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Introduction

If you are considering taking your company, startup, or entrepreneurial endeavor global, then congratulations to you — your operation has experienced enough success, growth, and potential investment to venture itself around the world. Going global is the next logical move for any operation that has mastered its local and national marketing, as the global economy provides a nearly unlimited amount of cash flow, investment options, and partnerships you just can’t find in one defined region.

Whether this is your first attempt at global expansion, you don’t quite know where to start, or you just can’t shake the idea of going global, this e-book is here to provide you with the basics, essentials, and global expansion roadmap tips you need to be successful. Failing at global expansion is something that is tremendously costly, both regarding the currencies of money and time. You don’t want to attempt something like this alone or without the proper information and education.

Some questions you already want to be asking yourself as you dive into this e-book include:

  • How will you protect your company’s intellectual property in other countries?
  • Are you prepared for the requirements of doing business in another country?
  • Do you have a budgeted timeline for what it’s going to cost to go global?
  • How will you maintain your compliance in multiple countries?
  • How do you know which global expansion option is right for your company?

And the list goes on. The good news is that there are plenty of innovative solutions, research, and case studies that have streamlined the global expansion process, enabling you to expand into new markets successfully, compliantly, and efficiently.

It’s paramount that you remain agile and flexible, while also committed to your goals, compliance requirements, and operational efficiency.

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You do not need to invest every cent and available minute into successful foreign expansion. By placing a small team in- country immediately to test the market and evaluate it for potential long-term commitment, you can quickly and effectively build up a network around the world with access to talent pools that totally transform your company and potential for success.

By applying the latest business models and trends to your global strategy, you are going to succeed at global expansion.

Let’s jump into the details of global expansion and what you can start preparing for your company or personal operation.

The Importance of Global Expansion

“Five years from now, it’s going to be a one global marketplace.” – Armin Lang

Today, the entire world operates on a global scale. Thanks to the technology of online shopping and delivery, the connectedness of social media, and the ability to video conference and collaborate with teams and talent from around the world, we are no longer operating at a local or national level. Globalization is here, isn’t going anywhere, and is something every company needs to embrace, regardless of their size.

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Therefore, it’s critically important to embrace this new global scale as opposed to resisting it. Why? Because your competitors are embracing it as we speak, which means they are tapping into new markets, economic potential, and talent pools that you are missing out on by sticking to your local mindset. 

In a study released by Mazars, it was found that 45% of midmarket company executives generate more than 50% of their revenue internationally.

So, before you shut down the idea of going global, consider some of the most generic benefits that are right at your fingertips:

1. Expanded Revenue Streams

If your business is performing well locally or domestically, then you could be making even more money taking it internationally. There is only ‘X’ amount of niche consumers for your market per square-mile where you are located. If you have maxed out your marketing potential, it’s time to find new markets. Going global helps you diversify your revenue sources, accessing a new customer base that comes with different wants and needs. Your business will be poised to fill the gap in this new, international market that’s been waiting for your products or services.

According to the U.S. Small Business Administration, 96% of the world’s consumers live outside of America. For example, massive firms like Nike and IBM maintain their operations in the Netherlands. Why? It gives them direct access to 170 million European customers that live within 300 miles of their headquarters. That’s also probably why UPS opened a new facility in Eindhoven, the Netherlands, one of the company’s largest investments in Europe to date. These operations understand the importance of globally recognizing where potential revenue streams reside.

2. Staying Ahead of Your Competitors

Complacency is one of the worst things that could ever happen to a company. Thinking that you have maxed out your competitors and that you are now untouchable is downright false, dangerous, and lazy, positioning your company for failure in the future while other business owners and entrepreneurs are working feverishly to pass you by. Just look at the example of Facebook vs. Google vs. Apple. Do you think any one of these companies assumes they have “won” the technology battle? Or even Uber and the sharing economy. Their ride-sharing app is constantly pursuing global market expansion and reception so that other competitors, like Lyft, cannot catch up to them (M Frederick A. & Barbara M. Erb Institute, University of Michigan).

A new customer base not only opens the door to more opportunities for your company, but it also enables you to stay comfortably ahead of the competitors, reaffirming customer loyalty before these other operations beat you to the punchline.

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3. Expanded Talent Access

There are talented, refined, and specialized workers, managers, and executives around the world — they aren’t just limited to the United States or Switzerland. These new workers can bring on diverse perspectives and unique skill sets, as well as give your company direct insight into local cultural norms and expectations. With this kind of talent acquisition, you can better understand international markets and what they want from your products or service.

That’s probably why a 2017 Harris Poll survey found that 55% of U.S. companies have hired, or plan to hire, workers from overseas, which was a 21% increase over 2016. Companies know the benefits of going global with their workforce greatly outweigh the negatives (which we will cover in later chapters).

4. Increased International Perception and Respect

Credibility can go a long way when it comes to potential investors, partners, acquisition deals, and hires. Going global, therefore, not only increases your audience, but it also increases the perception that your company is a successful machine that isn’t limited by borders. Positioning yourself as a multinational brand will provide you a global presence, giving consumers more reason to believe that your company is reliable, high quality, and competitively successful. It has biological roots — we are more drawn to the strong than to the weak. Creating a company that appears strong will attract the masses.

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5. Protecting Bottom Lines Against Unforeseen Events

Everyone in business knows how to prepare for the unexpected. Sometimes, it’s what makes working in business so fun. Other times, it can be overwhelming enough to shut down an entire network of stores and talent. That’s why you need to always be pragmatic and considerate of diversification options that protect your assets. Companies with international operations can offset negative growth in one market by investing their time into another market. In the same vein, companies can also use these different international markets to introduce a new product or service concept, ensuring a positive revenue stream no matter what.

Just look at the example of coronavirus right now. Stocks are plummeting around the world as companies hesitate to do business with China and receive any shipments or imports out of the country. If your company was reliant on the Chinese market, and no other markets, you would be saddled with a serious financial problem right now. But, if you had markets still operating in North America and Europe, then you would be able to weather the coronavirus storm.

6. Foreign Investment Opportunities

The final benefit of global expansion is the additional investment opportunities that come along with accessing foreign markets. By operating in global markets, you can create new partnerships and alliances that help your company make informed investment decisions. You can also benefit from lucrative investment opportunities that were not present in your home country. For example, many governments offer special programs, tax incentives, and other programs for foreign companies looking to invest in their economy and workforce.

The bottom line is that the longer you wait to go global, the more you have to lose in comparison to your competitors. If you remain domestic, your competitors are going to snatch up new markets of consumers, new talent, investment opportunities, diversification strategies, and cultural immersion that can help them create an even better product or service with third-party perspectives. Although anything of this nature can seem scary and intimidating, it’s all about the prep work and the expansion strategy.

That brings us to our next chapter:

HOW TO DEVELOP A SUCCESSFUL EXPANSION STRATEGY.

How to Develop a Successful Expansion Strategy

“Traditional market-focused models of multinational strategy may be inadequate to represent the activities of the firm in the global arena.”

California Review Management, Internationalization, Globalization, and Capability- Based Strategy.

Obviously, just blindly moving into foreign markets with zero plan or strategy is not going to bode well for your operation. As someone in business, you know there are constant moving parts and actors that come together to create one seamless experience every day. Therefore, it should come as no surprise that global expansion is no different, which is why you need to take the time to create a successful expansion strategy that is right for your company and niche market.

Additionally, you need to move away from the traditional expansion strategies of the past, as the quote from California Review Management stated above. You need to commit yourself to an agile strategy that is modern, comprehensive, low-risk, and thorough.

To get started in the global expansion process, you need to first ask yourself one very important question:

Why is my company considering global expansion?

Your global expansion strategy needs to safeguard your overall vision for your business, as well as address the goals you want to achieve by expanding into a new foreign market. You need to ensure your stakeholders, team members, employees, and even current consumers are ready to join you on this global endeavor.

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Although there is no one-size-fits-all solution to expanding globally given the different attributes and details specific to companies, there are some common denominators in the world of sustainable global growth.

Here are some of our global expansion tips that will position you favorably for the big move:

1. Think with Small, Agile Steps

Anytime we set a goal for ourselves, whether it’s waking up earlier or losing weight, we must make a game plan that helps us arrive at this big accomplishment. If you want to lose weight, that requires you to monitor what you are eating, every single meal, for months. It requires you to workout more, move more, and drink more water, etc. It’s many, many small steps all rolled together for one aggregate result. The same thing holds true with your company. In essence, your PEO will be responsible for everything from payroll and taxes, to benefits, compliance, and employee protections for your new host country.

This means that your HR staff and administrative staff won’t be required to dig up every piece of information related to “how we do things” overseas, while also maintaining their day-to-day responsibilities back home.

An agile global expansion strategy is one that enables you to thrive in new foreign markets resulting from small steps taken towards one long-term goal. Before you set your sights on a specific country for your expansion, it’s wise to test the market and ensure there is potential there for long-term success. You need to ensure the market justifies further investment into the infrastructure, fixed costs, etc.

This expansion isn’t going to be a cheap undertaking, which is why you need to be wise about your expansion.

The companies that enter new markets with an agile approach typically maximize their return on investment in a shorter time. It’s like doing your homework before the test — that little bit of work up front ensures you’re going to know all the answers. The test is what matters the most at the end of the day, which is why you should do everything in your power to ensure you ace it.

2. Plan Your Entry and Exit Strategies

Before you choose a new market for your company, you need to first familiarize yourself with entering and exiting that specific market. What is required to remain compliant? How can you enter or exit successfully and in the least costly manner? If you enter a market with a successful entry plan, you can immediately get to work building a team in a new market with ease and profitability.

Additionally, if it’s time to exit a market, shutting down those new facilities can be time-consuming and incredibly costly. For example, it typically takes two-full years to close down a Chinese subsidiary in compliance with the government. If you know this in advance, you can start that timeline well ahead of any problems or major disasters that can drain your bank accounts. You don’t have to weather any major surprises if you do your due diligence in the interim.

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3. Embrace Local, Human Capital

“Nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies.” - Lawrence Bossidy, Former COO of General Electric

Human capital is the most important asset any company manages today. It can also be a company’s best resource in a new foreign market.

Local employees are valuable for several reasons, including working at your company, helping you to identify untapped opportunities that you might not otherwise know, evaluating market penetration plans on a day-to-day basis, and communicating cultural norms and expectations that are foreign to you and your managers.

Local talent can also provide you with third-party perspectives you had never considered before that will assist your operation in other unrelated management requirements.

4. Don’t Be Afraid to Partner Off

There is a large volume of information you need to consider before you expand globally. This can include employment regulations, compliance, government requirements, and other in-country operating procedures. In fact, ignoring these procedures can lead to liabilities that cost millions. For example, Target recently announced it was withdrawing from Canada, liquidating 133 stores and laying off more than 17,000 employees. Due to a variety of factors, like compliancy, consumer reception, etc., the massively successful department store just couldn’t make Canada work — and it cost them big-time.

Before launching into global expansion, protect yourself from consequences that could befall your operation. You can do this by partnering off with some experienced companies that specialize in recognizing warning signs, understanding risk, and doing everything else in their repertoire to keep you compliant. Remember that not everyone in the world sees business the same way you do, which is why you need to be respectful of the compliance norms and customs in other nations.

5. Always Spend Time Testing the Market

Whether you like to do background research or not, always test the cultural dynamics and specifics in your target market so you can mold your outreach, marketing, and hiring process in adherence with these expectations. This can include creating marketing campaigns that resonate with local preferences, changing your brand message to match the local sentiment, adjusting your products to meet consumer demand, and doing it all in adherence with cultural differences (creating Facebook ads in their language, etc.).

You can do all of this without building any facilities in the new country. Simply work with an in-country partner, or send a few team members, to conduct this research on your behalf. They will evaluate how the product or service did with local consumers, and based on that information, you can then decide if expanding into that specific market makes sense for your company.

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6. Pick a Global Hiring Method That is Right for You

A major part of your expansion strategy is deciding how you are going to hire talent in this new foreign market. Your international team is a major aspect in your potential success, which is why the right hiring method is key for maxing out your global potential. You have four different international employment methods at your disposal today: foreign independent contractors, nonresident employers (NRE), foreign subsidiary establishments, and international PEO (professional employer organization).

This next section will talk more about how these four new employment methods can impact your hiring options in a global expansion scenario, as well as which ones are right for your operation.

Which Hiring Option is Right for My Company?

To reiterate: depending upon your global expansion goals and expectations, there are certain international hiring options that will make more sense for you than others. You will need to consider:

  • Employment liability
  • Tax implications
  • IP protection
  • Asset holding
  • Budgeting
  • Time commitments

Let’s evaluate the benefits and risks associated with each of the four hiring options:

1. Foreign Independent Contractors

This makes the most sense for one-off jobs, project-based work, and project- based research. However, do be aware that noncompliance due to contractor misclassification is common. It’s a problem we are seeing around the world right now with the arrival of the new gig economy. Should Uber drivers be considered employees and paid benefits? California passed a law at the end of 2019 called the AB5 Law, which limits how many projects freelance writers, etc. can take on in a calendar year. In an effort to curb exploitation in the form of independent contracting, the state has also stifled freelancers’ ability to maximize their revenue. Therefore, be aware of running into the same problem if you are hiring talent globally in an independent contracting arrangement.

For definition purposes, a foreign independent contractor is an individual that lives in a foreign country, working for a company headquartered in a different country under a contract that does not specify an employee agreement. For the independent contractor, they can make their own hours and schedule, as well as work remotely, saving transportation and office money. However, they do not receive the benefits of being an employee, like health insurance and perks. As the company hiring these people, you need to be aware of noncompliance penalties in that country, as well as international contract confusion.

To avoid any mishaps, be sure to clearly establish the independence of the contractor from your company with a signed agreement, as well as prevent yourself from assigning a set schedule for the contractor to adhere to. These contractor agreements need to originate in the country of work, as the one in your home country will not hold up.

2. Non-Resident Employer (NRE)

An NRE is a local registration that gives companies an in-country Tax ID, which enables them to legally hire employees in their new country of obligation. These arrangements are only available in certain countries and can go by different names depending upon where you are. The benefits of an NRE include: having a Tax ID, fewer regulatory requirements, and cost effectiveness since NREs are typically less expensive when compared to setting up a legal entity.

The downsides of NREs include limited functionality, as NREs are primarily focused on market development, compliance risks in the form of tax avoidance, and timelines of only six- months at a times.

3. Foreign Subsidiary Establishment

This legal entity is based in a different country and controlled by a parent company through more than 50% of the voting stock. In this kind of arrangement, there is a high level of compliance going the extra mile to set up an entity that can cover a big portion of risk, as well as a true market presence that allows you to directly contribute to the local economy. A foreign subsidiary establishment also comes with legal recognition for your company by local governments.

On the downside, these arrangements come with a costly initial set-up fee of somewhere in the $15,000 to $20,000 USD range, as well as significant maintenance fees that can cost around $40,000 USD per year. It is, therefore, difficult to dissolve and stop operations once the foreign entity is established, which means if you were counting on a quick exit strategy, this is not the business formation option for you.

4. International PEO (Professional Employer Organization)

An international PEO is an innovative, newer solution that has been reinvented in the face of global expansionism. It enables companies to hire employees anywhere in the world quickly and within compliance, as well as without the burden of establishing a foreign legal entity.

Many companies like Airbnb and even Uber are using this kind of arrangement so they can hire employees in days, when compared to the months’ timeline common in established entities.

At its core, this solution is one where your employees in foreign countries are hired directly through a third-party. It essentially becomes an extension of your HR department, managing everything from tax withholdings and payroll, to remittances, social security programs, etc.

Notable benefits include quick market entry, within days, cost savings as it can be up to 60% cheaper when compared to foreign subsidiaries, time savings so you can get your operation up and rolling seamlessly, and risk mitigation by using in- country expertise to help minimize liability and other issues you might not be aware of.

On the downside, this employment model does not allow you to acquire fixed assets within the country, as well as the requirement to go over each tax code in the target country to determine if you will remain compliant with your establishment.

Next, let’s migrate into a chapter that is more about mindset and personal expression: 4 ways to foster a global mindset at your operation.

Four Ways to Foster a Global Mindset at Your Operation

“Once your mindset changes, everything on the outside will change along with it.” – Steve Maraboli

Your mindset is the driving force behind everything you do, say, and approach in your life. If you have a positive mindset, you will choose to see the glass half full, whereas the person with a negative mindset will see it half empty. When it comes to something as big and bold as global expansion, you need to ensure the people at your company are ready for this kind of undertaking. It’s one thing to expand into international markets — it’s entirely another thing to ensure crosscultural mishaps aren’t slowing down your revenue potential or frustrating your workforce.

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Adding new languages, supporting new offices, working with people from foreign backgrounds, supporting new currencies, etc. is only the tip of the iceberg. You need to also ensure your company is ready with a global mindset that will fuel future growth. It’s not going to be easy or simple, which is why you need absolutely everyone onboard with this decision. But, if you include people in on this decision and make it feel like a team activity, they are going to be more likely to view global expansionism with positivity.

Successfully get your company ready for this kind of worldwide thinking. 

Here are our 4 tips to consider:

1. Make it an Internal Discussion

No one wants to feel like they are outside of the discussion or there is a lack of transparency. In fact, research has shown that to be successful in any kind of big business change, you need to focus on what your employees think. It can be a common mistake to think that the product you now offer in your present market is going to be well- received in your new market. Every country has different nuances, requirements, necessities, and luxury items. You want people thinking in a way that they design new campaigns and features centered around the people in those markets — not the people in your current markets.

Come up with some global terms and mantras to get everyone excited about this new opportunity. Instead of seeing global expansion as intimidating, start to make “global readiness” task forces and conferences whereby your employees are briefed on everything that comes with going global.

Get them in the habit of being “global champions” as well as make it easy for them to learn more about the benefits of potential of this move for their happiness. For example, going global might mean they have more promotional capability now, or even the opportunity to go work abroad.

Did you know that 71% of people want the opportunity to work outside of their home country during their careers?

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2. Gain More International Expertise without Going International — Yet:

One of the best ways to get your company ready for going global is to bring the global into the heart of your company. How is that possible? For starters, begin with hiring people with international experience.

People who have already worked around the world or across borders can share their experience with your current workforce, put on presentations, and include special pointers and tips you might not otherwise know. You can start hiring people by saying “international experience desired” to ensure you are working with candidates that know what it’s like to speak other languages, adapt to new communities, eat new foods, etc.

Before you go through with new hires, be sure to ask those that already work for you if they fit the bill. You might be surprised that some of your workforce has already worked abroad; even more shocking, you may discover some of them are immigrants without accents. They could represent a major asset that oftentimes goes largely ignored.

3. Encourage Your Workforce to Gain International Experience

If possible, send your current workforce to foreign countries on assignments so they can learn first-hand from employees, partners, and customers. If you already have an office in another country, take turns rotating those working out of the office so they will be groomed to manage a newer office you have planned in the future.

You can also invest in international mobility expertise via an immigration attorney to help in your facilitation of sending employees around the world. Even short trips of just 2–4 weeks can be enough to embed someone in a totally different culture and open their eyes up to the world around them.

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4. Be Willing to Change Your Organizational Design

Although you may not want to rock the boat, in this case, it can be worth it to mix things up so more people are getting international experience. Consider placing key hires in offices outside of your country so that they are trained in the art of international business before you truly go global. Create more roles that are global in scope, so more opportunities are available for those at your company. This restructuring is also a great precursor to the restructuring you are going to have to do when you do go global.

By doing this, you will be showing your employees you are ready to do what it takes to go global and provide them with the best possible experience. They will appreciate your effort and more and more people will request international assignments as they become available.

Lastly, don’t be afraid to say goodbye to software and programs that were designed with a domestic scope in mind. To make your employees happy and expansion-ready, be sure to take the time to let them know you are onboarding new software and will be providing them with in-depth training so they are not rushed or overwhelmed.

Show them that you want to invest in their global success by warning them far in advance about any software overhauls.

What Does Your Company Stand for?

If we were to walk around your company office place today and ask your employees to describe what your company stands for in three words, would they be able to answer us? Have you taken the time to go over company culture with employees, communicating to them what you believe in and what you hope to solve in the world with your product or service?

Taking the time to get everyone up-to- speed on your brand and united around your values can be integral to them remaining happy and content working for you abroad. It’s much easier to rally behind a common cause than it is to simply wake up in the morning and collect a paycheck.

One example of a company that understands this is HubSpot, the digital marketing management platform. They created a local version of their “Culture Code,” which clearly articulates their guiding principles for the business. They also created a Buddy Program, called Tomodachi (friend in Japanese), which matches hundreds of buddies up every month for an informal chat with someone in another office. The employee feedback has been so positive that they are considering bi-weekly buddy chat meet ups.

Mindset Over Matter

With all these cultural shifts and commitments in your company, your employees should be feeling confident and prepared for a global expansion. Human capital is the most important capital at your disposal, which is why supporting positive mindsets is something you absolutely want to concern yourself with in the face of global expansion.

In the second half of this e-book, we’re going to look at global expansion roadmap points, risk mitigation tools, what to consider when foraying into a new market, and lastly, a global expansion checklist that will help you tie together all the loose ends before you make the big decision.

Let’s get started!

Risk Mitigations When Going Global

When it comes to any big business decision, there is always going to be risk involved. The art of managing a business or corporation itself is risky. You had to decide to invest your own money into a concept or idea, as well as pay an employee or two to see if this idea was going to survive. You’re no stranger to risk, which is why with proper awareness, there’s no reason you can’t accept the risk associated with going global.

Naturally, weathering risk isn’t a matter of crossing your fingers and hoping for the best. With responsible planning, you can mitigate the possibility of any risk before your international empire is established.

If you do business internationally, you have higher exposure to risk than domestic businesses. You must navigate laws, customs, business practices, and the geopolitical context that can put your entire operation at risk. These concerns are something to consider whether you’re doing business in Africa, Asia, or even the United States. Planning for the unexpected and any possible risk will ensure you are prepared no matter what.

As Winston Churchill put it, “He who fails at planning is planning to fail.”

Plan so that you don’t have to react. Here are five steps that will help your company mitigate risk as you move into the international landscape:

1. Take Time Going Over the Business and Political Climate:

Let’s take the example of Brexit, which went into effect at the end of January 2020. The vote to leave the EU years ago established uncertainly in the UK, with adverse effects on import and export strategies negatively impacting the economy. At the same time, the political risk of Brexit saw many British leaders come and go, unable to come to a consensus on the topic. Many economists warned the British economy would crash the day after Brexit, and although it did not, the alarmed business community was holding its breath. Experts’ fear discouraged new foreign investment in the country, and everyone suffered alongside the politicians.

Therefore, there are two things you can do. First, read up about the market you are planning to expand into. China right now amid the coronavirus is an obvious problem and something you should remove from your plans in the near future. You also want to create a business plan that considers both the political situation and the business environment of that country.

Calculate overhead costs from legal compliance, taxes, reporting, and employee compensation. And make sure you look at the transportation infrastructure of the country, ensuring it can adequately support your needs.

Which countries are business friendly? As of right now, according to US News, consider: Luxembourg, Switzerland, Canada, Denmark, Singapore, the Netherlands, and Sweden.

2. Choose an Experienced Business Partner That Can Help

As we have mentioned earlier in this e- book, there are international business partners with the experience you haven’t yet acquired that can keep you from making costly mistakes. Experienced local professionals can help guide you through the regulations and cultural expectations of that region. For example, did you know that bribery is legal in some countries, although incredibly illegal in the United States? Consider testing the waters with a strategic alliance or a joint venture that enables you to get a feel for customs and changes before you dive all the way in.

3. Hire Talent That is Also Experienced

Beyond hiring local talent, ensure you are hiring talent with experience in what they are doing. These people need to be able to adapt to your company’s vision, strategy, and goals, as they will be the face of your new business launch and opening in that country. Do not rush this process or cut corners, but rather take time to conduct due diligence on all applicants. This can take the form of background checks, work history checks, speaking to previous employers, and interviewing carefully. Additionally, some countries may require additional security checks or certification as part of anti-terrorism efforts. Ensure that your new hires meet these requirements.

In general, it costs close to $50,000 for every employee that you lose/puts you in a position to have to refill their role. After the training, the time investment, and the benefits provided to that employee, you do not want to lose them. Get the hiring process right the first time.

4. Create a Business Model That is Compatible with the Market

Your business model needs to fit the country and demographics in question. In a country that is massive with tons of ethnic factions, like India, you might need a multi- part model that includes strategies for each specific region and language. Additionally, take the time to assign a New Product Introduction (NPI) team to determine the correct operating models before they enter the market.

These can vary based on cultural and social differences. This team should also design a product to meet the needs of the local customers.

NPI models account for all direct and indirect costs associated with international trade. When it comes to international trade, shipping methods, tariffs, and duty calculations need to be considered, as well as protectionist laws in different countries. Mistakes can be massively costly, which is why you want a business model that is already set up for the target market.

5. Be Pragmatic About Expansion

Although being optimistic is important for business growth, you also want to be pragmatic about trying this new market. Even the most successful companies in the world have had massive expansion failures. For example, Walmart failed to take in cultural nuances when they opened in Germany in 1997. They invested in 85 stores, hoping to win over Germans and their frugal lifestyles. However, intricate labor laws restricted Walmart and how long it could remain open, as well as the overly “happy” greeters that Germans found distasteful. In 2006, they pulled out of the country, which cost them about $1 billion in total.

Factor downside mitigation into the model by asking yourself how much you could stand to lose if expansion fails. What is the number you are staring at? Can you afford it in case it happens?

Develop an exit strategy and decide how can you save money and cut corners during the exit. Place some safety nets so that you can sleep at night.

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Risk is an inevitable side effect of doing business. Successful companies recognize that with careful management, preparation, and the right intentions, no amount of risk will sideline their operation.

And, even if it does, they will be able to shoulder the costs and continue operating into the future.

Next, let’s look at some of the finer nuances to consider when entering a new market today.

Six Things to Consider When Entering a New Market

In a study published in Capital Confidence Barometer back in April 2015, it was found that for 84% of companies, overseas expansion is expected to be the focus on their M&A strategy for the next 12 months. Why? It’s a move of opportunity, one that offers potential high growth and revenue increases, as well as one that comes with risk (which for many of us, can be exciting).

Global expansion is a challenging process, which is why many companies 1) won’t attempt it and 2) will fail at it. Analysis is pivotally important when accessing a new, foreign market. In fact, analysis is the difference between success and failure. What’s amazing is that you can do all this research without spending any money or opening any physical business locations.

Why doesn’t every business do their due diligence? Sometimes, when you’re so busy and making so much money, you can feel invincible. Surely, another market will welcome your product or service with open arms. Other times, business owners simply don’t want to do the work. They feel like they don’t have the time.

Don’t let this be you. If you’ve made it this far in the e-book, then it’s clear you care a lot about doing your homework before expanding globally.

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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 viewpoint 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 product changes that you will have to make, as well as 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.

2. Financing

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?

4. People:

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, as well as onboarding international people into your current work culture.

Pursuing a balanced mix between 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 on 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 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 as well as in compliance. 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 the positive side of the equation, too. 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 two 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
  • Resources
  • 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:

1. Build It Out

This option is a more expensive and committed one than partnering or buying something already in existence.

Since it’s more expensive, it’s also riskier and will require more resources on your end. However, you will retain total control over the company. This option may not be available in some markets where regulations require you to already have a local partner.

2. Buy Another Brand

One way to accelerate internationalization is to buy a company that has a ready- made brand at your disposal. But, in this scenario, the merger details can get complex and require extensive due diligence, as well as strong management to ensure it’s an effective integration. You should spend considerable time weighing the pros and cons of buying a brand as a way to launch your global takeover.

3. Partner with a Brand

Lastly, you have the option of partnering with a brand, which ensures someone else is shouldering the risk, as well as the reward, of your expansion plan. It can provide you with access to infrastructure that is already in place, as well as the expertise of a brand that is already established in the region. This is your best option if you want to avoid any compliance problems or mishaps.

The good news is you have options when it comes to market entry. You don’t have to do it alone, and you certainly don’t have to shoulder the costs and compliance questions alone.

As we like to put it:

Accept the risk but do the homework.

It isn’t a risk-free exercise; but it’s one with tremendous payoff if you do the homework ahead of time.

Your Global Expansion Roadmap to Success

So, what does all this look like in practice? When you put everything together, what kind of roadmap are you holding in your hands? We know we’ve shared a lot of information and that you might be a little overwhelmed — but that’s a good thing. You’re well on your way to mastering the art of expansion!

Every company’s global expansion roadmap to success is going to be unique. We can’t predict every detail related to your market, product, or service. However, like we’ve done throughout most of this book, we can provide you with a general overview, as well as some final tips when you put everything together.

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Let’s look at that personal roadmap to
internationalist success:

Step 1: Identify Your Objectives with Key Stakeholders, Executives

Goal setting is the foundational principle of any kind of roadmap. What are your goals with this expansion? Why are you expanding? Are you prepared for everything that comes with global expansion? Is your team ready for such an expansion? Do you have the capital to fund expansion should things go wrong?

One recent study by Elsevier found that goal setting in a professional environment improves worker performance by 12-15% when compared to settings with no goals at all. Goal setting will define where you are, where you are looking to go, and how you are going to get there. Sitting down and doing this will ensure everyone at every level in your operation is briefed on the forthcoming plan so there is no miscommunication or confusion.

As part of your goal setting, make each objective specific and measurable. If you want to increase sales, get specific. Give a timeline and commit to a percentage by the end of the year. Goal setting is not a time to get hard on yourself, either. The goals need to be attainable, not impossible. If you keep missing the mark on attainable goals, you will start to feel discouraged.

This first step in expansion should take place at the executive level. Next, refine the goals and plans of action you come up with into a PDF or something you can email to your workforce. Share it with your employees so they are part of the conversation and up-to-speed on all expansion requirements. Be sure to cover timelines of one month, one year, five- years, etc. Get it all out on the table so all questions are addressed proactively.

Step 2: Plan How You Will Achieve These Goals

Now that you have the end goal mapped out, it’s time to create the actual plan of action for reaching it. It’s up to you to create a series of tasks that will guide your teams, step by step. Start with the smaller goals and their deadlines. Who specifically will handle each step? When are the milestones due? Who will proof these items and by when? Is there a content calendar in place? Is the content team working with the marketing team to meet their objectives within the same timelines?

  •  While you’re planning for your expansion, there are other, more general things you will want to plan for specifically in the lens of global expansion.
  • What kind of message do you wish to convey? Is your brand going to change on an international scale?
  • Will there be linguistic differences? Are you moving to a country that doesn’t speak your language?
  • Do you have a translator lined up to help you with the linguistic differences? Do you have a schedule for communicating with your translator? Maybe you need more than one translator since the role is critical?
  • Do you have a list of colloquialisms in this new language that everyone on your team needs to learn?
  • Will you be hiring new people? Are your goals and steps laid out clearly enough for anyone to hop right into the conversation?

Step 3: Execute the Plans

Some of us are better at writing down goals and tasks as opposed to actually carrying them out. We can visualize what needs to happen, but when it comes down to it, we don’t want to put in the work to ensure it happens. You will need a specific timeframe in which everyone will carry out the plans that have been set forth for them. This is known as a “sprint.” It’s common for sprints to take two to four weeks.

Step 4: Evaluate the Execution

Make sure you set aside time every day, every week, and every month to take a step back and analyze if you are on track to meet your goal deadlines amidst the move. Is everyone doing what they promised they would do? If not, it might be a sign that your organization is not fully prepared for global expansion and requires more time to be brought up to speed. Meet with other executives, managers, and employees to ensure the execution is occurring according to plan.

Step 5: Make Real-Time Changes

Goals are going to change, timelines are going to be missed, and small, action steps are going to be forgotten. Don’t just stop at identifying the issues. Use the lesson you have learned to improve upon your execution in the future. In a very global world, many companies feel the challenge of establishing a comprehensive, standard practice that reaches across teams. You don’t have to accept this as reality for yourself. You can correct differences, communicate universal guidelines, and track team education to make real-time changes.

React to the issues as they arise.

If you pair all the information provided thus far in this e-book with this general roadmap to success, your company is going to be positioned for surefire global expansion success.

Your 10-point Global Expansion Checklist

Before we wrap things up, it’s time to finish this guide out with a 10-point global expansion checklist that should answer any final questions you have about this kind of business growth opportunity. It’s best to approach this massive change with a positive, yet pragmatic mindset — one that won’t get you into trouble. As a recent Harvard Business Review publication called “Distance Still Matters” detailed, companies that exaggerate the potential of a foreign market position themselves for trouble down the line.

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A rational approach to evaluating global opportunities is your best bet here.

Don’t Bet Everything You Own on This:

As the saying goes, “don’t bet the farm.” Have a clear Plan B as backup if your expansion plan fails. There are many global variables that are out of your control, and it should be acceptable should they come into play. Ensure you have limited the risk associated with launching the business globally so that your entire operation doesn’t come crashing down.

Don’t Allow Yourself to Become Distracted:

Choose your market based on the parameters we have laid out in this book. Don’t get distracted by things like picking a market because it’s a beautiful country where you want to travel, or someone you love lives there. Be pragmatic and look at everything rationally.

Always Do Your Homework:

Even after you’ve done the first round of analysis and research into your new market, don’t stop there. Global factors change every day. Customer preferences follow trends. You need to constantly research your market so that you don’t get left behind.

Don’t Underestimate Cultural Nuances:

Take counsel from advisors with expertise in the market’s cultural norms. Many times, these are the norms that can take down huge companies, like Target in Canada or Walmart in Germany. No one is immune.

Don’t Forget About Tax and Regulatory Compliance:

The country in which you are doing business is going to have unique rules in the areas of reporting, accounting, and tax requirements. They will differ from where you live, which is why you will need support in ensuring you are compliant.

Don’t Assume Your Product Will Succeed There:

Walmart failed to identify the greeting component of their business directly clashed with German norms. Do not assume your product will be warmly received wherever you go. Be sure to do a test run ahead of time.

Don’t Forget About Your Workforce:

Asking your employees to deal with global expansion is a tall order. Don’t forget to thank them for their receptiveness and willingness to be agile in their work. A little appreciation goes a long way.

Heed Advice from Local Experts:

Create a network of local counselors, advisors, and business experts in your new country of operation. Take advice on market conditions and listen to their warnings. Share with them your data forecasts and listen to their feedback.

Create a Governance Structure Fit for Purpose:

You can’t micromanage an entire office from halfway around the world. That’s why you need a clear decision-making process that empowers the local managers to step into day- to-day operations without you.

Update Everyone on Global Expansion Progress:

Lastly, please be transparent with the people working for you and with you. Tell partners, stakeholders, and employees everything about the expansion. Keep them in the know so they’re less likely to leave you. There’s no need to make this a backdoor operation.

Conclusion

Congratulations! You’ve made it to the end of The No.1 Guide to Global Expansion! That means you are now fully prepared to oversee the transfer of time, talent, and money into a foreign market for any kind of B2C or B2B operation.

As you now know, it’s possible to expand globally with some thorough homework and a team of individuals that are ready to assist you in the big move. It doesn’t have to be a taboo fear preventing you from reaching your true potential anymore.

Equus Global Expansion Llc

We run a workforce management software and Global PEO firm, with headquarters in the U.S. and Europe today. We know how intricate global expansion can be, as well as costly if things aren’t managed properly.

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If you want professional help and oversight during this massive shift, we are here to help. Thank you for reading with us! Please do not hesitate to reach out with any questions or concerns.