Expanding a business could be both exciting and daunting. The decision is complex and brings with it several risks. However, the idea is not unfounded. According to Small Business Trends, 58% of small businesses are looking for expansions across borders. Using this data, it won’t be wrong to predict that more giant corporations occupy a much more significant percentage. If you’re curious about expanding your reach, we can help you with your planning. Here’s what you should know while you’re making this choice:
Why Should I Have An International Business?
There is always room for growth. If you’re thriving locally, why not utilize your resources and try your luck beyond the market you know. Here are some benefits of having an international business:
- New Markets. You allow your business to get more exposure and an opportunity to discover and conquer new territory. It can generate surplus profit which won’t benefit your company alone but will reshape economies.
- Diversification. You get a chance to diversify your assets and protect your company’s resources. Economies are constantly fluctuating. You don’t want to be in a predicament where your business takes a hit with a pessimistic market. Foreign markets leverage your company’s support and help you streamline your revenue, making sure it remains positive.
- More Talent. With digitization, you can easily discuss ideas and bring new talent on board. You can obtain new talent back home with you and get them started right away in your company. You also have the option now to expand with virtual offices.
These capture all the innovations that go into a physical office, but it is far more flexible and sustainable. Setting virtual offices anywhere in the world makes it easier for you to ensure work is in its due diligence. Suppose you set up virtual offices in India; not only may youhave a population advantage, but the local market will also be brimming with opportunities for your company to explore, resulting in a profit.
- Stay Ahead Of Your Competition. The market is in constant competition with each other. Your opponents are probably spending as much as you or maybe more than you to make sure their advertisements and marketing strategies outshine the rest. However, a foreign market gives you a competitive edge like no other. You get access to new technology and resources and platforms that will expand your outreach even further.
- Investment Opportunities. As a business, you should never let any investment opportunity slide. With new investment opportunities, you get to make an even lucrative networking system and bring additional resources to profit.
What Should I Consider Before An Expansion?
Before you start making any international plans, you need to do a little more research to ensure that your business can handle this expansion. Without substantial planning, it is easy for your business plan to fall apart. Therefore, these factors should be a part of your outreach plan:
- Affordability. As a business, despite the profit you may be making, you still need to manage your resources properly. You know very well that running a business in the local market costs tenfold money. So an international expansion will warrant its own set of costs. You will need to bear the office space costs, customs, shipping, and manufacturing details. You may also need warehouses to store shipments.
The prices of these vary from country to country. Customers are particular for business. Unless you know the regulations and policies of working in a different country, you may be setting yourself up for the loss. In some instances, you may need to provide them with resources such as equipment and machines, which will add additional costs.
Once your business gains momentum, you don’t want a discrepancy in your cash flow that may throw off your balance sheet, and you may have to struggle to cover the costs. Unless you have a sizable amount of profit that can quickly help you make this decision, keep your business limited to local expansion till you can hit the international market.
- Employment Regulations Along With Taxation. Every country has its policies of taxation and employment opportunities. Suppose a country has a robust code in ensuring workers are safe. Unless a company can provide the necessary protective gear, they can’t operate internationally. You can’t ignore these policies as it is an invitation for legal troubles. Any legal scandal leaves a lingering dent in your reputation throughout the business sector. It would help if you looked into hiring local accountants in every respective country so that they can file your taxes correctly. If you have the research, you should have no trouble in starting your business.
- Marketing Strategies. You can’t use the same marketing strategies as you do locally. The international population has its own set of values and customs that you should know. You will also need to know the language and use their societal norms to create meaningful and profitable advertisements. You would also need to know their local market and what products entice customers the most. Unless you know how to diversify your marketing campaign, you may struggle to connect with the international market.
- The Number of Employees You’ll Need. You will need to research how many employees you’ll need onboard. How many departments should have how many workers, and what responsibilities can be combined. The talent pool may be endless, but you will need to judge them based on skills and experience to add them to the team. It also may be challenging to find the talent you need internationally, especially if you choose to skip out professional help to find your employees.
- Packaging. It is another logistic factor that needs consideration. You will need to figure out how you want your international packages to be. For a global market, you need to ensure you’re packaging that aligns with their customs. Suppose you’re delivering goods in a country that is all about sustainable and recycling goods. Your plastic packaging will discourage the local consumers from purchasing from you. You will also need to be aware that the boxes should have a disclaimer and use symbols such as no liquids near the device.
- Currency. You would want to know where the cash rate stands for any international market, especially when the rates fluctuate. The exchange rate may be at a disadvantage if you choose to do business in a country with a low exchange rate. As a result, the local market may skip buying your products, and you incur more loss than profit.You should also find out if the country you plan on doing business with has any imposition on taking money out of the country. If they have severe restrictions, you may find your money tied in there.
- Quality Assurance. You will be dependent on your foreign employees to ensure they deliver the quality you wish to maintain. However, you should be aware that expanding across the borders may include a shift in quality standards.
Depending on where you go, a country may either have relaxed policies about quality control. There may be manufacturing mistakes. Faulty products in the market or some countries may be so strict that it takes longer than necessary for the products to hit the market, causing a lag in your profits.
Some fresh produce products may show a depletion in their quality as they travel vast distances to their destination. You may need to add more money to make sure they are safely transported and don’t get spoiled fast, or else the cost of rotten products is expensive to cover.
- Political Stability. Political instability is the worst-case scenario. When a country is politically unsettled, it affects its economy. It would help if you tried to research the last ten years of a nation’s economic and political prosperity and keep up with any signs of unpredictability. If you’re able to study their trends, you can make future predictions on how their next ten years may look.
Suppose a country has a population that is not happy with its government. In that case, you should expect frequent riots that may lead to ports and airports closing, negatively impacting you. You should also know how political instability may lead to expropriation—case in point when Ford expanded to Cuba, and the Cuban government took over their assets.
- Brand Recognition. The expansion also means starting from scratch. The popularity you may enjoy in your local markets may not be abroad. You will need to invest in marketing and ad campaigns to significantly ensure that the population gets used to your product and brand message.
If you bail on this, the market may not pick up your name or even look you up in stores. It will help if you work with renowned celebrities to endorse your products. It will also help if you look up what your brand name may mean in their language and make necessary adjustments to avoid a conflict of interest or spark a controversy.
There are many advantages of expanding your business internationally. You’re not only expanding your horizons, but you’re also giving yourself a chance to make your income and company stable further. However, even though the benefits may be glamorous, you may need to consider certain factors before making the shift. Start by staying on top of your company’s finance, not financially, to jeopardize yourself. Look into their employment regulation and taxations so you know how many workers you can hire. Have new marketing strategies and work on your brand awareness.