Reprinted with permission from Accounting Today
The world is shrinking and the surge of international business is a contributing factor. According to the Small Business Administration, four out of ten small businesses are engaged in some degree of international commerce. Is your firm exploring this lucrative market, or merely responding to clients’ needs? There is a world of difference in these approaches. The firms who are sending out expeditions today will be the big international market winners.
Check Your Map
I turned to Bob Bunting for answers. Bob chairs the Moss Adams International Service Group, which serves some 1,300 clients. He is immediate past president of the International Federation of Accountants (IFAC) and is past chairman of the board of the American Institute of Certified Public Accountants. A well respected thought leader in this space, Bob’s views are widely sought.
Asked how firms can drive success in the international arena, Bob suggests starting with geography. He counsels firms to assess which nationalities populate their areas as a way of identifying potential targets. For example, Alabama has an abundance of Korean auto manufacturing and Indiana has become home to a number of German-based industries. For Moss Adams, the firm’s San Francisco location as a gateway to Asia provided a natural starting point for international expansion.
Think “Buyer Group”
Approach your international practice (or any niche for that matter) by thinking not just in terms of services offered, but in terms of buyer groups and their particular needs.
This permits you, for example, to go beyond offering international tax services and offer a broader portfolio that includes mergers and acquisitions, business planning, and preparing financial reports under IFRS.
IFRS conversions will become increasingly important, even to firms who do not work for publicly traded entities. Current estimates point to 75,000 subsidiaries of U.S. parents doing business somewhere in the world. These represent $9 trillion in assets. What’s more, there are 63,000 subsidiaries of foreign parent companies doing business in the U.S. These are generating some $2.6 trillion in assets, and many are located in countries using IFRS. The bottom line? If you’re moving in an international direction, you’ll
need IFRS capacity.
Joining Is Not Enough
A proactive approach to international growth requires more than a map of the world and membership in an international accounting association. Certainly, these organizations are an excellent source of technical expertise and business development. But membership per se will not win you clients.
Bob recommends conducting an inventory of your existing client base to identify companies involved in, or set to embark on international transactions. Find out how they go about buying products from foreign companies. Determine what types of expertise are required in terms of their business activities and requirements. Remember, too, that existing clients may have global interests that you may not be aware of. Find out if they have distributors or manufacturing representatives selling for them in other countries. Check income statements for indications of revenue from Canada or other countries. Your client may need to be filing Canadian taxes and may require export/import licenses.
You also need to determine which might need your help with licensing, IP, tax issues and other areas. Learn what services are currently being provided by others, such as lawyers, customs experts or specialists in transfer pricing. According to Bob, many accounting firms make the mistake of handing off such duties to other firms or specialists. Instead, quarterback the relationship so that you become the trusted advisor and problem-solver.
It’s the same way you would operate stateside. If a Kansas client had income or employees in Colorado, the Kansas firm would not refer the client to a Colorado firm, but would research and provide the answers. It’s a matter of establishing your strength and credibility as a financial problem-solver, wherever that problem exists.
Springboard to Success
Once you’ve identified an international client or opportunity, leverage that relationship to find others. Ask your contact at a French manufacturing firm about other companies planning to establish European operations. Seek names of relevant attorneys and regulatory agencies. Learn all you can about the industry. Find your most powerful channels of distribution – those people and firms that work with foreign entities.
Bob counsels to also mine a particular geography or national group to see what industries emerge from it. As Moss Adams began to research Japanese opportunities, the timber and fishing industries arose naturally from those inquiries.
I couldn’t agree more. Identifying particular industries and geographies will enable you to focus like a laser beam growing specific markets. Whatever your approach, avoid the temptation to be all things to all international clients. Back in the day, when you were building a domestic practice, you probably hung out a shingle for all comers. Our world is far more sophisticated today, and your approach needs to match it.
Growing an international practice takes patience. Be prepared to become small again as you start to build relationships and prove your value in unchartered territory.
There’s a world of opportunity out there. Go out and find it!