For all entrepreneurs, nothing can be more exciting and motivating than the thought of opening a store or an office in a different country. Having a branch overseas is taking another step to achieving global brand recognition. And when you find success in this new venture, expanding to other countries will also be easier.
Preparing for Global Expansion
The thought of expanding overseas or tapping into the international market can truly be thrilling, but everything can easily turn into a nightmare if you don’t go through the process correctly. So before setting up shop in a different country, consider the following first:
1. The current status of your business
Your capability to open a new business or branch overseas will depend greatly on the present standing of your company. Before entertaining any thoughts of expanding overseas, make sure your business is already enjoying a steady flow of income and profits. It should be financially stable at the very least.
Setting up a company in a foreign land will require a substantial amount of investment. Even if you will be working with a business partner or investors, you will have to pay for a lot of the initial outlays. You will also need to shoulder travel and accommodation expenses.
Without a doubt, your business will be bearing all these expenses. If your business is not experiencing financial stability or success and you have no other resources, you may have to postpone your plans of expanding overseas.
2. Your objectives for breaking into the international market
Failing to identify the exact reasons why you want to expand overseas can have negative effects on your plan. Without specific goals, you will not be able to come up with a good business plan and strategy for entering a new market.
If you are interested in opening a new business overseas, be particular about where and how you want to expand and your motives behind it. By doing so, you will be able to come up with a tailored market entry tactic. You will also give the right expectations to your business partners or potential investors.
3. Favorable market conditions
Before making any business expansion plans, make sure you have thoroughly researched your target market. This means conducting market research and understanding the results. Business consultants based in your target country will be able to help you out with these.
You need to find out if your product or services will sell in your target market. You should also be certain that there will be a demand for your product or services even if your prices increase. You also need to know the size of your target market and have an idea of how long it will take you to capture your intended sales.
It is best to start making plans for expanding globally when all the results are likely to be in your favor. If not, it may be best to rethink your decision or strategy.
4. The relevant local laws and regulations
Aside from doing market research, take the time to know and understand the labor laws amongst other important and relevant regulations that you and your business will need to follow when you start setting up shop.
You will avoid a lot of time-consuming and costly issues and challenges if, from the start, you know what you can and cannot do in establishing and running your business.
At the very least, know the rules and policies on getting the necessary business permits, hiring locals, and bringing in foreign workers, along with requirements for salaries and benefits. Be aware of environmental laws that may have an impact on your business’s operations as well.
5. A business plan and strategy tailored to your target market
Although your current business plan has been very useful to your company, when expanding overseas, you need to come up with a new one that will be more suitable to your target market. Your new business plan and strategy should aim to drive local success but, at the same time, remain true to your company’s objectives and approaches.
While developing your business plan and strategy, make sure you decide on the final business model and structure as well. Determine if opening a new or different company, a retail branch, or an office will be the most cost-effective and smartest route to take.
6. Your budget
It can be easy to fall into the trap of being too extravagant when you are opening a new business overseas. You will, for example, want to have the best office and go all out on your marketing campaign to make sure your target audience can find you and be impressed with your products or services.
To come up with a realistic budget for this venture, make sure you cover all the basics. Consider the fluctuating exchange rates and different business taxes as well. However, you will have a clearer picture of this important element if you know what it would mean for your expansion plans if you go over your budget.
If going beyond the budget puts too much stress on your operations, you will have to redefine your goals. You will need to have contingency plans for shedding costs and resources as well.
7. Fine-tuning your products or services
The success or failure of your business will depend on the products or services you will be selling. It is crucial that whatever you offer stands out from the competition and meets the expectations of your target consumers.
You can start by making sure that your products or services meet government and industry standards and that they comply with local laws and regulations. If necessary, localize or customize your offerings to meet local policies.
If you have an original, first-of-its-kind offering, it is best to apply for a patent or trademark review. This is to ensure that your original idea remains yours and that even if it is copied, you will still be credited as a pioneer.
8. Your pricing structure
The success of your new venture will depend greatly on your sales and profits. As such, you need to come up with suitable prices for your offering.
When deciding on your prices, consider the cost of opening your business in the country, local currency, foreign exchange rates, taxes, and your competitors’ rates. Again, do sufficient research and adjust the cost of your products or services as needed.
9. Your team
When opening an office or shop overseas, you have the option to build a local team or get employees to temporarily or permanently handle business operations.
You can also consider having senior executives head the new office temporarily with a team of locals. Once you have a permanent leadership team and the employees are fully trained and you are certain you can trust them, you can start making adjustments and giving this office a bit of free rein.
10. The company’s organizational structure
Although your current HR and administrative policies and procedures are working well for your company, differences in culture, language, and even local laws may make them unsuitable for your new office or branch. As such, you will need to assess your current organizational structure and determine if this will work in a different country.
This usually entails creating new policies, procedures, and handbooks that comply with local requirements but still resonate with the overall company rules. You will also have to come up with compensation packages and benefit programs based on local standards and customs that will attract local talents.
11. Your marketing strategy
When working on your marketing campaign, start by localizing your website for your target territory. This means translating and customizing the content so that you will have an easier time connecting with the local audience and converting them into potential customers or clients.
You can also translate and customize your marketing materials so that your target audience will have an easier time understanding and relating to the message that you are communicating. You can use this technique with your ads, window storefronts, packaging and labels, flyers, brochures, TV, radio, and online ads, and local email campaigns.
It is also best to have a separate social media account or page for your international market so that your audience can connect and communicate with you in a way that is convenient for them.
12. Potential risks and strategies for dealing with them
Certain risks always come hand in hand with opening a business. These risks can double if you will be establishing a company in a foreign country.
Difficulties in collecting payments and delayed payments are just two of the common issues that you may contend with which will have negative effects on your business.
As such, it is important that you know and understand these risks and have the right plan in place to deal with them. This means buying insurance or having access to other financing solutions. If you accept foreign currency, make sure your business is protected against fluctuations.
When expanding overseas, make sure you go through the process one step at a time. Most companies that fail at global expansion often demonstrate poor preparation and weak execution. Do not make the mistake of rushing headlong into a new market without any idea of how businesses operate here.
If you want your first venture overseas to succeed, take the time to conduct sufficient research and to develop a good business plan and the right strategies. You can also get help from business consultants who are experts in assisting entrepreneurs in setting up companies in foreign lands.