If you follow International Man regularly, you're familiar with the range of justifications for multi-flagging and strategies to accomplish global diversification. Passport from one country, income from another, and property in yet another is a rule of thumb that informs much of the IM community's thought and action.
Less frequently discussed though are motivations for, and benefits of, similarly diversifying your business.
If there is a short list of traits common across members of the IM community, an inclination toward independence and entrepreneurship must rank highly; therefore, many of you own or aspire to own companies.
Business owners have unique diversification considerations as their personal interests are often tied to their corporate interests.
Three personal considerations of corporate global diversification impact business owners.
- Immediate – risk
- Short term – income
- Long term – wealth
Did you spend the last three months of 2012 wondering what the antics in Washington would mean for your business? Did you suspend certain types of expenditures, and delay or accelerate others, for tactical reasons?
Clearly the political risk to business in the US hasn't yet reached the level of "nationalization."Because edicts from the EPA, for instance, can instantaneously change your business model and profitability, you must consider your risk concentration.
How is demand for your product/service impacted by a -1% growth environment?
For most the answer is clear – and not good. Yet, while broad trends affect large swaths of the globe, local conditions vary substantially. You could well experience vibrant activity and robust growth in some markets while others languish.
Most business owners generate their primary income as employees of their own business. But while payroll obligations for other employees often trump other obligations, one person is always last in line: the owner.
Global diversification has two important income implications in addition to the security inherent in diversification. First, the vast majority of the world's consumers are outside of the US.
Previously, many had no disposable income, but many now do and are often eager consumers of products they previously only imagined. Developing markets represent a revenue opportunity, as international sales could help supplement stagnating domestic revenues.
Second, if you establish a foreign subsidiary or affiliate, an owner can often pay himself in local currency, and deposit in a bank account denominated in the local currency.
Several side benefits of internationalizing your business can also impact revenue, including potentially lower taxes on export sales, and possible government subsidies for business development activities.
Most business owners could easily earn a more secure income as someone else's employee. For some who enjoy independence, the motivation for business ownership is a lifestyle choice. But for many, business ownership is the best avenue to wealth.
A foreign subsidiary could also present an opportunity for accumulating foreign assets (e.g., real estate) that contribute to your diversification.
Sensible from any perspective
So whether you're primarily concerned with growing revenue today or building the value of your business in anticipation of its sale, global activities should be an important part of your calculations.
About Ed Marsh –
Ed Marsh is an international business entrepreneur. Having founded, run and built businesses in several countries. he intuitively understands the potential and pitfalls of global business development. He assists American SMBs in formulating and executing global business strategies. Website link is www.ConsiliumGlobalBusinessAdvisors.com
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International Man delivers the most important news and top resources on the internet regarding the world's last frontiers, internationalizing your assets, and diversifying your political risk, for new and experienced freedom-seekers, investors, adventurers, speculators and expatriates.