Starting a business can be difficult, but expanding a successful business into a global powerhouse can feel next to impossible without the proper knowledge and tactics. Expanding your business to reach a global market can provide amazing benefits, but it can also be a daunting task. Before you decide to expand internationally, there’s an array of things you need to be prepared for.
Understand Your Expansion Reasons
Have sales slowed down in your original market? Or do you have an international fan base hungry for your product? Knowing why expansion will work for your company can help you in a multitude of ways. Armed with reason and articulated goals combined in a succinct business plan, companies can tailor their market strategy, learn more about potential consumers, and provide information for existing and potential company investors and stakeholders.
Understand the Market
Your target market in another country is most likely not going to be the same as your current cache. With this in mind, there are some necessary changes to utilize. Pitching to prospective clients or companies may require a different tactic. Your business goals may need to alter a bit to fit the needs of a different culture and climate. Do your research and understand the business culture before you begin your expansion efforts. Seek out competitors, understand their business offerings and strategies, and understand requirements that you must abide by for legal business practices. This foresight could prevent failure.
Cater To your Audience
Expanding your business internationally means finding a larger audience, but don’t expect buyers in different locales to respond in exactly the same way to your product. After you’ve researched your target customer base, alter your product to fit their needs. When the Christmas sweaters at TipsyElves.com became a huge hit in the United States, the company chose to go ahead with an international business plan. This ended up being a lucrative move, with Tipsy Elves offering country-specific options to residents of Canada and the U.K. They catered to a new audience, and reaped the rewards for their effort. On the other end of the spectrum, Best Buy’s international expansion struggled in Europe because they didn’t respond to customers’ desire for smaller stores.
Respect Local Culture
Depending on where you plan to expand, get acquainted with the local culture. Some may prefer to conduct business in their own language, work different hours due to time differences, and approach work ethics differently. Understand these factors and decide if the area is conducive to your goals. If not, reassess your reasons for expanding.
Get Ready to Spend
As most business ventures go, you have to spend more to get more. This is true of expanding internationally. You’ll need to be free-flowing with your money to get the business off the ground in another country, but you’ll need to balance that with a spending limit. Finding this capital may be best done through classic channels, or you may need to branch out to unique investors to make your global dreams a reality. More often than not, companies do not allocate enough to their expansion budget, and this mistake can prove fatal to your business. Account for potential business taxes, international exchange rates, and a different economy. Knowing these variables may help you more accurately assess and assign your business a proper budget.
Don’t Expect Instant Results
Making your business profitable halfway across the world takes time, so don’t expect success overnight. Try not to fall victim to the pressures of quick business, and provide the necessary support to both your employees and your new customer base. Sustainability, not immediacy, is the goal. Take your time to make things function properly and set the tone for years to come. Rushing is one of the main reasons international expansion fails, so don’t fall into the pitfalls of wanting things to come too quickly.
While you most likely have all your vendors, distribution sources, and manufacturing resources locked down for your national operations, expanding means locating new sources for all of these. Staffing your business in another locale can also provide its own set of issues. These factors are all interconnected; where there is a problem with one, the others can also be negatively affected, throwing your operations off track. Understanding these logistic issues before entering a foreign market is essential, and securing strong relationships with vendors, manufacturers, and distributors can make or break your company.
Expanding your business on an international scale is no easy feat, but rewards abound should your company succeed. There are plenty of risks to factor into your planning, but with proper assessment, realistic budgeting, and logistical prowess, your business may be the perfect candidate for international expansion.