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16/07/2014

Azule Finance: The Secret Of European Expansion

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Azule Finance is the leading provider of asset finance and leasing solutions for the media and technology sectors in the UK and across Europe. Peter Savage discusses the company's recent expansion, the importance of local knowledge and the ins and outs of cross-continental business.

An emotional paradox - this is the only way I can describe international expansion. As a managing director, I have personally overseen ventures into Europe and I admit, the process is far from easy. But, once you have a foothold on the continent the rewards are well worth the hardship. After all, being able to offer clients a multi-national deal is extremely helpful when pitching for contracts - writes Peter Savage,
I know it doesn't matter how experienced you are, or how much planning you put in, of course there will always be obstacles to overcome when taking a company to international markets - but to help you, here are my experiences to give you the best chance of success.

European standardisation
As members of a single market, how different are the individual European Union states?
Very.
Although most first-timers assume they will be similar, if not the same, there are notable differences.
For instance, I found that starting a company in Germany needs a minimum share capital of €25,000 to be invested, compared to £1 needed in the UK. And before I could even invest this money I had to become a director, which meant having several documents notarised, authenticated and legislated with a witnessed signature. Finally, the share capital payment needs confirming (the bank sends a statement as evidence it has been paid) and you are personally liable for the €25,000 until the full amount has been paid, or at least half of it; a scary prospect even for an old hand like me.
Although it is complicated, I can see how the German process makes sense. While it is time-consuming (in my experience, about three months), it does ensure that you are wholly committed to setting up the business. Interestingly, and presumably because they know you have paid in €25,000, people are far less concerned about providing credit; there is a natural assumption that you will pay.

Man over matter
An important piece of advice - never underestimate cultural differences. You can do as much R&D as you like but until you get to market, you can't be sure how well you'll be received. We found that people in Germany weren't willing to talk with us Brits about finance, no matter how nice our offices were; credit is a big taboo over there.
This taught me the single most important thing when moving into a new market - get someone on board who knows what they are doing; somebody who understands and identifies with the local culture. This isn't simply a communication matter (although this is vital), but part of a much bigger picture. If we'd had a local finance expert on board then we could have built key relationships with clients straight away, rather than waste valuable time and money.
As I have mentioned, each individual market in the EU is different and here's an example. When Azule moved into Ireland we found people were perfectly happy to discuss finance with us, and ironically we found a good firm of economic accountants who advised us against an expensive office – lesson learnt.

Be brave
Despite the set-backs we made it into Germany, which acts as a fantastic starting point for conquering the Continent.
Remember, there will always be challenges but with experience and knowledge you will overcome them. The important thing is to trust your company, the people around you and to be brave.

So what's next for Azule?
We have been considering expansion into France for a long time. Using the above experiences, I am confident that it will be a success but it won't be plain sailing. Like the rest of Europe, France has its own rules and regulations about employment and business regulations.
For me, the stand out difference is employment inflexibility and this is the only obstacle stalling us at the moment.
With time and patience you will get through the tough times if your R&D hasn't let you down. Yes, it is hard to set up a business in a different country but unless you try, you'll never know whether or not it will succeed.
I can tell you there are few British companies that have a foothold in Europe and this gives us a massive advantage. Now we can offer 'big' customers multi-national deals which helps them out a lot, and secured us contracts that being based solely in the UK we wouldn't have ever dreamed of.
Be brave, take a chance and you will find it's worth the effort.

The article is also available in BFV online.

(IT/JP)
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