5 Top Considerations to Make Before Expanding Internationally
You may feel you have reached the height of your customer base or are seeing decreased returns from your business in your country. Therefore, expanding internationally could be a great way to kick-start your growth again and simplify everything.
Watch the video below to see what we mean.
Foreign markets are often underserved but still benefit from increasing disposable income, making them attractive for expanding businesses. This is especially true in emerging markets such as Asia, Russia, and South America. If you can tap into this pool of unexploited customer demand, you can find a fantastic opportunity to expand your business.
Foreign countries can also save your business through lower materials, staffing, and manufacturing costs. There may also be tax benefits to working in different countries, such as Act 60 tax incentives in Puerto Rico.
If you decide to go global with your business, you can diversify risks more than if you only operated in one area. Despite a recession and low demand in your home country, your international business may still thrive and grow.
However, it would be best if you remembered that this will not be a simple process. Focusing on international expansion can come with substantial setup fees and ongoing fixed and variable costs.
You will also need to understand the foreign market that your business plans to target. It would be best not to start exporting to different countries on a whim.
Be sure to plan and research before making any firm decisions. It would be best if you also were cautious about allowing your exporting plans to distract you from your core local business.
What Are The Key Markets For International Growth?
The key target markets for international growth are emerging markets with low market penetration. These markets have a high level of untapped consumer demand, which could benefit you. In such places, wages and living costs are usually lower, and progress has already been made towards improving the infrastructure.
China is currently the best option for international growth in almost every sector. It has a vast population, and Western brands and luxury goods have only recently been introduced.
When you pair this with the large labor case, China’s growth potential is very high—making it an attractive option for business owners.
Other key markets for international growth include other BRIC countries, such as Brazil, Russia, and India. Other emerging markets, including Turkey, Mexico, Indonesia, and Vietnam, could also be good choices.
These markets are some of the fastest-growing and the most dynamic economies in which to grow internationally. First, however, you must understand what your niche is in each of these markets. There can be some very substantial differences between the different markets.
Doing business can be pretty tricky if you aren’t prepared. So make sure you know your niche and are wise enough to focus only on the markets you are in. Or have someone you work with who has a good understanding of it.
Which Businesses Are More Successful In International Markets?
The most successful businesses in international markets won’t be surprised, including colossal household name companies like Apple, Google, Coca-Cola, and Amazon. Companies have reached global success in different ways. What they all have in common is a simple, recognizable, and translatable brand. In addition, they have worked hard to cultivate customer loyalty worldwide and found effective ways to make the business model successful across international borders.
Businesses that can find success internationally are the ones that have invested a lot of time in identifying gaps in the market and different potential opportunities around the world. Having a scalable or exportable business model allows them to expand more quickly.
For example, Google’s advertising model is infinitely scalable without much modification. Coca-Cola has also had to invest seriously in production and distribution infrastructure worldwide in different countries and time zones.
Where Can I Get Support To Grow My Business Internationally?
If you have decided that expanding into international exports is the right move for your business, consider whether your home country has a government agency to offer you some help and advice. Many countries do, so it’s well worth exploring this option.
For example, in the UK, UK Trade and Investment produces a range of guidance materials that contain helpful information about trading in different countries worldwide. It also runs seminars and workshops and can arrange face-to-face meetings with a specialist advisor.
If you’re UK-based, you can also get government financial support via UK Export Finance. If you’re not in the UK, see what your country offers and what support is available to you as a business owner.
It is also good to approach some trade organizations in your sector to seek more advice. If you are expanding overseas, seek legal advice from a specialist law firm, as this firm may also be able to provide you with support and guidance.
How Do I Merge My Business With A Foreign Business?
Merging two businesses involves pooling your assets and resources into one combined legal entity. You can achieve this in different ways, such as one of the businesses purchasing the other. If this happens, this is technically an acquisition rather than a merger, but in practice, most friendly acquisitions are considered mergers.
You must take several practical steps. These include negotiating ownership stakes in the merged business and securing efficiencies by eliminating duplicate work.
The process of doing this is pretty much the same for an international merger. Still, you will have to consider many different rules and regulations of both your country and the country of the business you plan to merge with. In addition, cross-border mergers can be complicated, complex, time-consuming, and expensive. So, before you start the process, ensure you have a clear business case for the merger.
You must select one of the countries to incorporate the combined businesses. You should choose a country based on the best tax rates or other practical considerations. Some countries have much stricter restrictions on business ownership, which could make a difference to you and your investors, so research first.
You will have to think about whether or not you will keep the structures of the original small businesses intact as subsidiaries. Expert advice from an international business lawyer is always a good idea.
When Should I Start Exporting My Product Or Service To International Markets?
Before exporting internationally, establish a firm, stable business model at home. Have you fully exploited your domestic market?
Research possible international markets to find where customer demand is. Could your business model be adapted to the market of your target country? Remember that there can be a big difference in price, income, and regulation that you must consider when deciding whether you can make a profit somewhere else.
Before you make the final decision to export, consider whether a different approach might be better. For example, would it be better to contract a foreign manufacturer to make your products to save time and money on international shipping?
Identify the opportunities for global expansion. A significant competitive advantage of international expansion is likely to be new sales. The best prospects are countries or regions where your product or service has not already penetrated but where there are many prospects for growth. Ensure the local population can afford your product and check what local laws or regulations you must follow.
Prepare your business model for a global market. The simplest option is to export your product, but a local manufacturer or franchising your brand might better fit your business. Next, plan and invest in a marketing strategy. Marketing in a different culture can be challenging, so local help is wise to ensure your message gets across.
Expanding internationally can be an exciting time for your company. You may already be operating in several countries and looking to expand further. With little notice, you may have to decide due to a competitor moving into your country or region. Either way, you should consider a few things before entering your new market.
