Expanding your business into a new region, market or to an international audience is a big decision. The costs, additional workload, logistics and other potential barriers need to be well considered prior to any expansion activities.
Writing a comprehensive business plan that maps out the steps you’ll take and includes comprehensive research of the region in which you wish to expand, including the language and possible cultural barriers, local laws and regulations, regional competitors and a forecast of costs.
This preparation is key to the success of expansion plans. You need to understand the costs, plan for the unexpected and predict as accurately as possible the potential hurdles that your brand will face and how you might overcome those obstacles, using some of the planned strategies written into your business plan. This will help keep things on track and make quick decision making easier.
So what are the key things that you need to consider as part of your business plan for international expansion?
One of the first things to consider is the cost of international expansion for your business. These costs vary widely depending on many factors, such as industry, regulations, office space, manufacturing and logistics. The more you understand the costs related to the region or regions in which you want to expand, the better.
Attempting to understand all the costs associated with your expansion, such as registration and legal fees, can help you manage costs and expenses as they arise. Knowing these costs can also help you to make a final decision about your plans. Some regions might have taxes or fees that you had not considered, and knowing these costs could be a determining factor in your decision to move ahead with expansion plans.
Tax and employment regulations
Depending on the country and even the region, there will be different tax and employment regulations to consider. While your online business might not need to hire people in the territory you are expanding into, some countries require businesses to hire a certain number of people from the community to be registered in the country.
You also need to be aware of taxes that could impact your trade, and the need to register your business. You also need to consider how your country of business registration treats income earned internationally as this might impact profits significantly. To minimize risk when planning an expansion you need to look into these regulations and how they might restrict your ability to operate in certain regions. Your business service or product might even be taxed in a higher bracket in some jurisdictions, which could undermine any expansion plans.
Your marketing techniques
Glocalization – the understanding that your marketing needs to be adapted to the market you are targeting, taking into consideration cultural differences, language, cultural appropriateness and even climate – if you are in a different hemisphere from your target market, they are experiencing the opposite season.
Your marketing needs to be adapted to reach your target market. This might require hiring an agency in the region in which you want to enter to ensure that your campaign is adaptable.
Hiring employees internationally
Many eCommerce companies have teams of remote, freelance workers. This is a great option for your expansion as it removes the burden on you to meet with local employment laws, and it gives you the opportunity to expand using professionals on a contract basis, which can save you money on hiring and training.
The other option is using a BPO, which can also remove the burden of law, however, you do need to be aware of the terms and conditions of the contract you are entering into. It is also important to understand the conditions that people are working in if they are part of a BPO. Ignorance of any working conditions or human rights violations that a BPO might be accused of does not recuse your business of responsibility simply through ignorance. You should be prepared to travel to the place the BPO is located and investigate the working conditions yourself.
If your business supplies products, fulfilment is one of the most important things you need to consider. From warehousing to packaging and shipping, you need high-quality, fast logistics that fit with your budget. Finding a fulfillment company can include using a dropshipper, logistics, warehousing and even manufacturing, depending on the needs of your business.
Regulations for packaging vary in different countries, so you must ensure you’re packaging products correctly, which is why using a local distribution centre can be more convenient. Packaging must align with sustainable practices in some regions and is an integral part of your marketing regardless of your expansion plans. Legal requirements for disclaimers on the package also impact your decisions. For instance, many nations require disclaimers on cigarettes and alcohol while others do not.
Performing your due diligence is an essential step in considering any international expansion projects. One of the best ways to complete the task is to consider using local firms in the countries you are wanting to expand into to advise you and inform you of the most important business regulations that you are required to understand.
Information-gathering of this sort can prove to be invaluable in the long term. A hands-on experience of the culture provides an indication of whether your product solves a problem for local consumers, what price point suits local economics, and how to distribute and sell your product online. While these insights can be costly, having a business consultant in the local market can prove invaluable and even prevent you from making costly mistakes.
Currency is an important consideration in any international endeavour. You need to understand how exchange rates fluctuate, how this could affect your bottom line and how you can address this for your customers.
Most countries impose restrictions on taking money out of the country, meaning that your profits can be held in the country they are earned, which limits your flexibility. Online businesses need to find ways to manage multiple currencies, payments acceptance, and movement of funds to support international business growth.
Quality assurance means having the mechanisms in place to protect the delivery of your product or service in an expanded business distribution environment. If your expansion would compromise the quality of your product or service, it might be worth reconsidering whether you want to enter into that market.
Economic and political stability
Politics and the economy are extremely influential to the success of your business, and understanding trade agreements and even relations between different countries is important. Global expansion requires you to consider the level of risk associated with expansion. Higher risk often yields higher rewards, which can seem attractive, but needs to be carefully assessed. Use prevailing and historical information, as well as forecasting to limit your risk by choosing countries with less unpredictability.
Economic risk comes through changes in the economic factors underpinning consumer purchasing power. While China represents a good opportunity for many businesses with its growing middle class, the unpredictability inherent in a command economy makes it a higher risk entry.
Distance from home country or markets
Geographical distance is a consideration when considering expansion. You need to consider carefully how your product or service might transition into a neighbouring region, or one further away. For example, a clothing retailer in the northern hemisphere wanting to enter a market in the southern hemisphere faces the challenge of seasonal difference. For this reason, it is usually easier to expand closer to home in the early stages of growth, as often only a few things will need to be adjusted to enter the market, while slow growth or expansion means a gradual build up to broader locations further from the business centre.
Your brand might not be known outside your local market, and for this reason you will need to take stock of your marketing strategy. Using a local marketing agency is a wise investment for businesses looking to expand so that no fopahs are made, such as your brand name having an undesirable meaning in a different market, or a product name having associations that are detrimental to your sales.
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