In recent times, the UK economy (and others in the Western world) have showcased incredible resilience in the fact of social, financial and geopolitical austerity. This robustness first presented itself in the wake of the Great Recession, while it is something that has defined the British economy over the course of a uniquely challenging 18 months.
Despite the uncertainty created by Brexit and the vague nature of Britain's exit plan from the EU, the nation's corporate finance chiefs remain more optimistic about the future than at any point in recent times. This confidence is also shared by smaller businesses and investors, many whom are predicting a bright and prosperous future.
Should You Invest in International Businesses? The Key Considerations
The spectre of Brexit still remains, of course, while Prime Minister Theresa May's determination to sever all ties with the EU could yet lead to a period of economic decline. With these factors in mind, confident UK investors may look to invest in overseas business and asset classes, as they look to capitalise on improved sentiment at home and superior economic portents abroad.
International investment is a complex and risky entity, however, particularly when you commit your funds to businesses. So, here are three key considerations to determine whether or not it is right for you: -
- The Basic Rules of Investment Still Apply
The complexities and nuances of the global business market can be daunting, while they can also cause investors to lose sight of the basics. Regardless of whether you are investing in a domestic firm or an international brand, there are a series of universal and fundamental rules that you must adhere to.
Many of these relate to the business itself, and more specifically its cost base, profit margins and future growth projections. When appraising international start-ups, you must still commit to undertaking gap market analysis, in order to determine whether the companies proposition fulfils or a consumer need or is likely to generate demand.
These basic rules enable you to determine whether or not the specific investment in question is viable, before you consider the complexities of finance and international law.
- Remember the Importance of Currency Conversions
From the perspective of international deals and investments, this is arguably the most important consideration. After all, the forex market is one of the most changeable and volatile entities in the financial world, with the value of individual currencies and pairs known to fluctuate wildly during the course of each, 24-hour trading period.
Resources such as FxPro chart these price movements, which can be influenced by everything from geopolitical conflicts to microeconomic data. These outlets also provide additional resources and analytical tools that will not be found on basic currency convertors, however, making them invaluable to traders and those who wish to invest their capital overseas.
If you are going to make the most from your investment, it is imperative that you understand the impact of currency and access real-time prices and trends. Without this, you can undermine any deal that you strike and instantly devalue your investment.
- Account for Logistic and Legal Challenges
On a final note, there are also a number of logistic and legal challenges that investors face when committing to overseas ventures. In terms of the former, investors must account for time zone and language difference, which can impact negatively on communication and make the process of managing investments more difficult.
From a legal perspective, each international country also has its own, unique set of laws relating to compliance, HR, taxation and numerous other business elements. If you do not heed these, or at least employ a reputable, local legal advisor to help oversee the investment, you may end up falling foul of local laws and undermining even progressive projects.
