The decision to take your business to the next level is charged with complexity and investment risk in equal measure. Global expansion involves some speculation (what risk doesn’t?) but it also needs a huge amount of due diligence. That means going into your new venture well prepared, with your eyes wide open.
Here are a few things to consider before making a commitment.
The Global Economy
Many say that international expansion is a good way to secure long-term growth for your company, particularly if you have already almost saturated your domestic market. It’s the classic “spend more to get more” approach. We’re here to say that you need to think twice about going global with your expansion strategy.
For a few years now there has been a downward trend regarding globalization as a whole. The good news is that Morgan Stanley forecasts a V-shaped recovery from the COVID-19 pandemic, with emerging markets, excluding China, signaling robust GDP growth of 7.4% for 2021, ahead of the projection for the USA, at 5.9%, and that of Europe at 5%.
Of course, some countries, such as India and China, have a rosier outlook than others in the emerging market category. Other pockets of opportunity may lie elsewhere. The secret is to find them and act when the time is right.
Check With Your Accountant
Is your balance sheet robust enough to withstand being buffeted about on the high seas of investment in new markets? Task your accountant with a critical analysis to identify the weak points in your financials. Another way to discover the answer to this question is to ask your banker for a hefty capital investment loan, and then wait for their response.
Language and Culture of Your Target Market(s)
Don’t for one minute think that you can ignore this aspect of global expansion. From brand names to distribution, new hires, supplier contracts, and taxation regulations, brace yourself for a steep learning curve.
Everyone speaks English, do they? That’s a myth. At some point in your global expansion process, you are going to have to engage the services of professional translators.
You’ll need freelance translators who are knowledgeable about your type of business, and the country of your target market. Aside from that, you need translators with excellent writing skills in the local language.
Our biggest tip here is to set aside a considerable budget for translation and interpretation as part of every major business step you take. Bring your translators in early on in every PR project to achieve the quality work you need in this area.
Customs Duties Are Part of Global Expansion
Meeting with the commercial attaché of the embassy of the country you’re thinking of investing in can give you valuable insight into what advantages and disadvantages exist. Likewise, talking with a specialist taxation consultant will give you a better idea of local costings and pricing structures for your product or service.
The same applies to compliance and other legal issues. In short, you don’t want any nasty surprises when it is too late to back out.
Hands-On and Grassroots
Part of your due diligence will include visiting the country or countries on your global expansion list. Once there, you will have the opportunity to look at business premises. You’ll be able to identify local estate agents and other professionals who can help you establish your new local base.
It’s likely that you’ll make several business trips before signing anything on the dotted line, and each time you’ll notice one more thing that needs your team’s attention. So, as we began this article, we recommend thorough preparation.
As the old saying goes, nothing ventured, nothing gained. Check out other articles on our site to read about other intrepid entrepreneurs and their experiences in the international business world.