By Keavy Slattery
As an entrepreneur, deciding whether to expand your business internationally can be difficult. You may feel apprehensive about it, and rightly so! There’s a lot at stake if you choose to take the leap of faith into international waters. Will your business survive in a global market? Will you be able to adapt to a foreign culture? Is it the right time? Yet global expansion can be fundamental to the growth of your business and can provide you with an array of new opportunities.
So, how do you know if and when it will be the right time to take your company into an international market? And have you considered everything you need to do before doing so?
Are you ready to expand into an international market?
Before you begin thinking about expanding internationally, you need to evaluate your current business. If your current business isn’t commercially successful or financially stable, your expansion overseas could really suffer. To help you determine if your company is ready for the global marketplace, here are four key elements you’ll need to assess:
1. Where are you in your local marketplace?
It’s no use expanding your business if you don’t already have a stable foundation. Evaluate your position in the local marketplace and think about the following questions in relation to your business:
- Is your business where you hoped it would be at this point in time?
- Where are you in relation to your competitors?
- Are you profitable and showing signs of progress?
If your business isn’t where you had hoped it would be, it’s time to take a step back, reevaluate, and head back to the drawing board to figure out how to get where you want to be. However, if your business is doing well, global expansion could be a good next step.
2. How are your finances?
You don’t want to jump into a new market without ensuring you’ve got the funds to back you up. The financial position of your company is very important as it will enable you to invest in your new international market while also keeping your current trade afloat.
Your overseas brand will require a lot of money to build and will likely only bring a small amount of return within the first six months or so. This means your present business will be a support system during the expansion, so making sure that you’re in a good place financially is vital.
Lucy Cohen, co-founder of Mazuma Accountants, says, “My biggest advice would be to have enough cash to be able to make mistakes. Expanding into a different market is a new experience–don’t expect it to go exactly the same as your business in your home country. Make sure that you have the resources (both time and money) to take your business overseas properly–don’t do it if you can’t commit to it.”
If you haven’t already done so, you should hire an accountant to look at your overall income, profits, outgoing costs, and other expenses to determine whether you’re in a good position for global expansion. An accountant will also be able to determine how much you can invest in your new business while keeping your current business afloat.
“It’s also important for you to clearly define how you are going to measure its success,” says Cohen. “Given your current business, you may allocate a year, or two years to make X% profit to deem the venture worthwhile continuing. Or perhaps you are hoping to ramp your turnover up and attract the interest of an overseas investor or purchaser? Whatever your motivation, make sure that you know your figures and understand how your business works–that’s where an accountant can make sure you’re going in the right direction.”
If your finances aren’t doing as well as you had hoped, it might be best to hold back on exploring a global market. The last thing you want to do is use international expansion as a way of increasing low profits in your business—a big no-no. If you’re unsuccessful with your approach in a new market, you’ll have wasted a lot of time and money that could have been used to improve your local brand instead.
3. Do you have the capacity?
Have you considered how much time and energy is involved in a global expansion? In other words, don’t underestimate the amount of time you’ll need to invest in your new marketplace. It’s going to require a considerable amount of work to establish yourself, and you don’t want to be stretched thin between two markets.
Start out by auditing your existing staff and processes to give you a clear idea of what your current employees are doing and whether they can dedicate a sufficient amount of time to the new business. Think about new roles that will be needed in the new business and how your current team can fit in, or whether you will need to hire more people.
If you think your current staff has the capacity to dedicate enough time to the new business, then you may not need to expand your team. But if there is no way your current staff can take on new work, you will need to come up with a hiring strategy and then determine if you can afford to hire new staff.
In an ideal situation would be utilizing your current employees and also hiring new employees—having a mix of old and new provides a good dynamic of current company knowledge along with new ideas and perspectives.
If you don’t think expanding your workforce at the moment is a good option, don’t worry. Wait until you are sure you have enough staff dedicated to the expansion without sacrificing the quality of work in your current business.
4. Have you received international interest?
Another way to determine if your business is ready to expand internationally is finding out whether an international market would be interested in your business. If you have already received interest from a market, conduct further research to find out why that particular market is interested in your product, what you may need to do to improve your product, and what methods would be best to target that market.
If, however, you have not received any international interest, it’s time to start digging. You’ll need to do some research into the markets you are interested in to find out if there is a gap in the market for your business. Think about what markets you want to target and why, and what information you want to get from potential customers. An online survey could help you find out information from potential markets—SurveyMonkey and JotForm are useful tools for creating online surveys.
Your research may show there is no international interest, which means that expansion isn’t in the cards for you right now. Think of this information as the voice of your audience; if it says no one is interested, you need to listen. However, this does not necessarily mean international expansion is off the table for good. Take some time to review your current position, implement new actions, and then eventually you may reconsider your decision to expand overseas.
On the other hand, if you’re feeling confident your business can handle it, then you need to consider the specific challenges of international expansion.
Other Articles From AllBusiness.com:
- The Complete 35-Step Guide for Entrepreneurs Starting a Business
- 25 Frequently Asked Questions on Starting a Business
- 50 Questions Angel Investors Will Ask Entrepreneurs
- 17 Key Lessons for Entrepreneurs Starting A Business
What are the challenges of expanding globally?
Moving to an international market will likely throw a few curveballs your way. Here are a few challenges you may face and how you can prepare to deal with them:
When you go global, you will almost certainly encounter cultural differences. Whether it be different business etiquette or customers who speak a different language, there will undoubtedly be variations between your home turf and the international marketplace.
So how can you prepare your business for these differences? One word: research! Find out as much information as you can about the business culture of your prospective market, particularly when it comes to business etiquette and communication.
CT Business Travel offers an excellent infographic showing the different rules of business etiquette around the world. For a more detailed breakdown, Commisceo Global’s Country Culture Guides details culture, customs, and etiquette for more than 80 countries around the world.
After you have conducted substantial research about the culture of your chosen market, prepare your employees about cultural differences and challenges they may face in the new market. It is important that you and your team fully understand any cultural differences so that you will have a positive working relationship.
Depending on which country you’re expanding into, you may also have to overcome a language barrier. Although English is often referred to as a global language, it would be wise not to assume all business will be conducted in English. To prepare yourself, learn some local phrases or consider an in-country partnership with someone who speaks the native language to avoid any potential communication errors. A translation service can help you prepare business documents and web content.
Not only will you need to be familiar with the culture of your chosen market, but you will also have to know the current political, economic, social, technological, legal and environmental situation of your chosen market. Reviewing these areas is known as a PESTLE analysis (referred to as PEST in the United States), a tool used to analyze a new business environment. If you’ve never done a PESTLE analysis, we recommend using the CIPD template.
Conducting a PESTLE analysis will alert you to any factors that could potentially affect the way you do business in the international market—it’s damage control at its finest! It’s important to also regularly complete a PESTLE analysis; the business environment is constantly changing, so it’s vital that you stay on top of the latest trends and changes.
It’s likely that the legal system in your new marketplace will differ from what you are used to. Therefore, you need to become aware of laws which will apply to your business in the new international market and any legal implications in your local market of expanding internationally
These are two fairly broad areas, which is why it would be wise to seek outside legal advice to help you muddle through the murky waters of international business law. Hiring an attorney will ensure that you’re following the correct processes. You don’t want get caught not following a procedure you were unaware of. It’s not worth the risk. You also may want to consider using a local firm in your new marketplace to help set up your business overseas.
Have you done your market research?
You will need to conduct market research to learn as much as you can about the international market. This research can guide your international strategy and help you figure out if you need to adapt your product or marketing activities. Here are some areas you may want to research:
Just because you’re offering the same product to a new market doesn’t necessarily mean you will be selling to the same audience. For example, your current audience may be women ages 18-24, while in the new market you may have greater interest from women ages 45-54. If research shows the audience in the new market is extremely different from your current audience, you may want to hold back on expanding until you’ve conducted further research into that demographic. Take the time to research buying behaviors, what people expect from your service or product, and how to best reach them.
Product or service
The product or service you offer in your current marketplace may be a hit, but will it transfer to a global market? Host focus groups where you can talk to potential customers in detail about your product or service. The feedback you get from your target audience will help you identify whether or not you will need to make any changes before launching.
Educating yourself on the positioning, product, pricing, strengths, and weaknesses of your competitors is key to your expansion. By researching competitors, you’ll be able to differentiate yourself and identify your position in the market. If you’re not sure where to start, Shopify has a free competitor analysis guide and template that is very useful.
For more information on how to research an international market, GeoPoll offers a step-by-step guide to the international marketing research process. Open to Export also offers guidelines for conducting international market research.
Do you have an international strategy?
You don’t want to launch into a new market without a clear vision, and having a strategy will allow you to create a business plan that is realistic, focused, and achievable. Without it, you could stray from the direction you were hoping to go.
Don’t worry if you’ve never written an international strategy before—there’s plenty of content available to help. For example, Bright Hub offers information on how to write an international strategy.
You should also create a new marketing strategy which is specifically tailored to your new international market. Use your current marketing strategy as a starting point and think about the differences you’ll need to address. For instance, you will have a new target audience, new ways of reaching them, and new platforms to use.
HubSpot’s Global Marketing Playbook provides information, advice and guidance on how to develop a marketing strategy. Foundr also has some great advice for creating a compelling marketing strategy.
Will there ever be a right time?
To put it simply, there will never be a perfect time to expand overseas. There will always be a reason not to do it, but that doesn’t mean you shouldn’t. Launching an international brand can be extremely rewarding and will present opportunities such as increased revenue potential, access to new markets, and diversification.
If you’re confident in the success of your current business, and you’re prepared for the challenges of expanding globally, there’s nothing stopping you. You will know when it is the right time for you and your business.
RELATED: Here’s How to Make a Great First Impression With Your International Clients
The post Is Now the Right Time to Expand Your Small Business Internationally? appeared first on AllBusiness.com
The post Is Now the Right Time to Expand Your Small Business Internationally? appeared first on AllBusiness.com. Click for more information about Guest Post.