Going global with your business can be a complex and daunting process - building a solid foundation for your expansion is crucial...
If your business is fortunate enough to have experienced commercial success, setting your sights on the global horizon is a natural next step. International expansion can be a tricky proposition however, and not every business that makes the move does so with the same success they experienced at a local and national level.
Successful international expansion means meeting, and overcoming a range of new challenges - and involves careful, effective planning. To help your business prepare for its journey, to any corner of the world, we've put together a guide to some of the most important first steps...
- Due diligence: Before any degree of business expansion, you must be comfortable that your core organisation is ready for the stresses about to be placed upon it - and can handle adverse effects. The international marketplace will be different from your local environment - are there any potential threats to your business, or weaknesses that may emerge as a result of expansion?
- Business plan: Explore the practicality of your expansion move. Essentially this means thinking logistics, developing a detailed budget, and setting progress goals and objectives - along with criteria by which you can judge your level of success.
- Market analysis: Your business' success will depend on the demand for, and viability of, your product or services in your international target location. Customer research and market analysis is essential: you must be confident the opportunities available in this new market justify the costs of your expansion.
- Advice and support: You don't need to enter into the expansion process blind. International organisations and governmental bodies can assist businesses of any size with global expansion, including the International Trade Association and The World Bank. Conferences and consultations are other useful ways to plan and inform your expansion.
- Investment and finance: Ensure your business has the finances to fund its expansion process. While larger organisations may handle their own expansion costs, SMEs may need to acquire additional capital. Developing an effective pitch for investors is crucial to acquiring funds - investors will want to know how your expansion will deliver revenue, and scale over the coming years.
- Translate your model: You may need to tweak, adapt, or significantly alter your business model in order to see success in your target locations. There may be a range of new contextual challenges to overcome in your new marketplace before you can optimise your sales-potential.
- International team: Putting the right personnel in place to handle operations in your expansion location is important. You should be comfortable that your team has the experience and expertise to deliver the consistency, and standards of service you expect. In practice this will mean selecting both capable senior executives and talented local employees.
- Coordination and communication: International expansion puts a logistical strain on your core business. In addition to having teams 'on the ground' in your international offices, having a capable headquarters team in place to co-ordinate and communicate between locations is just as important.
- Legal expertise: Ensure your business' presence in your expansion location doesn't contravene any local laws or legislation. With a range of legal issues to consider - including environmental, employment, safety, and copyright laws - it may be worth acquiring local representation and expertise.
- Tax and payroll: Taxation differs in almost every country in the world - and failure to comply with local tax rules and regulations can lead to costly compliance penalties. Ensure your payroll department understands local tax procedure - outsourcing to a third party payroll organisation is a way to gain the benefit of local expertise.
- Culture-shock: Unfamiliar business environments can bring both professional and cultural challenges. While compliance or regulatory issues may affect day-to-day operations, cultural factors including language and local customs, may also present obstacles. Take the time to understand how your business will fit into the local landscape, and what cultural impact it may have.
- Professional partnership: Your expansion efforts may be helped by establishing partnerships or alliances with certain organisations within your target markets. Overseas partners can help promote and distribute your products and services, or simply raise local awareness.
- Transportation and travel: If you are exporting products to your international location, you will need to consider the most efficient way to transport them. Your products will also need to be insured for the international journey. If personnel need to move between offices, further travel arrangements will need to be made.
- Distribution infrastructure: Consider the methods by which you will distribute or deliver your products and services on an ongoing, global scale. Your strategy will involve analysis of established trade routes, and should detail both the logistical, tax and legal implications of crossing international boundaries.
- Exchange rate: International economies can be extremely volatile - and this should factor into your expansion decision. Obviously, you will want to limit your business' exposure to unfavourable foreign currency movements, so a careful examination of target markets is a vital part of the expansion process.