Is your business ready to expand into the U.S., or perhaps you have already made that move? While the market is lucrative and may seem similar to Canada, there are many complexities of doing business in the U.S. that must be considered. In Richter’s original four-part series, Overcoming the Border Barrier, our professionals, along with guest speakers that specialize in different areas of expansion, lead attendees through various aspects of working and doing business south of the border.
Session one: Managing your business remotely
Session one focused on the practical concerns of U.S. expansion: what to consider, as you are considering expanding. Richter Partner Terry McInally, and Senior Manager Margarita de Guzman, discussed the importance of proper governance, developing proper internal controls, and monitoring and reporting systems.
There are a host of items to consider before you actually begin to move your business into the U.S. – the saying “walk before you can run” has never been more applicable. Before your business takes a step into another country, it’s imperative that your governance structure and internal controls are optimal, at home.
Proper corporate governance ensures the implementation of business strategies and stability of operations. A holistic approach to governance is imperative, as governance is necessary in all aspects of your business: from budgeting and operations to performance measurement and reporting. Proper governance should be built into your business model to help strengthen your overall business resiliency – especially when it comes to supply chain evaluation and management.
Internal controls help you objectively evaluate your supply chain – do you have alternative suppliers if needed? Are the geographic locations from which you get your products diverse enough, should anything happen in one specific region? Before you start to expand, it’s important to answer these questions. What’s more, banks will often look at the strength of your internal controls, as this affects your lending power.
In order to evaluate the effectiveness of your internal controls, we recommend running a proper risk assessment. This helps determine your risk tolerance as you start to scale and expand. What is your tolerance for risk? Where do you feel the most at risk? Do you consider reputational risk more damaging to your business than financial risk?
Risk can cause havoc to a business at all organizational levels and can heighten especially when crossing a border. When a company starts to de-centralize, it’s natural for risks to increase; therefore, proper internal control systems and monitoring needs to be implemented. Regardless of the level of trust you have in your employees or the ease of system use, an objective system of “double-checking” is never a bad thing.
Depending on the size of your business, these controls may be formal or informal. If your business is not large enough to have a formal whistleblower program, you may need to seek out other options: increase senior manager presence throughout the office or encourage an open-door policy. As you start to scale, it gets harder for business owners to maintain the sense of communication with all the team members throughout the operation. To avoid a major cultural shift as you scale that may in turn affect your operations, make sure employees feel empowered to report on things that may seem out of the ordinary, or may cause trouble down the line.
It’s important to note that not all risks are related to people doing something wrong willfully, as well. For this, automatic check-and-balances, proper sign-off procedures or perhaps even quarterly reviews or monthly spot checks can help you ensure your business remains stable and secure. Externally, vendor check-ups every few years are also recommended to ensure your contracts and financing structures are meeting your objectives and staying up-to-date.
There are many great opportunities that come with expansion; but with such chance for reward, also comes an increase for risk. Before you start moving your business south of the border, ensure your governance, compliance and internal control processes are running optimally.
Overcoming the Border Barrier: A roundtable series
Designed specifically for business owners and executives, this exclusive, four-part series provides insights into managing an international business, building solid infrastructure to sustain growth, operational considerations, and important tax and compliance requirements. From priming your business for expansion through to evaluating your business model, this series offers valuable information to ensure your cross-border expansion is successful.
Part three in this series will be held on Thursday, May 19th. For more information on this Toronto-based event, please email: firstname.lastname@example.org. We look forward to hosting you!