Before you enter a new market, here are the 6 things you should consider:
1. Think Practically About Expansion
There are more than 200 countries around the world with their own economies, products, and service demands. It’s important to think carefully about internationalization and which markets are going to be the most receptive to your product. First, you will want to look at the growth potential in each market—obviously, third-world countries will not have the same economic capacity as powerhouses like Japan and Germany. If you want to be able to double or triple your empire, then you want to consider the parameters of the market and its capacity.
You also want to consider any recent market history, any spikes in numbers, or any steady growth numbers that indicate future success. You will also want a local perspective of the market, which is why you will want to consider conversations with organizations like local government investment agencies and organizations. They will provide you with a pragmatic and sobering view of the state of the market.
Remember: no market is perfect—there are flaws within each one.
Additionally, as part of the market analysis, you will want to consider what that means for your products or services. Some markets will require businesses to adapt their existing products or services, change pricing, etc. to meet local preferences and spending potential. With something like food, it’s safe to say mochi ice cream parfaits are going to be more desirable in Asian nations than in South American nations. You must be realistic about the product changes that you will have to make and the cost to make them. What is the comparison in total between changing your service and the potential earnings of selling in that new market? Sometimes, the cost to change what you are offering is higher than the payout, which should tell you right now to stop in your tracks.
A thorough and well-planned financing structure is essential for successful global expansion today. You have options to consider, like whether to fund the expansion from the home country or in the new market, and the overall cost of finance, tax rates, and the local legal system. Are there any incentives offered by the local government? Any tax breaks? You may desperately need to access funding to pull off this expansion, which is why the financial choices at your disposal may end the expansion idea before it begins.
You also need to decide which financial institutions can help you expand internationally. For example, an international bank with a presence in varied markets may be the right choice for those rolling out an expansion program, but it will need to offer access to local expertise and more.
All these changes are also going to change how your company needs to be organized and managed. Supply chain issues may arise, for example, if you supply fresh food. How are you going to get it to remote areas in your newfound place of operation without mounting costs and travel concerns? At the same time, these changes could offer operational advantages. You could start to enjoy economies of scale, increasing your output via expansion, lowering average costs while increasing your margins.
Amazingly, this expansion can even deliver new insights into the business back home. You may discover new ways to operate, package your product, or market your services, providing you with a new perspective that will help you earn even more in your founding country.
3. Sales and Marketing
No matter where you choose to set up shop, you are going to need to sell something to someone to stay afloat there. Regardless of if you’re a B2B or a B2C operation, either a business or a consumer needs to spend their money in order for you to continue your success.
To forge these new networks, significant resources and partnerships are going to be required as well as a sales and marketing strategy that is local in its approach.
Language and tone will be incredibly important in this scenario. Certain sayings and phrases in your own language may be different in others. Humor and what people find funny change dramatically over cultures. Even what’s permitted in advertisements changes. For example, in the Netherlands, they are much more relaxed with sex and LGBT imagery in their ads than the United States.
You will need to think to yourself: does the product name, slogan, or concept relate meaningfully to those viewing it? Or could I potentially insult the consumers in this nation and their customs?
Every business relies on dozens of layers of employees every day to oversee operations. There are specialty staff, staffing requirements, high-skilled workers, independent contractors, etc. that all work together in one operation. You should look for a market where this kind of labor force is available to you.
You will also need to invest in training to prepare your current staff for working with international people, and onboarding international people into your current work culture.
Pursuing a balanced mix of local and expatriate talent will also be vital for your operation. Local workers have new market insights that you can’t find anywhere else, whereas expats will have a clearer view of the overall objectives of the business. It is generally broken down as follows: expats are better suited for product, technology, control, and operation management, whereas local staff excel in the local language, established relationships, and market knowledge. Utilize both to their fullest extent.
5. Taxes and Regulations
The T word. It’s a word no business owner likes to think or talk about, but it’s an incredibly important one for remaining profitable and compliant. Things like tax and custom laws, import restrictions, corporate organization, and liability laws may create significant barriers to entry that just don’t make sense for your operation. You need to also consider the legal system. How long will it take to resolve issues with local partners? What are the local intellectual property laws like there? And what about currency risk—will currency exchange rates cause problems? Is the market volatile?
Of course, there’s also the positive side of the equation. Many countries offer tax incentives and tax breaks to foreign companies that choose to invest in their market.
6. Further Expansion Plans
Any business owner that is foraying into an international market probably has the drive to continue expanding. Why stop in 2 markets when you can be in 14? You should be looking for a business-friendly climate, and a country with overall business receptive policies that will support you should decide to offer your product and service in other locations. As we have listed previously in this e-book, consider doing business in notoriously business-friendly nations before you consider navigating trickier waters.
Choosing the RIGHT Way to Make a Market Entry
Before you can earn your millions in a foreign market, hire new talent, and consider an exit strategy, you need to first concern yourself with the entry strategy. How a business enters a market will depend upon a variety of things, including:
- Local regulations and environment
- Risk appetite
- Personal expertise
And the list goes on. Do you hire your own team and build your business there? Do you find someone with a similar business that you can partner with?
Let’s consider your options: