Congratulations if your business has built up enough clout to enjoy success throughout your home country. When this happens, it’s only natural to want to try that success in other lands. For many in the United States, looking to the neighbors directly to the north or the south is the first consideration to make. Others have a different set of products that are best sold halfway around the world, or clear across the globe.
Wherever and however far to expand are not the first questions to take into consideration, though. There can be many great opportunities as a foreigner in a foreign land. Thought, that same benefit can get the best of you if you have not done ample research. It’s important to do in-depth research to be able to quantify and compare the risks and potential benefits.
1- Every business faces risks and benefits: Instead of stopping because there are risks, look into what steps can be taken to tackle the potential risks of doing business, to either lessen or prevent them. Sometimes the only way around risk is to avoid taking the steps to expand at all.
2- The right expansion strategy matters most: Beyond just looking at potential rewards, or benefits, it takes added layers of thought to successfully execute an expansion into a foreign market. It takes a good bit of luck, and the ability to find qualified and capable people and other resources in those marketplaces. From sales and marketing to political and financial brains,
Join Our Small Business Community
Get the latest news, resources and tips to help you and your small business succeed.
3- The groundwork is tedious; be ready for it: According to WTax one of the greatest opportunities and also barriers is the actual entry into another country’s marketplace. Doing it well makes the difference between building relationships that customers view as beneficial and worthy of their money. Doing so badly results in becoming quickly irrelevant, or possibly even ruffling feathers in the process. The idea is to make the best entry that provides a great first and lasting impression of your products through many avenues of business.
4- Thoroughly analyze all the option you have: One method to increase the potential for success is to purchase an existing business instead. It provides the chance for easy entry and potential for great success. Think about it this way. Take a company that has a great run of success, like Amazon. Well, President Trump has targeted the company because of its opportunistic business policy whereby it does not pay sales tax or charge sales tax and strains the Postal Service. If you had just bought Amazon, and the leader of the nation came after your business, you may have little else you can do.
Another area of potential problems could be that of conflict between the existing company and the newly overtaken company. Because so many large-scale threats to the business may come from existing company issues, it may be better and more financially intelligent to start fresh. This is called greenfield investing.
It entails starting from the ground up. This is a proven path to success that is used by both Starbucks and McDonald’s.
A better way to work may be to license distribution to the company for overseas. That’s less risky than the greenfield investment model. Though, licensing has the downside of requiring that you relinquish a great deal of control over the company.
5- Keep your market & competitor research up to date: Especially in an overseas marketplace, you already have the issue of distance. Add to this that you are foreign and may not fully understand the language culture, or legal environment. That means that someone may be able to easily steal your products and market right from under you. They may even ruin your company’s name or brand in the process.
Many prefer to export products to local. It’s easiest but poses a host of logistics problems to overcome. It does involve a lot of skill in the areas of currency trade, tariffs, and costs for distribution. Though, it’s not impossible to find an import agent who has a solid reputation when going overseas.
Look at the potential market and consider it against the different ways to enter the marketplace. Do the right research to identify the right opportunity at the right time.
The Bottom Line:
Expanding your business in new regions where it brings a huge growth potential, also comes up with unseen and unexpected challenges and the best way to deal such situations is to prepare yourself accordingly.