Whether you’re in your first year of trading or you’ve been in business all of your life, expanding is a great way to grow and take your brand to the next level. Not only can you introduce your products and services to a whole new audience, but you can make more money, get ahead of the competition and ensure your long-term growth and stability as an entrepreneur.
In this post, we outline some of the challenges you’re likely to face when expanding your business internationally and share with you some top tips on how to overcome them.
Ensure you’re making the right decision
Before you dive in at the deep end and begin international expansion, it’s essential that you take the time to understand whether you are going to find success in a new market. You should be sure that you’re entering a market that wants your products, so think about analysis the market using data, then prepare a GAP analysis against local products and competition, which will help you to decide whether you’re offering something unique that local companies cannot.
From there, you should look to perform a SWOT analysis (strengths, weaknesses, opportunities, threats) against your competition. Think about everything from pricing to marketing, and remember that your product or service will likely be more expensive than a local competitor once shipping, marketing and other associated costs have been factored into the price.
Develop a strategy and create a team
Every market you enter will have its own nuances and differences, whether that be economic, local market conditions and cultural differences. Developing a clear plan of action – and bringing together a team of experts – will ensure your expansion goes off without a hitch. First think about the short, medium and long-term goals that you’d like to achieve, and define your key metrics so that you can measure success as you begin your expansion. Think about your annual budget, forecast sales, and create a tactical plan that includes key dates for monitoring and roll-outs.
Once you’ve got the foundations in place, think about creating a team of local industry experts who will be able to guide you through your expansion. The most common mistake that people make when trying to expand into a new territory is to assume that their existing team are the ‘experts’ and that their skills will be enough to expand, but the truth is that this is a risky and time-consuming approach; instead, find new executives who can oversee your expansion plans.
Get your products ready
It’s all well and good having the world’s best product, but if it isn’t market ready, you won’t be able to sell it in your new territory. Start by reviewing all government and industry-specific rules and regulations, bearing in mind that these will likely differ from your home country, and ensure that your products are compliant and have received the necessary approvals and certifications.
You should then decide whether your products need to be localised. Think about translation and be especially careful when choosing a new name, as mistakes and faux pas can happen and lead to embarrassing results. When Coca-Cola first sold their products in China, their localised name turned out to mean ‘Bite The Wax Tadpole’ – so double check all possibilities before you settle on a new name or branding, as mistakes like this can be costly and ruin a brand image.
Next, think about patents and trademarks, as some countries are known to copy good ideas. Then check out the quality assurance of your products based on local laws and regulations. Finally, think about logistics and distribution, and decide how your products will get from A to B.
Get your organisation ready
A “one size fits all” approach to business may work well in the short-term, but long-term, you will struggle to find success when expanding into new territories. Whether you’re launching in China or Chile, it’s important that you think about cultural differences, like language and regulations, to ensure you’re being a fair and engaging employer. This means that you should evaluate your existing organisational structure, and make the necessary changes to execute your new growth strategy. This may involve hiring new staff, promoting internally or downsizing departments.
You should also take the time to develop new company policies and procedures that not only meet your existing guidelines but comply with local requirements. Creating a competitive benefits program should also be a priority if you want to attract top local talent, whilst deciding on a competitive salary and compensation package should also take a lead. It’s important that you not only offer employees what they’re legally entitled to but what your employees in your home country are offered, too, otherwise you’ll be left with a complicated human resources department, balancing different benefits, pay schemes, and more.
Remember laws and taxes
One of the biggest pain points for businesses expanding into new territories is laws and taxes. Work with a local legal specialist to draft up localised commercial agreements for your products, review regulations to ensure your products are compliant, and maintain corporate records and governance for as long as possible to ensure you’re covered should something go wrong. Craig Dempsey, CEO of Biz Latin Hub, says that “businesses thinking about international expansion should consider outsourcing legal responsibilities to a third party company, who knows the local market inside out and will be able to advise on the best methods for your particular needs”.
You should also consider outsourcing taxes and finances. Establish a relationship with a local bank, develop a risk management plan, a cash repatriation plan and decide on how best to report sales and taxes. You may choose to hire a local bookkeeper to do this for you.
As an entrepreneur, expanding overseas may require you to become a chameleon and balance several books on your shoulders. Whilst in the short-term you’ll likely be stressed and have to take on the work of setting up a new business whilst maintaining your existing brand at home, the long-term benefits will speak for themselves, provided that you execute your expansion plan correctly. Wherever you’re planning to expand, we wish you the best of luck!