Going Global: Guidelines on Opening a Successful European Sales Office
One of the milestones in an emerging company's growth is moving beyond a domestic-only sales model and putting feet on the ground in foreign territories. One of the most important is Europe, with its population of 550 million people located in a compact area. Europe is often the natural entry point for companies wanting to go global, particularly since their competitors might already be there.
However, opening a European sales operation shouldn't be handled casually. Europe is a complex market with multiple languages, time zones, cultures, and currencies. There are different labor laws from country to country. Each nation will have its own work ethic, business customs, and legal framework. Many of the important aspects of opening a European sales office aren't easily plotted on a spreadsheet but can make or break the success of such an operation.
While no two companies are the same, it's helpful to know the key factors ahead of time in order to streamline the process of selecting a location and getting the operation to successful critical mass in less time. Here's Part One on “Guidelines to launching a winning European sales office.”
When Should You Make the Move?
There are important considerations that drive the "when" decision. First, what's your company's sales model? Some focus on high touch, others depend on inside sales and there are those that emphasize field sales or work primarily with channel partners. Your particular approach drives the answer, with those that engage more directly with customers—thus need to be near them—likely needing a European office sooner.
If your sales model can be successfully handled remotely, the demand for an office is lessened. However, companies in some industries like medical devices don't have a choice whether to launch a European office if they want to sell products there. They need a regulatory pathway to get approval for products, so establishing a base is needed. Other companies that must consider European laws and regulations that impact their products and business might also benefit from being local.
There are also various practical considerations driving the decision, such as whether your executive team has the skill and bandwidth to manage a foreign office or group, and whether you even have the internal resources to do the necessary planning before launching such an operation. But consider this: Most companies that have made the leap say that once they verified the benefits of having a European sales office, they realized they should have made the move sooner.
Where Should You Locate?
Given that there are 28 unique countries in the EU, choosing a location isn't easy. This is a good time to consider where your peers, customers, and partners are located. What country have they chosen and why? Locating near your main stakeholders can help maximize success.
For a single-office location, pick a place that can tap into a wide pool of skilled international workers in an easy-to-access city and a location that understands both the U.S. work culture and ethic as well as the European way of doing business.
Clearly, costs in your chosen country are a big issue, from real estate to the price of housing and living expenses for your employees. You might well scale up your operation over time, thus a country with an expensive, overly competitive real estate market could be less attractive down the road.
Often, companies start with sales and support personnel in the new market but as they grow, begin to hire engineers and developers. And as the team expands, companies start to hire finance, legal, ops, and other support functions to aid their growing teams. Thus, you should assume you'll need additional space for new hires soon or in the medium term. This means finding a location where you have the flexibility to scale across multiple business functions. You need flexibility in terms of real estate and talent availability and mobility across these functions.
Given the many moving parts in making such an important decision as where to locate an office, it's best to examine a number of potential locations in light of the local work ethic, customs, productivity levels, and attitudes.
Policies, Regulations, and Other Red Tape
The main driver of your success in Europe will be getting access to the right people to manage and grow your business, so labor laws and immigration policies should be top of mind. What are the country's immigration policies? Will moving staff in from other locations, if needed, be problematic? And will labor laws make it difficult to get rid of employees who don't work out? There are flexible labor laws that benefit both employer and employee in Ireland, for example, and the country has no cap on the equivalent of H-1B visas.
To better understand the costs, tax liabilities, and benefits of various locations, speak to lawyers, tax advisers, and bankers for insights into the level of paperwork required to get up and running. Banking in Europe is very different than how it's handled in America and can be a major pain point for U.S. firms, thanks to the EU's Anti-Money Laundering Directive and the Know Your Customer initiative, which is part of its customer due diligence measures.
Deirdre Moran is vice president of emerging technologies at IDA Ireland (http://www.idaireland.com/). In this role, she works with high-growth emerging companies and start-ups to assist these companies in exploring the opportunity of moving overseas to Ireland by providing information on the business environment, building business models, recruitment, finance, legal, tax, property selection, PR, and infrastructure.