Finance News & Insights

Five Common European Expansion Mistakes – and How to Remedy Them

Picture for 5 common mistakes

NBTC – Jochen Tack

Each year, companies both large and small make the big decision to expand to Europe.  But many soon find out that although expansion was the right choice, the location they picked was not.

“Expanding to Europe is a wise business decision for many companies,” says Bas Pulles, commissioner, Netherlands Foreign Investment Agency.  “Strategic locations, pro-business policies and a highly qualified local workforce can all add up to success.  But choosing the right place requires careful research and analysis.”

Here are five common European expansion mistakes, and how to remedy them:

The mistake:  Assuming “one size fits all.”

The solution:  Do some match-making.

Business needs vary, so one location may not be the best choice for all operations.  The online tool www.locationeurope.com allows visitors to weigh factors such as market location, multilingual availability, and accessibility according to how important they are to an individual company, and then provides an analysis of locations that perform best in those categories.

The mistake:  Undervaluing the local workforce.

The solution:  Find a workforce that fits both a company’s needs and culture.

Recruiting and retaining employees with the right skills are an important concern. A well-educated, multilingual population that is also proficient in English is a big advantage.  In addition, locations that are worldly, culturally open and focused on international commerce will contribute to a successful European expansion.  Finally, consider local labor costs, which will vary greatly by title, vocation and country.

The mistake:  Not getting the full picture on transportation and logistics.

The solution:  Consider the entire system, and how it fits together.

Airports, seaports, rail, even public transportation, are all important factors when choosing a location. A nearby international airport that is serviced by enough carriers to destinations is important, as is a location with a variety of shipping companies and 3PL providers.

The mistake:  Forgetting about quality of life.

The solution:  Ask the question—“could you live here?”

A European office may mean North American-based executives and employees may spend a significant amount of time there.  Many may even move with their families.  Excellent educational and health care systems, dependable transportation and telecommunications networks, and a variety of entertainment options and housing choices will help employees feel “right at home” – even if “home” is an ocean away.

The mistake:  Thinking short term.

The solution:  Think long term.

Often, a company’s first instinct is to locate its European operations in the center of its most successful market.  That may be a mistake, simply because that market or location may not be ideal to handle future growth. Consider how the chosen location will fit the company 5 or 10 years from now.  Think strategically to choose a location that fits a growing business.

One final tip:  rely on the economic development agencies of the countries under consideration.  They can give a good overview of business practices, tax structure and lifestyle-guiding companies through an often confusing and overwhelming experience.

For additional information on what to look for when considering a European business location download the Netherlands Foreign Investment Agency’s white paper entitled:  11 Key Factors in Choosing the Right European Location.  For specific information on the advantages of the Netherlands as a business location for U.S. businesses go to our website at www.nfia.com.

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