Expansion can be an exciting time for any company, but it can also come with many concerns. While global expansion is often a goal for many businesses, it’s also a time when many end up failing disastrously because of mismanagement, false assumptions, strategic mistakes, overexpansion, or legal issues.
Jumping into new markets also means having to deal with new rules and regulations, some of which may be obscure or completely different than those back home. You also have to deal with changing culture, both on the corporate and consumer side, and a foreign workforce as well.
One of the main goals here is to make sure that you don’t go overboard with your budget and experience cash flow issues that could end up both affecting your operation at home and your expansion goals. Here are a few cost-effective ways to expand your business overseas.
Know Your Target Market Inside and Out
The most important thing you need to do when thinking of moving into a new market is to make sure that you conduct a thorough analysis of it. You want to know what kind of demand there is for your product. You also want to know if there may be some sort of law or cultural blockage that could make moving in difficult or even impossible.
You might have to work around pesky property laws, for instance, or find that there are specific ownership thresholds you have to meet. This will give you the time to evaluate whether you’d like to take the added steps necessary in order to operate lawfully in the country. You might also decide that that’s too much of a hassle and that the profit wouldn’t be worth it.
Also, you have to know if you’re actually filling a need, or if there’s even a space for your business there. You have to look at the demographics, common interests, and specific needs of your target customer. You want to look at whether you can position yourself to fill that gap.
Another thing you should do is have a list of potential markets, and make sure that you prioritize markets where it would be easier to move over those you always wanted to move to for some reason. You can’t move to a market simply because you have a feeling that it will be the best for you, or that it could boost your brand.
You might want to move to a market that is recognized as a hub for your industry. While that may seem like a winner all the time, this isn’t actually the case. What that means is that you’ll have to compete with all the biggest brands in your particular niche, many with much more capital on hand and who are much better at coordinating their international operations. They will also have more experience on the ground, and more time to expand as a brand locally.
At the same time, there could be a slightly smaller market nearby that is starving for the kind of product offering you’re serving. Some might be trying to establish themselves as a smaller competing hub. This is often the case in fields like tech, for instance, or fashion. There’s always a new Milan or Silicon Valley popping up somewhere, and there’s no need to go into a market where you’ll be drowned out by the competition when you could simply move to a slightly smaller pond and dominate.
When picking a market, you want to look at things such as the actual size of the market, and what you could prove by dominating it. Being able to dominate a competitive market in your niche could be a major selling point for a future IPO, for instance, so it might be worth it if you feel you have a chance. You also want to see if there are any synergies in the market. For instance, establishing your operation in a country in the EU would also give you greater access to the EU market as a whole, while other markets could end up isolating you and greatly limiting you in terms of logistics.
Look at E-commerce Solutions
Another thing you should check is if you could opt for E-commerce instead. For example, you could choose to test the waters by creating a local site for the market you were thinking of entering. This could give you a general idea of how people would react to a physical location. If your business was already based online or had a big online component, this is a no brainer. However, you need to know that you may have to abide by some of the country’s tax laws, even if your operation is strictly online.
Look at Your Workforce Needs
You also need to look at your workforce needs and see how and where you’re going to be employing people. If your operation requires you to have lots of boots on the ground, then you will need to have an employment strategy. Things might get complicated depending on the jurisdiction, however, or you might have to hire talents from other countries outside the market to fill gaps. This is where someone like an employer of records comes in.
If you are wondering, ‘what is an employer of record?’, you can check out this blog from Global PEO titled What Is An Employer Record? In short, an employer of record is a third party entity that will handle all the administrative and legal tasks relating to international employees. If you want to know more about exactly what this entails, GlobalPEO is a great resource. On their website, you’ll find out exactly what they do, and how they can help you navigate through murky international labor laws and markets. They also run down some of the main benefits of working with one, and why it’s so important to have one as part of your team wherever you’re thinking of expanding your operation.
One of the areas in particular where an employer of records will make a big difference is when it comes to building benefits packages. It can sometimes almost be close to impossible to build a benefits package for employees in a country that you barely know. However, an employer of record will know exactly what to look for and make sure that the benefits you offer are even relevant in the employee’s jurisdiction. They’ll also be able to tell what type of benefits employees actually expect to find in their package.
Choose the Proper City to Build Your Base In
You will then have to choose where your base will be in the country. When choosing a location, a lot of businesses make the mistake of going with the city that offers the most advantages or where it’s cheaper to employ, but that is a great mistake.
You want to choose somewhere that will be easy for you, your employees, and your clients to reach. You also want it to be easy to reach from your main headquarters. In addition, you want to make sure that you establish yourself in a place where you’ll have a large pool of talent available to you, which will make it easier for you to scale your operation.
Moving into new markets is always a challenge, but one you can overcome by taking the proper steps. Make sure that you follow these few tips to the letter if you want to keep costs under control and ensure that your expansion is a success.