The pandemic won't stop globalisation
London has always been a multicultural hub for businesses across the world, but with COVID-19 taking centre stage this year, it is easy to assume global companies will stay closer to home. With months of lockdown and borders shutting, many businesses have been unable to rely on their international partners and have had to look elsewhere for sourcing their supply chains. But in fact globalisation should be more alive than ever, as businesses turn their operations online rather than in person. The way we work has been forced into a mass digital transformation meaning business leaders can start a global organisation from their own home.
London today already looks different to six months ago. The way we work is changing and outsourcing talent with remote workers is easier than ever. With many businesses no longer needing or using their office space daily, the hunt for talent can be more global. Key to making this a success however is using the best technology and solutions from finance tools to team collaboration platforms to easily set up business online.
Building the foundation of a global business
When looking to expand a business there is a lot to be considered. A common issue when entering a new market is setting up the financials. In the not too distant past, a representative of the company would have to go to the country and physically set up a bank account and get verified. To do this, often the business would need to have an office space to connect to the account. Traditional banks make it extremely hard for any sized business, let alone SMEs, to expand globally.
This is where newer finance platforms come into their own. These are cheaper, more convenient alternatives to traditional banks as they make finances easier. When setting up an international business it’s essential to be able to easily to pay suppliers in local currencies. However, the cost of this can skyrocket as traditional banks often have the highest exchange rate and can hide fees so business leaders don’t have the visibility over their own financials. Using a neo-bank can help minimise these costs by being completely transparent with their FX fees, providing lower exchange rates and transfer fees than the big banks, as well as being completely transparent.
Usually, they can save money as well as time as some offer no sign-up fees or monthly fees. Neo-banks which offer this allow for businesses to set up in a matter of minutes - making globalisation accessible to SMEs.
Opening up new opportunities
With lockdowns across the world, eCommerce has been one of the industries able to thrive. In fact, if you look at eCommerce, lockdown has massively accelerated the growth. Total online spending in the U.S in May hit $82.5 billion, up 77% year-over-year. Businesses during this time have found ways to be nimble and have adapted to the changing environment caused by COVID-19.
Creating an online web-store has been one way businesses have changed their models to keep on operating during recent restrictions. Luckily, it’s relatively simple to convert a brick and mortar company or shop to an online offering. There are multiple platforms out there such as Shopify, which provides even the biggest tech novices with a simple process to get their store and products up online for anyone to buy. With competitive pricing, multiple add-on features and very user friendly, it’s an affordable solution to ensuring your business continues to succeed.
There is a lot more to making a business global beyond setting up bank accounts and ensuring the operations are available online. Business owners often make avoidable mistakes by not sourcing the correct advice and deploying the best solutions possible. For example, many business bank cards can really hike up the price of managing finances overseas. Lots of banks charge a fee per use and this all adds up, setting any business back.
Virtual cards are another option to provide employees with a way to pay for business costs abroad such as subscriptions and invoicing. Using virtual cards from a neo-bank often means costs are kept low, there are zero transaction fees and businesses can rest assured they are being given the inter-bank rate when managing their international finances.
During this challenging time businesses should not be deterred from going global. COVID-19 has highlighted how successful businesses can be run from anywhere. The key to this is setting up the right foundations and implementing the best solutions to make globalisation viable.
Having the best financial tools to keep your business afloat is the best place to start. Enabling businesses to open foreign bank accounts in a few clicks, from the comfort of their own home is essential and also extremely cost-efficient. London will remain a hub for global business but just not as we know it. Entrepreneurs are no longer limited by geography and their business plans should reflect this.
This was posted in Bdaily's Members' News section by James Butland, VP of Global Banking, Airwallex .
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