June 19, 2020 | 5-minute read (970 words)
Expanding a business internationally is not for the faint-hearted, and comes with its own set of hurdles. However, for most companies, it is the next logical step because global markets may offer tremendous opportunities for growth. While developing products for a global customer base and building multilingual and multicultural brand awareness across borders adds a level of complexity to most aspects of the business, the difficult task of going global can produce great results and provide a competitive edge. How do you know it’s time for you to expand your business internationally?
If you have a stable enough business foundation and you have done your due diligence about the markets you wish to enter, going global could be a good next step for your business. Due diligence could include determining how much direct presence you will have in each region, in addition to whether you’ll require local partners to handle certain aspects of your business, or whether you have the right suppliers lined up in order to deliver a quality experience for your international customers.
10 Things to Consider When Going Global
Take these 10 factors into consideration before beginning an international expansion.
1. Cost: The first thing to look at is whether you can afford to expand internationally. An international operation comes with such costs as office space, customs, shipping and manufacturing, among others. These costs differ from country to country and region to region, and can include costs that are unique to global expansion. Work with professionals who can advise you about the costs associated with specific expansion areas to ensure that you have the money to successfully realize your expansion plans. List all the costs and ensure that they balance against your expected revenue and profit, in order to avoid unexpected cash flow issues.
2. Tax and Employment Regulations: Different countries have unique regulations when it comes to taxes and employment, and they are not always easy to understand. For instance, in Mexico, there are different agencies governing employee safety, each with its own regulations that can sometimes be contradictory. Such legal regulations affect everything from filing your tax returns correctly to hiring employees.
It’s also important to figure out how your home country treats income earned internationally, as this might affect your profits significantly. So look into these regulations sooner rather than later.
3. Marketing Strategies: In marketing, there’s a saying: “Think globally, act locally.” So it goes without saying that when expanding into a different geographic area, you need to change your marketing techniques so they fit the laws and expectations of that region. While it’s crucial to consider language, it’s also important to understand the deeper meaning of messaging across different cultures. Hire a local marketing firm to help position your business in the best light to the locals.
4. Brand Building: If you plan to expand your business to a region where not many people recognize your brand, it could lead to significant investments in terms of advertising in order to create awareness about your brand.
5. Hiring Employees: In an international market, the kind of people you’ll hire for the various roles may differ dramatically in terms of their availability, culture and training. This will determine your management style with cross-cultural employees and how you train your employees.
While you can choose to hire remote workers if you can’t find the right employees, it’s a good idea to choose a country that has an abundance of talent that is ideal for your business. You can also work with a trained hiring professional to help you identify the right people for your business.
6. Logistics: It’s essential to have an efficient fulfillment strategy in place right from the start. From warehousing and packaging to shipping, you need fast, high-quality and budget-friendly logistics for your company. Look for a partner that can help you with worldwide fulfillment, by aligning with your plans to expand into new markets and offering quick delivery software, as well as other offerings.
7. Packaging: Another thing to consider is international packaging. Rules and legal requirements for packaging vary in different countries, so you must ensure that you’re packaging your products correctly. For instance, some countries require disclaimers on cigarettes packaging, while others don’t. Your packaging is an integral part of your marketing plan, regardless of region.
8. Currency: Exchange rates fluctuate, sometimes by a huge margin. This can increase your risk because you can’t always set your prices based on international exchange rates, and might find yourself selling products at a loss.
In addition, many countries impose restrictions on taking money out of the country. This can tie up your profits in the country where they are earned, which limits your ability to use that money to meet financial obligations outside the country.
9. Geographical Distance from Home Country: Quality is always an essential consideration, and if you’re moving products from one region to another, it might impact quality at the delivery location. For example, such products as fresh produce crossing large distances can increase the chances of spoilage or wastage. Hence, set up a system of quality assurance that takes such factors into consideration.
10. Economic and Political Stability: The world can be quite unpredictable, both in terms of the economy and politics. So when planning to expand globally, ensure that your business has fully considered the level of risk associated with expansion — a higher level of risk might require a higher level of reward as compensation, which might not always be feasible. Use historical and current data, as well as forecasting, to regulate your risk by choosing regions with less unpredictability. That being said, if a country represents extremely high risk, then it might be a good idea to avoid it completely.