Global expansion can be great for your business, and even better for your local economy. Bloomberg reports, “U.S. companies operating internationally help spur economic growth that creates domestic jobs to meet demand in foreign markets,” according to a joint study by the Business Roundtable and the United States Council for International Business.
Yet, deciding when and how to expand internationally can prove difficult.
Are you ready?
On a whim, many ambitious entrepreneurs decide it is finally time for them to begin selling their products and services to the international market, whilst others are more calculated. Some business owners make the commitment only after they have hit a specific revenue milestone or have accrued a certain amount of liquid assets and cash. In rarer cases, many pursue international expansion as a remedy for slower business growth domestically.
In an article for “Entrepreneur”, writer Alina Dizik lists 10 questions you should ask yourself before expanding overseas:
Is your business fundamentally sound?
Do you have enough human resources to lead expansion efforts?
Are you prepared to hire overseas workers if that’s necessary?
What will you have to change about your business or offerings to adapt to local culture?
Are you familiar with local strategies for effective selling?
Is there a way to take market share from existing competitors in your new target markets?
Will you need to partner with a local?
Can you absorb the start-up costs of overseas expansion?
Are there regulatory issues that limit your potential business growth?
Is selling online a better alternative given your available resources?
Assuming you have all your ducks in a row, next you must figure out if there is sufficient revenue-generating opportunity.
An initial litmus test.
Before you invest big dollars into an overseas office, you should first estimate how much demand there may be for your product or service among your new target populations. Find third-party research, scan local newspapers and join professional networking groups to gather information about the market opportunity. Of course, even with high sales potential, you must make sure you have the “right” product and the “right” brand that local customers will be drawn to.
At this point, one thing savvy business owners can do is run a few lead generation campaigns to see if there is enough interest in their product or service. Create a landing page, buy local ads to drive brand awareness and see if anyone signs up. This approach typically works best for B2C companies. B2B businesses, instead, can initiate a prospecting program to identify potential business leads and then interview them to see if they would be willing to purchase your product or service if you do, indeed, expand to their local market.
Pilot a program with local customers.
Before you formally introduce your business to a new customer base overseas, pilot sales with a few select customers to start. Go through the full process of fulfilling product orders or completing client engagements to experience what it is like to do business with a certain type of buyer abroad.
When you play the role of vendor for an overseas client, you gain firsthand experience in international account management and customer relations, allowing you to better understand the cultural differences that may help or hurt your business in the long-run. Typically, it can be hard to forecast all of the issues you may encounter with international expansion without actually doing it. Though you won’t become fluent in local business practices yet, you will quickly discover whether or not long-term expansion into a particular market is actually viable.