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How changes in global finance can affect your business


Changes in how financing happens on a global scale affect aspiring business owners in various ways. Choosing to expand and ground your business into international territory comes with its set of challenges. Rules, regulations, and opportunities for financial backing shift dramatically depending on where you’re conducting your business. With that being said, business owners are hoping to explore new, untapped economic potential within global markets. There’s no doubt that the potential for success is out there, but in a modern economy, some business owners might need to get creative with their ventures. Here is what entrepreneurs need to consider when it comes to financing their business on a global scale.

Different financial strategies for every country

The benefits of global commerce are extensive, if you and your business are up to the task. Choosing to sell internationally can counteract sales patterns in your current market as well as reduce your financial dependence on just one market. However, if you’re thinking about opening up internationally, you might want to consider how you’ll be able to fund this growth opportunity. There are many ways to fund an entrepreneurial endeavor, but not all of them lend themselves well to international businesses.

Loans, for example, are not accessible to all business owners in all markets. International qualifications and processes can vary considerably. Certain loans in the US may only carry you so far internationally and can be hard to qualify for. As such, some business owners are funding part of their endeavors with small, controlled funds that are easy to qualify for, like secured credit cards. This type of funding is accepted in most places and works the same virtually anywhere, which leads us into our next point about exchange and global markets.

Opening up your business to an international market means that you have to be in tune with multiple economies spread across the globe. Certain markets lend themselves beautifully to entrepreneurs who are working to expand their boundaries. As for others, taxes on capitalist ventures, the ability to be approved for an international loan, and cross-border trading laws can all be quite strict depending on where you’re looking. In addition, rules and regulations regarding renting space and conducting international business from a location in country can vary drastically depending on the market.

This means that any small business owner should be acutely aware of desirable markets and strategizing your business plan for landing within that country. It absolutely can be done, but not without some careful planning beforehand. Sadly, not all markets are created equally and a lack of understanding in regards to international funding and processes could be detrimental to your dreams of global expansion.

Venture capitalism

Financing your business internationally could also mean reaching out to private investors to fund your endeavor. In recent years, venture capitalist funding has exploded for small businesses and entrepreneurial startups. Venture capitalist investors are looking to spend their money on companies that are creating something that can potentially change the future of their niche. Not to mention, they’re looking for a product that can reach an international audience. Fantastic examples of this are Uber and Airbnb, two companies that came up with an extraordinarily simple idea that gave the world something it didn’t even know it needed.

Specifically pertaining to venture capitalist funding, investors are searching for that “unicorn” start-up that could make an incredible return on investment. The two impressive examples shown above are both companies that are worth 1 billion dollars or more, hence the name unicorn. As such, this has had a direct impact in what type of companies venture capitalist companies are willing to invest in. Investors are still willing to fund projects of course, but their idea about what a successful company should look like, has changed over the last several years.

The types of businesses that have been funded by venture capitalists and have been wildly successful have changed dramatically over the last several years (as you can see with Uber and Airbnb). As a result, many investors are looking for a groundbreaking new idea that hasn’t been explored by anyone else before. This financing option has opened the door to new possibilities for expansion for countless startups that may have never been able to acquire this scale of investment before.

Changes in the job market & gig economy

In addition to taxation, international funding, and cross-border trading, entrepreneurial startups should also be aware of international job market changes and increased influence to gig economy. An increase in the virtual economy has caused a large change in where money goes and is spent in today’s global market.

For example, many countries, like the US, Australia, South Africa, and the Philippines have a growing population in interest of freelance work. If the local economy and job market isn’t accommodating the specialties of those who live there, some individuals may stay put, but prefer to perform contracted, virtual work for companies in other countries. This causes a shift in local and global economies due to the lack of investment in local trade.

The results of a gig economy are a bit complex. On one hand, the gig economy provides an opportunity for small business owners to employ skilled workers from around the world, even on a temporary basis, and not have to worry about necessarily having a home base of operation in each market. On the flip side, an increased demand for freelance workers could mean a significant shift in the local job markets and economies of certain countries if skilled workers are able to find better paying work online as opposed to locally. For entrepreneurs looking to expand, this is something to consider when making decisions about the most fruitful prospects of expansion.

There’s no doubt that global expansion is a lucrative endeavor for entrepreneurial business people. However, as you can see, in a modern market there are many facets of international business that currently affect opportunities for development. Some of these areas have been financially affecting entrepreneurs and small business owners for some time, while others are just now emerging within a technological boom that can only morph and grow with time. Choosing sound financial backing and markets within countries that have proven to withstand economic fluctuation is undoubtedly the hope for any entrepreneur that hopes to expand internationally. Examining these trends and strategically planning for expansion will help to eliminate the financial stress of encountering a global economy.

About Trisha Miller

Trisha Miller is a writer from Boise, ID. She focuses on the world of finance, business, and marketing, as well as other topics like mental health, work-life balance, and veganism. You can find her on twitter @thatdangvegan

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