The decision to expand a business internationally is a major decision to make, one many business owners consider, with the savviest of the lot understanding that there’s more to a successful overseas expansion than just opportunities that exist elsewhere, no matter how outstanding they might appear, or actually be.
The manner in which you expand abroad will come down to a wealth of factors, most notably the nature of your overseas expansion – setting up franchises abroad, shipping to overseas retailers, operating bricks-and-mortar stores, etc. – and to what extent, the size of your business organisation and the countries to which you’ll be expanding.
Every overseas expansion is unique in its own way, so there’s nothing set-in-stone here, though there are certain considerations relevant for all businesses expanding overseas.
1. Do your research
It seems obvious but many overseas expansions have failed because those responsible for planning and preparing the expansion failed to adequately research what was involved.
Not only should you research countries in which you’ve identified viable business opportunities but you should have an understanding of others to ensure you’re not missing out on something more lucrative or viable.
2. Know the cost of expanding
There’s more involved financially than start-up costs alone and you’ll need to have a comprehensive understanding of what these are, including importation fees, customs fees and fees that governments apply to foreign businesses operating domestically.
3. Know the financial risks
There are inherent financial risks that you must be aware of. Research the risks involved and compare them against the prospective gains; moreover, understand that risks can change quickly so keep up to date with developments taking place in the country you’re expanding to.
4. Research the culture
The culture of the country might be viable with your plans to expand into their markets or it might prove just the opposite. In addition to such a major consideration, understanding the local culture helps you to make friends in the right places, enjoy your time there more and make for an overall smoother and more rewarding overseas expansion.
5. Consider a local partner or representative
Partnering up with someone in the country you’re expanding to only makes sense if you’re 100 hundred percent certain that you can work together; otherwise, look at less binding arrangements like a local representative.
If there are language barriers and/or you’re expanding to a country where your native tongue isn’t the lingua franca, source a reliable provider of translation services. Finding yourself in situations in which you don’t understand what’s going on is dangerous in
6. Source a local marketing agency
Marketing is essential in a brand-centric marketplace and as a foreign business you’re competing against established local businesses that are, at the end of the day, local and therefore have the upper hand.
In addition to marketing your business more effectively, local marketing agencies will help you avoid some notable marketing mistakes made over the years, like Mitsubishi’s decision to release a car named ‘Pajero’ in Latin America (now renamed Montero), not to mention Chevrolet’s ‘Nova’ – the car that wouldn’t go.
7. Understand the laws
If you’re to do business across borders and in other countries you need to know the laws involved. This is a prominent reason for doing business with someone you can trust in the country you’re expanding too – either a partner, local representative or a good lawyer – but you should also have a good understanding of the laws involved so as to help you make important decisions.
This isn’t all you need to consider, though it should give you an idea of where to start.