can in the crisis," Szwarc says. "As well as supporting the training and wellbeing of their employees, many companies are also now finding opportunities to reinvent themselves."
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