Is your business doing well stateside or regionally?
Well, you might be primed to expand overseas.
Expanding your business on an international scale will help you diversify and find new opportunities in the fast-growing market. But before you make that huge step, understand that succeeding internationally is not easy and will require careful planning.
In many cases, the expansion is marred by a plethora of nuances that might make the whole experience terrible.
The good news is that we’ve outlined five steps that you should follow if you are looking to take your business international.
1. Assess your Readiness
Traditionally, a business was deemed ready for international growth when it grew big. The old-fashion path to global growth means expanding regionally, nationally before going international years later.
However, a few years back, the Council on Competitiveness coined the term “micro-multinational” to describe businesses that go global from day one.
Today, we can leapfrog all the traditional steps, and go global, even without a national or regional presence, provided you're ready.
So, how do I know that my business is ready to go international?
First, are you key employees on board with your globalization proposition?
Secondly, you will need “soft skills” that will see your expansion to success. Some of these skills include patience, good communication skill for building trust with foreign partners and willingness to adapt to new business culture.
2. Select your Markets
If you are ready for international expansion, your next step should be that of identifying a few promising markets.
While at it, we advise that you start by focusing on a limited number of markets, and ideally, concentrate on countries within a certain region. This is more cost effective in choosing countries scattered all over.
On paper, some of the countries seem like the perfect location to conduct your business, but below the surface, there are so many more things to look at for, and it behoves that you conduct due diligence before settling on any country.
Some of the factors that you should special attention to when selecting on a new market include:
- Employment Regulations and Practices: Employment laws are different overseas. Having a grasp of how the regulations work in your country of interest will prevent your business from tilting the balance of powers greatly to the employees, at the expense of your company.
- Tax Environment: If you are planning on having a presence or ongoing sales to another county, be sure to investigate all legal HR and tax implications. Taxes can add a significant cost to doing business, and not to mention landing you into the corridors of justice if you don’t comply with the laws and regulations. This is not a distraction you need when expanding your territory.
3. Consider your Financing Needs
Expanding your business internationally comes at a cost. There is so much involved at moving your business to foreign markets.
Therefore, it's essential that you have a financial plan at hand and your financial plan should encompass on the nitty-gritty of financing your business.
Unless you are a self-sustaining multi-billion venture, it’s at this stage that you should be discussing your financial needs with your banking partners as well as investment partners to see what financing options you have.
Again, it’s also at this stage that you should also consider insurance. Insurance is crucial as it can protect your business against losses if foreign clients default on their payment.
4. Plan your Entry-Understand the Importance of Culture in Global Business
Once you found your target markets, have done in-depth research and laid your financial plan, it's time to plan your entry.
Planning entry is multi-faceted, but first things first, you should get acquainted with things like the potential market for your product, regulatory and labelling requirements, local competition, distribution options and cultural differences.
Speaking of the cultural orientation of your target market, you should understand that there is a whole set of cultural factors to consider when expanding business and they play a crucial role to the success or failure of your business.
A testimony to this is an American manufacturer of table tennis balls, which decided to expand its business to the Japanese market. While the sport is quite popular in Japan, the company failed miserably because they were selling their balls in a four-pack. Number four in Japanese is pronounced the same as "death". Thus, people generally tend to avoid anything that contains four pieces.
But that is a just a tip of the iceberg; to align your business interest to the target market, you’ll need to do a host of other things including tailoring your adverts to suit the local population.
With more than 80% of the population accessing the internet through mobile devices, translating your website into the to the local dialect is of the essence. Rather than going for the cheap Fiverr gigs, we recommend that you find reliable translation services in Budapest to handle all your translation and marketing services in foreign countries.
With everything set up, you are now ready to start selling.
When starting, your focus should be about building a long-term relationship with your new market, and again, it essential that you remain patient.
It often takes at least six to eight quarters for international expansion to take root.
When planning to go international, it's vital you conduct your market research methodically and ensure that you find out all cultural peculiarities of the market before implementing them in your international strategy.