International expansion means going out of your comfort zone, entering your business in a foreign market for better opportunities for long-term growth. Infact, according to Bureau of Economic Analysis Surveys (BEA), the foreign affiliates of U.S. companies acquired almost $5.7 trillion of sales in 2019.
This evidence is powerful enough to prove that international expansions are not only powerful for growth but even helps your business to reach that stable point where you are not dependent on a single region for conversions.
However, international expansions are different for every business. You have to undertake a detailed analysis to understand other country's laws, market, audience, cashflow, etc. So, if you are someone wanting to expand your business beyond borders, here are the tips you will need to make your expansion successful and smooth.
- Find the right people
Having a local country manager, a partner, or team not only ensures that your business is compliant in the new marketing, but also helps you manage your expenses efficiently. Plus, international expansions demand great intensity of communication. And having someone native will keep your communications streamlined. When you have meetings with clients the way they can communicate your USPs will be different and also relevant to the local market than you can do.
Also while building a team, you have to ensure that the people you hire are aware of the local environment, and also understand your business and core values. In simple words, a core team with necessary culture, language, and deep understanding of the market can go a long way. If you have clients with a different native language other than english, there are tools available for online translation that can take care of it. You can translate your document in different languages before sending it across. If you deal in retail, and looking for distributors, make sure you are not mistaking the largest ones for the best. Some of them might not be that big but they focus on product and are willing to offer the best they can.
- Create a Foolproof Strategy for Your Product or Service
After having the right team, the next big thing you need is how you will present your product or services to the audience. How it will be received by a different set of audience. Hence, you need a clear strategy to help you define important aspects of your product or service.
The very basic strategy includes how you will present your best with USPs and give them a reason to choose your brand instead. Not to mention, having transparency with your customers will always set you apart from others. For example, is your business following sustainability and green policy? That will be a big plus point, in terms of supporting the environment plus gaining audience trust.
- Check the Financial Aspect
While you leap forward with the international expansion, there are some financial aspects that you have to analyze. For example, when you are starting with something new, it is unlikely to be profitable in the short term. So basically, you will need to decide on how you will finance it. Will it be through equity or debt? Also will you be able to withstand the burden?
Most businesses start expanding their business internationally when they are stable in their own region. As a result, you already carry a certain image in front of the new audience. Hence, you have to make sure that the overall reputation is taken care of, otherwise it could affect your business. The key part here of minimizing the negative impact of expansion on the broader business can be ensuring that the financial and legal arrangements are in place. Because of times of need, they will play a significant role to support your business.
- Finetune the Legal Points
With your domestic business, you are likely aware of the legal and compliance environment for your business. When moving into another country, it is important to be familiar with the rules. Here are some of the important matters you need to consider:
Check it it is advisable to set up a subsidiary in the new jurisdiction to carry on business or use tripartite agreements to manage any staff in the new jurisdiction
Check if any functions need to use a professional employer organization (PEO). A PEO hires and administratively manages employees on behalf of your business. For example, the tax implications of any expansion. If your business has a fixed presence in the country, it is likely to
be classed as a 'permanent establishment' there and to have tax obligations. Tax returns, corporate income tax and other taxes would be owed in the new jurisdiction of other obligations that may arise after operating in another jurisdiction. To comply with these new obligations, you need to seek professional advice.
What will be your International Strategy?
After considering the cases for the expansion and other matters, here is how it looks like overall:
You have to manage finances, legal aspects, find a good partner and team, and after all this you can decide your international strategy approach. When it comes to strategy, there are several different ways to approach it. For example, multidomestic international strategy will include tailoring its offerings to each and every country. If you are in the fast food industry then it will seem the most relevant. For example, McDonalds has distinct offerings throughout the countries. They have fried rice in Indonesia, Sausages in curry ketchup in Germany.
There is another known strategy that is Regionalized international strategy. Here rather than tailoring the offerings, the business tailors their offerings to the region that they are entering. Also known as 'middle way' between the multidomestic international strategy that focuses on the local and global approach. The global strategy is one that is directed by the head office and applies a specific vision across the business. Also referred to as product or service standardization, it is becoming less popular with globalization. For example, Ikea has experienced success in expanding globally but Wallmart hasn't. Plus, it should be done so while largely adopting a 'universal' approach as part of the marketing. That means everywhere in the world, the store aesthetic, products and product names remain the same.
So, how are you planning to expand your business internationally? Let us know in the comment section below!