Expanding your business internationally can open countless doors for you and your company. This can be in the form of increasing your roster of potential clients, giving you a better quality of resources, or even just inspiring you with a refreshing change in scenery.
In fact, entrepreneurs from Europe are wired to think globally from day one in order to stay competitive, with startups from this region expanding abroad 19 months faster than our American counterparts. But of course, no matter where you come from, know that going global isn’t a decision to be made on a whim. If not calculated and prepared for well enough, this can turn your company bankrupt and make it worse than when you began.
Indeed, expanding your small business internationally, like many things worth pursuing in business, is not always easy. So how do you know if you’re ready to take things to the next level?
Is your business settled at home?
There are various factors to consider when measuring your readiness, but perhaps one of the most crucial is checking whether you have a solid foundation locally. Too often, entrepreneurs leap at the first opportunity of global expansion before ensuring the stability of the company at home. Remember that your foundation must be able to withstand evolving markets, changing regulations, and the shifting tides of customer behavior. Ideally, your company should be able to run itself even without you on the reins as you focus on your international expansion. Therefore, ensure that your business is a well-oiled machine in your home country first, so you don’t have to keep micro-managing from another.
Can you cover the costs?
According to Forbes, there is no replacement for a comprehensive cost-benefit analysis, no matter how attractive a new market opportunity looks from a distance. On top of this, we also previously emphasized the importance of a location-specific SWOT analysis, a useful tool in your arsenal for assessing any business landscape. Always read the fine print, because some requirements may end up completely different from what you’re used to. From tax regulations to currency exchange fees, it is nearly impossible to hammer down the exact cost of operating as a new global entity without taking these into consideration.
When it comes to taxes, for instance, the US is known to have some of the highest corporate tax rates in the world — but only nominally. That’s because credits and deductions often push down corporate tax liability to average global rates. The method of organizing and filing these taxes and deductions are also vastly different from those here in Europe. Therefore, European entrepreneurs need to be aware of these nuances when preparing expansion westward.
In general, your company should have enough financial resources to allow the international market to reach 10% of the scale of your home market.
Have you done all the necessary research?
You might be sourcing reliable translators or looking for suitable locations, but planning must go beyond the obvious. Sometimes, a product that flourishes locally may not have the same gravitational appeal overseas because of cultural reasons. It doesn’t mean that your product is any less good, but chances are, it just needs to be localized accordingly. This is where consulting local experts come in. CEO Nimrod Gabriel of Singapore-based consultancy firm Pura Vida Concepts outlines the many critical benefits of having a listening ear for smoother expansion — from finding localized solutions for logistics and marketing, to having a good grasp of local market tastes.
What you should also be doing is immersing yourself in the culture as early as now. The internet provides you with a wealth of resources, so you don’t even have to leave the comfort of your home just yet. For example, if you’re looking to expand in Asia, you might want to extensively observe what their advertising culture is like. You’ll notice their approach is more eccentric and quirky than European ads, because this is what sells for them. On the other hand, Expat Bets, which explores gaming culture in the region, has several articles on the Asian gamer’s psyche — from the crucial role of meditation for Thais, to the complex Arcade culture of Japan. These emphasize the importance of knowing the social contexts of any culture, not just in terms of gaming, but also, crucially, for business, especially if you would like to see your efforts bear fruit in foreign shores. There are many cost-effective ways for you to gauge how to localize your business that will save you from future risks and PR fiascos in the east.
Do you have a potential network and community to tap into?
If your business already involves clients in a particular country, consider expanding there first. At the very least, you already know that there’s existing interest for your product or service. Chances are, there is a lot more to the market than meets the eye, which means more potential customers for you. Do your best to collaborate with like-minded local companies and assess your competitors for mutually beneficial “coopetition” alternatives.
Do you see any further expansion back home?
For the highly ambitious, global mobility is inevitable. If you’re fortunate and work hard enough, all successful businesses hit a point where they feel the only next step in growth is to expand outside their local confines. If you know you’ve hit that wall and can no longer develop your current consumers, it may be high time to move out and swim in a much bigger pond.