For many entrepreneurs, the decision to scale their business to a global market is a defining moment.
This opportunity has been made far more accessible by online services and international logistics services. Taking advantage of moving into the international marketplace can change your business. Some of the advantages that come with successfully growing globally include:
- Reduced dependence on the markets in which you have developed.
- Extended sales life of existing products and services in new markets.
- Countercyclical fluctuations due to seasonal changes or demand cycles can be stabilized by tapping into global markets.
There are many reasons that your business might be considering expansion, the least of which is an opportunity. Your product or service might be in higher demand in an international space, and business might accelerate in a more appreciative environment.
Seeing that your business has real growth potential is an exciting moment. The reality of expanding your business globally is somewhat more complex than a mere idea. There are many questions that need to be answered before you make a final decision about which market you will explore, how to enter the space, what structures you will need to implement to support your move and the budget you require to fulfil your ambition.
Essential Questions about Global Expansion
Growing from the domestic market to an international market is difficult. While your aspirations might be inspiring and your business strong, there are key questions that you need to consider to ensure that your plans can be fulfilled:
- Will the product sell well in the targeted culture? You need to do extensive market research. From simple things such as how your product name translates and is it affordable in that region to more complex questions, like the need for your product in that environment, you need to be sure that there is going to be a receptive audience.
- Is your target market familiar with your product or service? If you have competition in your new market, you will need to invest in consumer education marketing to a greater degree than if you are the new entry. If you are the new entry, you have the opportunity to corner the market.
- Are you familiar with the customs, language and culture of the country? You need a working knowledge of the language and culture. This is not negotiable. If you want to understand how or why your product is or isn’t performing in a market you need to have a relationship with your anticipated consumers.
- What is infrastructure like? If you have an online product to sell, will it even be accessible? Can physical products be shipped in a reasonable time? How would your physical product be treated in customs? Do you need to pay duties and taxes to import your product? Can you rent storage to improve logistics?
These questions are just basic outlines to help you get started. You need to consider many things, such as language barriers, costs and local acceptance of your business before you invest. Market research will save you time and potentially money. You might not answer all your questions, and you might even get some answers wrong, but it is important that you ask before you jump so that you have an understanding of the challenges you may face.
Exporting Mistakes
Obviously many businesses have expanded into international markets, and many more have failed. The good news is that those failures do not have to be your failures if you take the time to understand how and why other exporters before you have fared. A few of the biggest mistakes that businesses have made include:
- Not creating a strategy. It is essential that you have a real expansion plan. There need to be steps, assigned responsibilities, deadlines and accountability. Without a plan, you have no map to guide you towards your goals.
- Choosing too many markets. You need to bide your time. While there might be international interest in your product, taking your time to enter marketplaces one at a time will help you scale your business more evenly and set you up for a better chance at success.
- Not tailoring your product to your market. You need to tweak your product so that it appeals to your customers in their region. For example, offering winter clothing in the summer season will see your business slump. You need to be aware of the details.
- Assuming business will be done in English. If you are entering a marketplace that is not in your native language, you need to learn some basic phrases of the market you want to enter if you do not have a command of the language, and you need to hire a professional translator. Never assume anyone should have to speak your language when conducting business in a foreign market.
Ready to Expand in 6 Steps
If you have decided that you really are ready to export your business overseas, the following steps will help guide you towards achieving your goals:
- Start your campaign with an international business plan. Your market research and attention to finances and marketing will help to inform your strategy and give you a clear map.
- Conduct foreign market research and be certain that not only would your business be accepted and successful, but that you are legally allowed to enter the target market.
- Evaluate distribution networks, whether they be digital or physical. You might need to consider partnering with a logistics company or upgrading digital capabilities to meet the needs of your target market.
- Learn the legal requirements of doing business in your target market. For example, if you have an online business in the US and you want to expand to the EU, you need to understand the GDPR and how it affects your business.
- Understand financing opportunities. Some marketplaces will invite your business and governments will even offer to help you get set up in their market. Do some research and find opportunities that could support your business growth.
- Know market regulations, especially if you are exporting physical products. It cannot be stressed enough that just because your product is acceptable by the standards of your home market, does not mean that it meets with the standards set in another market.
Working in Another Culture
Many immature business people have not been exposed to international markets and fail in their attempts to expand simply because they don’t take the time to think. Not everyone does business the same way, and you need to be patient and respectful if you want to gain a foothold in a new market. There are different standards in different countries, but there are some simple things to keep in mind as general good business practice:
- Establish a relationship. Get to know key players in the market in which you want to expand. People are more likely to feel comfortable doing business with someone they feel they know.
- Do your research. Learn basic phrases if you don’t speak the language of the market you wish to enter. Know the customs of business in that country, and show respect for the people you are doing business with by knowing something of the politics, history and culture of the country.
- Bring your own interpreter. You need a professional business interpreter who works exclusively for your business. This person is privy to sensitive information and it is important that you trust them and have a real and respectful relationship with that person.
- Understand body language. A simple hand gesture can be enough to offend a person and see a business deal fail. Your interpreter should help you understand the subtleties of body language so you don’t make rookie mistakes.
- Dress respectfully. In some cultures, there is a standard of dress code that should not be ignored. Ignorance is never an acceptable excuse for offending people in business situations. If it is unacceptable to wear short sleeves as business attire, make sure you know this and follow the dress code.
Your Final Decision
International expansion is an exciting step. While it is not necessary for all businesses to achieve this goal, for those who are seeking this success it can be a challenge. You need to be sure you want to invest the time and resources this venture requires. If you are a small startup, you need to be sure you have a committed team behind you who are willing to tackle challenges head-on – such as international travel or posting, salary freezes, extended work hours and insecurity. However, if you have a team committed to supporting your international expansion and the funding to attempt to enter a new market, follow the basic guidelines and create a plan. The world is your oyster.
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