New Market Entry: How & When Your Business Should Establish a Long-Term Presence 

When you take your business global, new market entry is crucial to get right.  The most successful companies start with salary benchmarking and market research. They’ll then test market entry with a few staff members, and perhaps the use of an Employer of Record.  

Then comes a pivotal question: should we commit for the long term? 

This commitment phase represents a fundamental shift in how you operate in a market.  

You move from testing to embedding, from temporary arrangements to permanent infrastructure, from proving viability to building sustainable competitive advantage.  

So when should companies make this transition and what establishing a permanent presence actually entail? In this third instalment of our series on global expansion, we’ll take a closer look.  

From market entry to commitment: what does it really mean?  

It’s easy to assume that establishing a permanent presence is merely a question of registering a legal entity. But it’s much more than that.  

You assume direct responsibility for employment, tax obligations, regulatory compliance, and ongoing operations in the market. 

And of course, this decision carries significant implications for your investment requirements, compliance obligations, and strategic positioning.  

It’s tricky to get right.  

Companies that commit too early lock themselves into expensive legal structures and HR processes before they fully understand the market. By contrast, those that wait too long risk missing growth opportunities and undermine confidence among employees, customers, and partners. 

Here are a few indicators that can tell you when the timing is right.  

Market performance indicators

Can you demonstrate consistent revenue growth rather than sporadic results?  If you can see a clear path to profitability that justifies investment in permanent infrastructure, it’s probably time to give it serious consideration.  

Customer and partner signals

Early adopters who took a chance on your company when you were still proving yourself in the market might indicate they want to expand the relationship.  

For instance, a software company might find that its initial customers, who signed small pilot contracts through your foreign entity, now want to roll out your solution across multiple departments or locations.  

However, their procurement team flags that company policy requires contracts with local legal entities for commitments above certain thresholds. 

Team readiness 

Your local staff has grown beyond a handful of pioneers to a size where managing through third-party arrangements becomes cumbersome.  

Talented candidates might express hesitation about joining without the stability of direct employment. Your existing team might for more autonomy and resources to capture opportunities they see in the market. 

Planning for new market entry 

When companies evaluate commitment decisions, they naturally focus on visible costs like registration fees and legal expenses. These initial investments matter, but they represent only a fraction of what establishing permanent presence will cost over time.  

Let’s look at some of these costs in more detail.  

Ongoing financial obligations 

To maintain a long-term presence in a new country, you’re going to need to be financial compliant.  

But compliance itself represents significant ongoing commitment. You’re going to need local accounting that maintains books according to local standards and produces required financial statements.  

Likewise, tax obligations will extend beyond annual returns to include various periodic filings and withholding requirements. Statutory audits may be required annually, adding both cost and management time. 

Corporate governance requirements 

Permanent establishment brings with it a host of corporate governance obligations.  

For instance, wholly owned subsidiaries might be asked to hold annual general meetings. Some jurisdictions will require company secretaries and resident directors to be in place.  

And corporate governance means more paperwork! Statutory registers need to be maintained and updated. Corporate filings need to be submitted on schedule.  

HR infrastructure 

Building a long-term presence means building a long-term HR and payroll infrastructure. Payroll processing needs to be precise. Salary  

 Benefits administration will need to extend beyond health insurance to encompass mandatory pension schemes, statutory leave entitlements, and jurisdiction-specific obligations.  

And perhaps most importantly, you’re going to need to invest in localized HR and benefits expertise to stay compliant with local laws.  

Build professional relationships & regional partnerships 

You need local legal counsel available for contract reviews and employment matters.  

Accounting and tax advisors become essential partners, particularly during reporting seasons and when regulations change.  

Industry associations and business groups require time and resources to maintain – but don’t ignore the fact they provide crucial market intelligence. 

 

Why international expansion is such a critical opportunity for business leaders

Ian Larkin, CEO of TopSource, explains why international expansion opens up new opportunities to recruit specialist talent. Whether it’s AI, crypto or bioscience – taking your business across borders means more than just discovering new total addressable markets.

How we can help

 

How to elevate your HR strategy in a new market 

When you transition to becoming a direct local employer, you assume complete responsibility for how you attract, compensate, and manage people in that market. It’s a big responsibility – and a costly one.  

What’s more, this shift will determine your ability to build the team you’ll need to succeed long-term.  

Understanding local benefits requirements 

Research shows that inadequate benefits packages rank among the leading causes of employee turnover, with approximately 74 percent of HR professionals identifying this as a primary driver of staff turnover.  

As a local employer, you’re going to need comprehensive understanding of statutory requirements such as  

• Pension contributions 

• Health insurance mandates 

• Parental leave. 

Competitive positioning 

Beyond legal minimums, competitive positioning requires understanding what leading employers in your industry offer to attract talent – and taking the necessary steps to match it and better it where you can.  

Salary surveys, advice from local recruiters, and market intelligence from your early hires all inform compensation decisions that balance local market rates with your global philosophy.  

Managing the employee lifecycle 

Your recruitment operation is going to need to comply with local labor laws regarding job postings and interview questions. Employment contracts must follow local requirements for form and content.  

Performance management approaches need adaptation to local cultural norms. Termination procedures vary dramatically across markets, with many countries requiring extensive documentation and significant severance payments. 

Building your HR capabilities 

Many companies find value in partnering with local HR consultants or service providers initially to help navigate requirements while building internal expertise.  

The investment in elevating your talent strategy pays dividends well beyond compliance, making recruitment easier and retention more likely. 

Investing in the operational foundations 

As we explained earlier, you’re going to need ongoing compliance with local corporate governance requirements.  

Poor entity management creates problems when you need to complete transactions or demonstrate good standing to customers. 

Financial operations 

You’ll need to maintain accounts according to local standards while providing information your global finance team needs for consolidation.  

Similarly, banking relationships need establishment with appropriate controls and processes for international fund flows.  

Cash management 

How will you fund local operations? Will you capitalize the entity adequately, provide shareholder loans, or rely on revenue to fund growth? 

 Each approach carries different tax implications. How will you repatriate profits when operations mature? Thinking through these questions early helps you avoid expensive restructuring later. 

Technology infrastructure 

Data residency rules may mandate that certain employee or customer data remain within specific jurisdictions (for instance GDPR) 

Tour company’s payment processing needs to accommodate local payment methods and banking infrastructure. Security requirements and data protection obligations will vary across jurisdictions – you’ll need to pay close attention to this as you expand.  

Corporate governance structures 

Who has authority to make decisions locally? What requires escalation or approval from global management? How will you balance local autonomy against global consistency? Establishing clear governance from the start prevents confusion as operations grow. 

How to turn commitment into competitive advantage 

Executed well, commitment builds trust with customers, unlocks hiring potential, and gives you operational control to grow. Executed badly, it creates costly inefficiencies, erodes credibility, and slows your expansion. 

The commitment phase represents a defining moment in your expansion journey. It transforms your presence from temporary and exploratory to permanent and strategic. For companies that have validated market opportunity and built initial momentum, making this commitment opens the door to sustainable competitive advantage and long-term growth.