Setting foot on another shore can be exciting and can bring your business growth. International expansion has been buzzing in the modern era but it is not easy as it sounds. We need to carefully look into all the factors and keep in mind important considerations before expanding business internationally. Here are a few considerations that help your checklist and make your expansion journey smooth.
8 Considerations Before Taking Your Business International
The first and most important thing to look into is the cultural and language barriers you might potentially face in the country you wish to expand. We cant expand our services and product and assume people will understand our objective. Before expanding we need to carry out thorough research on the culture and people’s physiology in that country/ city. It is important to understand the lives, culture and values of the people we think of as potential customers. To expand internationally one must be willing to put in time and effort to understand the local market and culture overseas.
2. Legal and Regulatory barrier
Every country has laws and regulations made even for the business, so expanding in foreign markets is possible if your business can adapt to the local regulations and laws. It is always a good idea to hire a good lawyer or legal team that has knowledge of international business laws. They can help you identify potential barriers or hazards that can be caused and how to avoid them. This way you can expand your business a bit more smoothly.
3. Foreign Governments
The government holds a lot of power when it comes to foreign companies trying to expand in their county. So it is vital to review the stability of the local government of the country you are planning to expand in. If aspects like tax, finance and compliance are not taken care of according to the requirement then can add significant loss to your company.
When it comes to overseas here are a few aspects to look into:
- Do you have access to the resources and materials needed
- Does the government offer any assistance programs for foreign business
- Options for transportation and communication
- Access to affordable capital
- Available protection policies for business
- Currency exchange rates
- Employment and immigration laws
Government stability is important as it plays the main role in employee rights and security, intellectual property, and contract integrity. It is a wise option to seek local experts in business and political matters before oversea expansion.
4. Business case and competition study
Advertising and marketing play a major role in the awareness and growth of the business, so it is important to study a few local business cases and conduct a competitor analysis. Some strategies that can be helpful are
- It is important to make sure that the government authorities recognize and are willing to protect the proprietary needs of businesses.
- Make sure to study the financial charts and see if the move is financially sensible.
- Knowing the market you are moving into is very important, so it’s wise to study market trends and forecasts, markets personality, financial cost patterns and financial feasibility.
- Partnerships with the existing supplier or client can help in seeking opportunities and guidance.
Stepping into uncharted foreign markets can be profitable, but it comes with its own set of risks that can turn your venture into a nightmare. Other than the aspects discussed above you can even contact American Chamber Abroad that are located worldwide.
5. Building International Connections
We all might wonder about How to make International business connections? Is it easy to get in touch with them? How to start? Well in some cases of building a business abroad the best strategy is to employ a person who has a network of local connections. The person can help you set up a business and this comes in handy if you don’t know the local language. If the person is fully invested in the company then, he/she can even help you with the hiring process and assist you in introductions.
Another way is to get in touch with the city’s investment promotion agencies or foreign development agencies to help you get in contact with organizations and you can start webbing your local network.
6. Create a Beach head team
Some companies prefer keeping things in-house so that when the opportunity for expansion overseas arises they relocate their executives. Whereas other companies prefer to build a team from scratch with locals of that country. Both approaches may slow down the expansion process as they both are time-consuming. It is better to create a Beach head team. Firstly hire a few senior executives who have experience and expertise in the market you are expanding. They can help you facilitate a fast transition and can also initiate the readiness of the company until a local team gets hired.
7. Merge with a Similar Company
In this strategy, two companies voluntarily combine to form one new legal entity where both are broadly on equal terms. This strategy is mostly done to save time for expansion, reduce the cost of expansion, explore new territories, gain market share and grow revenue. After the merger, the shareholders distribute shares of the new company.
8. Joint Ventures
In a joint venture, two or more companies sign a business arrangement where they agree to pool their resources to accomplish a specific task. Every participant in this arrangement is responsible for profits, losses, and costs associated with it. However, the venture is separate from the participant’s own interests and businesses. Joint ventures are mainly known for production or research but they can potentially continue ahead. Joint ventures have the ability to combine large and small companies so that they can take on one or several projects. This helps the expansion with leveraged resources, combined expertise and reduction of cost.
Conquering foreign waters can offer great opportunities and growth but it is not for the daunted. By keeping in mind the considerations above and creating a good strategy can help your expansion process get great results.