10 Tips for Expansion

Growth can be the most satisfying part of being a part of business, but it that doesn’t mean the process is easy.  Expanding to  a new country can make you tear your hairs out if you aren’t prepared.  These tips and advice can help you form your playbook for your expansion.

001-identify-top-growth-markets

Look at your funnel data and map it against the top countries from which you’re already seeing positive indicators — such as traffic, MQLs, higher win rates, and shorter sales cycles.   It’s important to understand and know the different factors in your market as well.

002-focus-on-few-countruies

Setting your sights on a few targets allows you to focus more of your attention and not get to fragmented.  There might be instances where regional grouping makes sense.

003-find-your-anch-mkts

If fast, near-term growth is the goal, think about markets that might be smaller and easier to penetrate, so that they can carry you into some of the bigger markets within the same region later.

understand-local-trends

This kind of information is available pretty widely.  Tools like Google Trends can help you identify what your target consumers are talking about.

keyword-research

Similarly, it’s important to pay close attention to your keyword usage.  This hasn’t changed for year and won’t.  Keywords will always be key to communicating with the audience you want.

create-country-focused

Even if you’re only writing in English, you can attract incredible traffic from a given country by covering country-relevant trends within a blog post.

look-past-camp

Segment your database by country and language. Then, clone top campaigns for each market instead of creating new ones from scratch. Adapt them and localize them as needed

offer-local-phone

This one is overlooked fairly often.  There are so many international call forwarding services that it shouldn’t be difficult to identify one.  This just makes your customers life a lot easier when trying to contact you.

have-interpeting-service

If you can’t handle incoming calls in other languages, you can access a phone-based interpreting service that will connect an interpreter to the line within seconds.

consider-co-market

Which companies already have a strong presence in the countries you are targeting? Consider joining forces and sharing resources to deliver co-marketing campaigns. Here are some great tips to get you started.

Our War Veterans

A few days ago I was at our local DMV renewing  my driver’s license, nothing extraordinary. I wanted to get it before heading out of town for some hiking. So I get there and am waiting for my turn when I see this elderly couple at one of the counters.  The gentleman was having his eyes tested for his driver’s license. The lady at the counter asked him to read the lines. Which he did. Then she asked him if he saw any red dots. There was silence. He said no! She asked him again and again he said no. At this time, I was thinking the lady at the counter was going to deny him his driver’s license when he said, do you mean the ones on the edges?  She said yes. And he said I sure do. They are on both sides! A sigh of relief came to both, over the lady at the counter and the gentleman’s wife, and as burst of laughter from the gentleman.

Next, it was time for the photo. He stood in front of the camera and smiled asking the lady at the counter if he could wear his hat for the photo. She said yes, as long as his face was completely visible. All this time I was watching, I could see the energy in this man, full of life and vigor. Then came my turn and I did my customary stuff at the counter and headed out.

leon_wwii

At the departure, I saw this gentleman and his wife and noticed the hat he was wearing was a WWII Vet hat. That gave me goosebumps watching this vet from 50+ years ago, full of energy and life. I graciously opened the door for him and his wife and told him that I was not even born when he served but can appreciate what he and all other war vets have gone through and the support that their families give them. And as we stepped outside I asked him if I could shake his hand. We shook hands and he let me know how appreciated he was for me to mention that and said God Bless you.

But there was something more compelling about this encounter. I had to go back and ask his name. He said it was Leon Frank Guania, originally from Poland. After introductions, we talked a bit more and he gave me a huge hug. This was my personal experience with one WWII vet on a certain day this year. There are thousands of vets and as we all know that one of the work hazards is what they always don’t talk about. Our people in the armed forces literally pledge to lay down their life for the rest of us. To preserve what we believe in and make sure we live our lives without the threat of some foreign power wanting otherwise.

So please support our war veterans unconditionally. They were there for us. Their friends died for us. Many came back severely handicapped and their wellbeing is our obligation and duty. They are part of our legacy.

Arun Sharma

How to begin the process of international expansion

When you decide that your business is ready for the global market, it’s not as easy as calling up the international expansion company and ordering one.  It takes a plan and a committed team to execute something as big as a international expansion.  Here are some things that you should be thinking about when your company becomes large enough.

what-to-expect

It’s important to have reasonable expectations going into an expansion.  There are certain things that you can achieve and there are certain things that can potential hazards.  Taking your business abroad can offer your business several opportunities and benefits if planned and executed properly.  There are a great deal of factors to pay attention to in the initial research phase.  For example, does your target country offer a more favorable business climate compared to where you are now?  A higher tax rate, raising wages or other increasing costs might signal that international  expansion might be an option for you.  A recession or a depression might also be a signal that international expansion is a good idea.  If you are in a recession, diversifying your revenue stream might insulate you from domestic losses.  Conversely, your business or product might be in a good position to do well in a down market.  In this case, you could take advantage of lower costs  to do business in that country.  This situation provides an excellent opportunity for a company to build trust both with the local consumers but with the local government as well.

Similarly, if demand for your product or service are down, reaching an untapped market abroad may provide your business with very lucrative gains.  Being able to offer a product where it is in high demand but low supply can very much make headway into the market.  In the right climate, doing this can create a sustainable and loyal customer base.  By being being the only provider of a good or service will very much endear you to the local consumers.  In time as you continue to provide good service you can build forward and solidify new partnerships and relationships.  This is an excellent base for ensuring that you have a platform to continue to expand and grow.  Without this trust, the path to expansion becomes more muddied and more difficult than necessary.

what-to-avoid

When preparing for an international expansion, it’s a good idea to try to think up as many potential pitfalls as possible.  You probably know your company’s weaknesses better than anybody else does.  After understanding these weaknesses, the next step would be to put them into the context of where you are expanding.  You  can start by researching your target market as thoroughly as possible.  The more information you have, the better you will be placed to succeed.  This would be a good time to do a SWOT, gap and market segmentation analysis.  Gather as much information as possible before moving forward.  Some things to consider are how big the market is, what is your timeline for success, is the target market compatible with your own market? After you have much of this information, you can proceed to develop your strategy for the target market.

One of the next things to consider is whether or not your organizational structure is indusive to a positive international expansion.  If you are expanding into a new culture with different languages and customs, it’s important to have a workforce that is flexible enough to adjust to the situation.  It is important that you have a set of guidelines in place that makes that integration into a new country as smoothe as possible.  Its also important to think about how to integrate technology and your workforce.  If you are looking to hire new employees in the new region, it’s important to know what kind of compensation and what you can offer that is customary.  If you go in expecting their customs to be the same as yours, you will fail to build the trust that is necessary for further expansion.

subway

There are so many example of international expansion gaffs, from large companies to small, independently owned businesses.  The path itself is one of uphill, but it isn’t impossible.  For example, Subway, the american fast food icon has transformed itself from wholly domestic brand to an international staple.  Subway started with more manageable aspirations, targeting only 10 countries.  These countries were chosen due to strong growth, high tourism and an ability to coexist within the culture of the target country.  After making strong headways initially Subway started to open themselves up a little more.  They went back to their data and examined countries that they had looked past for expansion.  By doing this they were able to identify Russia and UAE as prime destinations for their stores.

Subway has kept up their international growth by identifying trends and less obvious opportunities.  For example, after expanding into india, Subway began to feel a slowdown in their growth.  WHat they did was try to target local entrepreneurs as potential franchise establishers.  They recognized that India was not only growing, but there was a rise in small business ownership and entrepreneurial ventures.  They were able to cultivate an untapped group of partners.

target

For as many success stories like Subway, there are an equal amount of failures to learn from.  We can look to Target for a story on what not to do.  Targets failed expansion into Canada is one of the more recent failures that we can draw upon.  Target is a retail giant that was founded in 1902 that is currently headquartered in minneapolis, minnesota.  Target is currently the second largest discount retailer in the United States.  The main competition coming from Canada.  The expansion was first announced in 2011 after decades of growth and success in the united states.  The retailer was expecting to extremely rapidly recoup their massive $4 billion investment into the expansion.  The hope was that store in Canada would become profitable by the year 2013, but an unbiased international analysis concluded that there was no possible way of profitability until at least 2021.  In January of 2015, Target decided to close all 133 stores in Canada

What could have led to such a catastrophic failure?  To put it simply, their information gathered was both incorrect and incomplete.  To start off, Target decided to buy all 133 pre existing stores from Canadian retailer, Zellers.  This was a great way to cut costs, but in the end turned out to be a mistake.  This was a mistake for two reasons.  First, instead of having locations that were researched and picked out, they were stuck with whatever location the existing store was in.  On top of that, many of the stores couldn’t support that amount of merchandise and had to be renovated.  This renovation ended up being a lot more than was initially planned.  These locations weren’t always that accessible for receiving products as well.

Many of the times canadian shoppers would chose to go to a canadian target, the shelves ended up being mostly bare.  Targets problems lied in their supply chain.  They had to decided to expand so rapidly that their stores could not supply many of the items featured in their stores.  Their entrance strategy was poorly planned, but they also failed to the requisite research on their customer base.  Often times customers would find that shopping at walmart was significantly cheaper and had already had 2 years of familiarity to overcome. When Target finally did withdrawal the market in Canada, it left over 17,000 people out of a job and created a negative ripple through the rest of their business operations.  This might have been a grand failure for Target, but offers a lot of insight for the rest of us.

International Expansion Success Stories

In past blog posts we went talked about how not being prepared can lead to incredible failures.  Specifically how a lack of research beforehand will only hinder any attempt to expand your business internationally.  In this post we’ll go over some of the bigger success stories and what we can learn from them.

 

Subway

This domestic fast food chain has transformed itself from a single sub shop in Bridgeport to an international powerhouse with over 44,000 locations.  Of that number, roughly 18,000 locations are located internationally.  Subway started with more manageable aspirations, targeting only 10 countries.  These countries were chosen due to strong growth, high tourism and an ability to coexist within the culture of the target country.  After making strong headway initially Subway started to open themselves up a little more.  They went back to their data and examined countries that they had looked past for expansion.  By doing this they were able to identify Russia and UAE as prime destinations for their stores.  

subway_ritsumeikan_university_bkc

Subway has kept up their international growth by identifying trends and less obvious opportunities.  For example, after expanding into India, Subway began to feel a slowdown in their growth.  What they did was try to target local entrepreneurs as potential franchise establishers.  They recognized that India was not only growing, but there was a rise in small business ownership and entrepreneurial ventures.  They were able to cultivate an untapped group of partners.  

 

In order to stay relevant, Subway has continued to adapt with their communities.  This doesn’t mean just on a country by country basis, but even more specifically regional.  Subway tries to maintain its iconic standards, but allows for local deviations to keep the menu interesting.  They learned this lesson about brand identity through their business in Japan.  They originally decided to go all out and adapt everything to the local Japanese cuisine, so much so that an american probably wouldn’t be able to order anything familiar.  Since then they decided to go back to their consistent brand while blending local foods.   

 

Red Bull

Red Bull is another international success story.  Red Bull has accumulated so much success worldwide that most Americans would be fairly surprised to know that it was actually founded in Austria.  Red Bull was far from the mold that Subway set out, but in the last couple of decades, few other companies have matched the sales, marketing and brand prowess Red Bull currently enjoys.

red_bull_mini_2

They started their international trek buy establishing themselves in neighboring Germany.  The started with a meteoric rise but soon saw competitors rise up.  After years of competition, they finally reclaimed their spot and set their eyes on a wider market.  THey then aimed for England but again faced a bunch of challenges.  They were not allowed to use the term “energy drink” and thus significantly hindered their marketing efforts.  Soon after they retooled their marketing scheme to focus on nightclubs and the student market.  They would drive around in mini’s with large Red Bull cans strapped to the roofs.  This refocus allowed for England market to grow to the same size as their sales in Germany by 2000.

 

It wasn’t until 1997 that the product first appeared in the US.  The first test market was California and it was only a short time before Red Bull became a household name.  They learned from the failures and success in England and adapted a similar strategy in the US.  They would drive their cars ornamented with a giant can to college campuses, local beaches and nightclubs.  This marketing buzz propelled the drink across the states as a staple among party goers as an important mixer.  Bars felt the impact as they were serving Red Bull in a multitude of drinks.  The marketing machine that Red Bull had perfected was running on autopilot as they continue to see their sales and brand awareness grow consistently.  

 

Importance of objective research when expanding internationally

Expanding internationally can be one of the biggest steps in the history of your business.  It marks a point when your size and growth are doing well enough to begin the next stage in your company.  It can be a milestone that marks the beginning of a new chapter of growth.  The hurdle of course is getting to that point of success.  You are welcome to celebrate immediately after, but it won’t be a very good indication as to if it was a good idea in the long run.  In fact, there are a long list of companies, large and small alike, that failed to look beyond and eventually failed in their international expansion.  These ventures can fail for a whole host of reasons, bad timing, stiff competition, too rapid expansion.  Behind all of these reasons lie a distinct lack of preparedness and knowledge of the situation.  Large companies like Target, Best Buy and Walmart have all had a significant failure in their history when trying to expand abroad.  By looking at these 3 examples we can try to see where their mistakes were and how not to follow in their footsteps.

tagetr-canada

target-canada

Targets failed expansion into Canada is one of the more recent failures that we can draw upon.  Target is a retail giant that was founded in 1902 that is currently headquartered in minneapolis, minnesota.  Target is currently the second largest discount retailer in the United States.  The main competition coming from Canada, more of which i’ll have later.  The expansion was first announced in 2011 after decades of growth and success in the united states.  The retailer was expecting to extremely rapidly recoup their massive $4 billion investment into the expansion.  The hope was that store in Canada would become profitable by the year 2013, but an unbiased international analysis concluded that there was no possible way of profitability until at least 2021.  In January of 2015, Target decided to close all 133 stores in Canada.

What could have led to such a catastrophic failure?  To put it simply, their information gathered was both incorrect and incomplete.  To start off, Target decided to buy all 133 pre existing stores from Canadian retailer, Zellers.  This was a great way to cut costs, but in the end turned out to be a mistake.  This was a mistake for two reasons.  First, instead of having locations that were researched and picked out, they were stuck with whatever location the existing store was in.  On top of that, many of the stores couldn’t support that amount of merchandise and had to be renovated.  This renovation ended up being a lot more than was initially planned.  These locations weren’t always that accessible for receiving products as well.

Many of the times canadian shoppers would chose to go to a canadian target, the shelves ended up being mostly bare.  Targets problems lied in their supply chain.  They had to decided to expand so rapidly that their stores could not supply many of the items featured in their stores.  Their entrance strategy was poorly planned, but they also failed to the requisite research on their customer base.  Often times customers would find that shopping at walmart was significantly cheaper and had already had 2 years of familiarity to overcome.When Target finally leave did the market in Canada, it left over 17,000 people out of a job and created a negative ripple through the rest of their business operations.This might have been a grand failure for Target, but offers a lot of insight for the rest of us.

best-buy-china

bestbuy-china

Best Buy is another Minnesota based company that had a negative foray into international expansion.  They had already established themselves in other international markets, such as puerto rico, mexico and canada.  In 2006 they began their efforts of expanding into china.  Their plan was to slowly acquire the chinese company, Five Star.  After a few years they finished off buying the rest of the stakeholders in Five Star and becoming the only owners of Five Stars.  Shortly after this they opened up 9 of their own stores.  Unfortunately, these stores only lasted 5 years before being forced to close.

One of the biggest points that Best Buy failed to address when researching this expansion was how stiff the competition in the chinese market really was.  With so many traditional brick and mortar stores, as well as a slew of competing e commerce, Best Buy never had a great chance of gaining a meaningful foothold.  Best Buy also didn’t do the requisite research on their perspective consumers.  At almost every point, Best Buy was seen as an expensive alternative.  They were not able to compete with established companies that had to do very little fend off  Best Buy.

The other point that  Best Buy failed to account for was the integration of Best Buy and Five Star together.  Both companies  had separate and distinct finance and IT departments as well different supply chains.  Because of this, merging both companies become a very difficult task.  This along with rampant counterfeiting made doing business in China extremely difficult for Best Buy.

Best Buy still had 184 of the Five Star locations, and after closing down the 9 Best Buys, they decided to focus on Five Star.  Just three years after this decision, the remaining Five Star locations were sold to a chinese real estate company.  After 8 years of business in the Chinese market, Best Buy had little to show for it.  Much of their problems could have been avoided with a little more foresight aided with more comprehensive research and knowledge.

Strategic Partnerships

Strategic partnerships is not something that fits into a specific mold and can be recreated several times.  A strategic partnership is finding value in another company while being able to provide your own unique value or skillset.  A misconception is that international distribution partners are basically the same as a international strategic partner.  In most cases, this is not true.  A strategic partner is somebody that provides more than just infrastructure.  A strategic partner is somebody that complements your own business model and can work in conjunction with you.  The possibilities for how a strategic partnership might play out are endless, but the basis for it depends on that both partners are dependent on each other and the act of breaking up would be painful.  

 

put time into

This is one element that is absolutely crucial to long term success.  For any partnership, there has to be a level of trust before all parties can work together effectively.  Spending time, either in person or through teleconferencing, is the easiest way to build that trust.  This is the time to adapt to any cultural adjustments or syncing up with their workflow.  

The easiest way to build trust in your partnership is to spend time in person with them.  If the country is totally foreign to you, make sure you appropriate enough time adjust your new partner and culture.  A great way to do this is by having your new partner show you around town and personally introduce you to their customs.  This is also a time for you to gather information and prepare your staff with the new changes.

 

ask the in depth probig

It is important to be able to ascertain a profile of your partner early on.  The most straightforward way to do this is by asking as many questions as possible.  The larger your information base is on your new partner, the easier it is going to be to anticipate their needs and for you to understand their capabilities.

What is happening in their business that would als help your company?  Are these the most effective practices?  What are their specific expertise?  What is their access to capital.  What is the profile for their client base? Key connections?  Which marketing channels do they use?What are some challenges they face?  Are there any internal or external threats?

 

gauge what you can offer

Through all this, you should have a good idea as to what your capabilities are.  When you are trying to engage in a partnership, your value has to be as promising as your potential partner.  You should be able to gauge and take an inventory as to what your side can offer in exchange.  

For example, perhaps you have relevant contacts that could help your partner immensely.  Or you might have specific knowledge about something or even a potential target market that your partner could find useful.    You might find that you have personal that you could make their process more efficient.  This is a time that you should collaborate and gather as much research as  you can to maximize this strategic partnership.  The more avenues of collaboration you can find, the higher chance you give your partnership to succeed in the long run.  

 

never stop evaluting

As you continue along and build your partnership up, it’s important to continuously evaluate and negotiate over time.  Just like any other business venture, it’s important to revisit and reanalyze projects or programs that both companies are taking advantage of.  Things are changing fast enough that it makes sense to go back and try maximize any programs that have been lacking attention.  The same goes for projects that are no longer effective for either company.  Often times these come from changing circumstances that make them either inefficient or irrelevant. This also presents itself with good opportunity to look at new opportunities for collaboration.  

This could be a good time to look at purchasing and other financial agreements.  This could also include incentive programs for existing employees.  This time should really be spent with a discerning eye looking at all current collaboration.  For example, you might have been working on digital media between your two companies, but are finding that as it is taking longer, the more out of date the information is becoming.  Here you have the options to stop completely or try to pivot the project in a new, more effective position.  

Things to Consider Before Expanding Internationally

Taking the next step with your company into the international arena represents a major leap in your growth.  Taking these next steps can be very daunting if you are not fully prepared.  The only way to prepare yourself is to do the necessary research and an honest self assessment.  Here i’ll go over some things to consider before you start the process of expanding internationally.  

 

One of the first things to consider is how well you are situated in your current state of operations.  Have you built a team or staff that is capable of operating without you?  It is important that your day to day functions are implemented and running smoothly.  What you can’t afford is disorganization on two fronts.  Your daily functions shouldn’t be an area of focus for your team.  

 uss-nimitz-108622

Similarly, you will have to determine if your company is deep enough to start business in a new location.  On top of hiring new people, you will most likely have to reorganize the structure of your company.  It might be necessary to assign senior employees to your international efforts.  This will cause some displacement in your daily operations.   It’s important to gauge if your company can afford this movement.  Your international team is going to need a great deal of guidance and somebody closely informed about your company.  It’s important that you keep as much consistency as possible in your new venture.  

cultural consideratios

As you send your people abroad, it’s also wise to think about the cultural implications of living in a new place.  Some countries are fairly easy to adapt to if it is a predominantly English speaking country, as well as countries with high rates of English speakers.  As for other countries, integrating into their customs can be difficult.  Countries like japan can be very rigid towards those visiting their country.  It is important to accept and adapt as quickly and easily as possible.  This will ease the transition to doing business in an unknown environment.  Its also key that you tailor your message or product to whichever region you are expanding into.  Concepts and ideas to not always directly translate over and it can be counterproductive if your marketing is done in the wrong way.    

country research

When doing business in another country, it’s important that you do the necessary cultural research.  You can undo all your work by following the wrong procedures or conversely, you can spend to much of your time on leads that will never pan out to something tangible.  Certain cultures have an inability to dismiss your or say no to another meeting with no intention of ever buying, instead simply being polite to their guests.  When selling in a new country, it’s a good idea to look for similar trends with similar buyers.  This also a good opportunity to do market research on your competition.  Understanding the competition can shed light on some of your questions and problems.  Doing the requisite market research might also impact your decision whether or not to expand at all.  If you discover that the new market is ripe for a new entry, you have the information to process.  You may also discover that market penetration will be a hard and difficult task, that you might not be able to afford in the short run.  

Dangers and Pitfalls of International Expansion

Taking your business abroad has numerous benefits, but as many benefits there are, there are equally numerous pitfalls.  The road to expansion begins and ends with research.  You or your business will go nowhere without a proper amount of foresight that comes out of due diligence and a thorough accounting of where you are and where you are going.  As discussed before, just because you have the capabilities of expanding internationally, does not mean that you should be going abroad.  Going abroad takes a tremendous amount of resources, so it is very much worth it go through the research and determine if the further investment is worth it.  

 

When preparing for an international expansion, it’s a good idea to try to think up as many potential pitfalls as possible.  You probably know your company’s weaknesses better than anybody else does.  After understanding these weaknesses, the next step would be to put them into the context of where you are expanding.  You  can start by researching your target market as thoroughly as possible.  The more information you have, the better you will be placed to succeed.  This would be a good time to do a SWOT, gap and market segmentation analysis.  Gather as much information as possible before moving forward.  Some things to consider are how big the market is, what is your timeline for success, is the target market compatible with your own market? After you have much of this information, you can proceed to develop your strategy for the target market.    

 

One of the next things to consider is whether or not your organizational structure is indusive to a positive international expansion.  If you are expanding into a new culture with different languages and customs, it’s important to have a workforce that is flexible enough to adjust to the situation.  It is important that you have a set of guidelines in place that makes that integration into a new country as smoothe as possible.  Its also important to think about how to integrate technology and your workforce.  If you are looking to hire new employees in the new region, it’s important to know what kind of compensation and what you can offer that is customary.  If you go in expecting their customs to be the same as yours, you will fail to build the trust that is necessary for further expansion.      

 

Similarly, if you have a product, that product should be ready for expansion.  That entails that your product meets certain industry and government regulations.  It is not worth to go through with all the work only to be halted before distributions because you didn’t read the fine print.   It is also important to do some cultural research.  You don’t want to launch a product that doesn’t translate well into the local language or a product that is offensive to locals.  It wouldn’t hurt to do some serious product testing and make sure that the demographics are consistent with what you would expect.  Another area of research is to make sure that your product is protected sufficiently.  Certain countries are known for harboring individuals that specialize in  copying or stealing ideas and repackaging for themselves.  You should have more than a rudimentary understanding to sufficiently protect yourself.

 

Once you have entered a foreign market, it is also important to your investment that you remain in that market.  Having a solid foundation at home is crucial for the initial expansion, but in order to have continued success it’s important to build that same foundation in your target market.  The faster you find stability, the easier it will be to transact business.  THis means that both you and your business will have to adapt and be malleable to your new environment.  Being too rigid can lead to loss of business and erode the relationships you have previously built.  It is equally important to gauge new ideas more carefully.  Remember, your thought process might not fit in with the local culture seamlessly.  As you continue to expand and diversify both your organization as well as your offerings, it’s key to hold your company message as consistent as possible.  THis is especially important for a new environment because it is the easiest way to characterize your business and keep everybody on the same page.  Consistency is also key to building a base of loyal consumers.  

 

 

 

Positive Effects of International Expansion

For many companies, the operation of their business are only done domestically.  This might be because the size or resources of the business preclude them from going abroad.  For other firms, the timing for an expansion might not be feasible.  What we are left with are companies that are already abroad and those that are prepared to expand their operations.  To the companies that are in a position to go abroad, there are numerous variables to consider.  For a start, the determination has to be made whether to even expand internationally.  Just because you are capable of going abroad doesn’t necessarily mean you should. In this post we’ll discuss a little more about the positive impacts that can come from broadening your business.  In a future post we’ll tackle some potential dangers and pitfalls of international expansion.  For now, we’ll talk about what a good international expansion might net you.

 

Taking your business abroad can offer your business several opportunities and benefits if planned and executed properly.  There are a great deal of factors to pay attention to in the initial research phase.  For example, does your target country offer a more favorable business climate compared to where you are now?  A higher tax rate, raising wages or other increasing costs might signal that international  expansion might be an option for you.  A recession or a depression might also be a signal that international expansion is a good idea.  If you are in a recession, diversifying your revenue stream might insulate you from domestic losses.  Conversely, your business or product might be in a good position to do well in a down market.  In this case, you could take advantage of lower costs  to do business in that country.  This situation provides an excellent opportunity for a company to build trust both with the local consumers but with the local government as well.  

Global Expansion

Similarly, if demand for your product or service are down, reaching an untapped market abroad may provide your business with very lucrative gains.  Being able to offer a product where it is in high demand but low supply can very much make headway into the market.  In the right climate, doing this can create a sustainable and loyal customer base.  By being being the only provider of a good or service will very much endear you to the local consumers.  In time as you continue to provide good service you can build forward and solidify new partnerships and relationships.  This is an excellent base for ensuring that you have a platform to continue to expand and grow.  Without this trust, the path to expansion becomes more muddied and more difficult than necessary.  

 

As you build exposure for your company, you continue to add to your global image.  Building this global image is key to future expansion.  Consider what you do as your resume for potential future endeavors.  You are not only building experience for yourself and your team, your company is also slowly growing an image of its own.   When you get to a point where your public image is solid, it becomes something that you can hang your hat on and open doors into new ventures.  

 

International expansion can also have several benefits for your workforce and talent pool.  Companies that are gearing up for expansion usually are usually in a position to be able to attract a great deal of highly skilled people.  You will notice that as your prospects go up, talented people will want to work for you.  Also by expanding internationally, you open yourself to a new pool of potential employees.  THis kind of diversity can lead to an influx of new ideas and fresh blood into your business.  New perspectives can always be useful, especially when taking your business into the the relative unknown.  

International Expansion Benefits

Exporting

By opening up your country or product to the international markets, you are taking the next growth step with your company.  This inherently has a number of benefits as well as a number of risks.  For example, by opening yourself up to the international market, you have to now account for IP, exchange rates, legal issues, partnerships and services.  You also have the issues of stocking and capital allocation.  This indicates that expanding internationally isn’t a breeze, but instead should be treated as a serious undertaking with numerous moving parts to it and because expansion can be filled with hazards, many misconceptions and falsehoods are born from the difficulties.  In this post i’ll go over some common myths and beliefs about international expansion and more specifically, exporting.

What size company should be exporting

Many small business and medium size business owners tend to believe in the concrete myths that international expansion is going to be exclusively too costly or too difficult.  When in reality, there are so many avenues to explore that require different levels of capital and skill.  For starters, how small is too small to export.  It’s a commonly held belief that only large, well established firms with big name recognition are the only candidates for international expansion.  This is a misconception held by a lot of american individuals and business owners.  In reality, much of the world’s exports from foreign countries comes from small to mid level size companies.  These are the kind of companies that have less than 50 total employees and sales in the $1-$10 million range.  On top of that micro sized companies, with less than 20 employees, are seeing a surge in international sales in  the last few years.

Cost of exporting

Along with the size of a company, the total financial picture is also a good indicator of whether or not to start exporting.  The common understanding is that international expansion is going to demand hiring more people, more costly marketing campaign and coordinating logistics in a different country.  The biggest misconception here is, go big or go home.  Again in reality, your commitment to exporting is going to somewhere on an infinite continuum of international expansion. As a company, you can commit large resources and hours upon hours of manpower, but this is only feasible if you are in a position do that.  For others, the financial commitment doesn’t have to be equal to larger firms.  For one, international expansion should be preceded by promotion and research.. These 2 things begin your base for international expansion and give you a jumping off point.  As you continue to promote and do research, you gain more understanding and a stronger foothold.  This might eventually lead to trade agreements or distribution contracts.  These are intended  to be little to no cost ways to begin your journey of exporting.  These avenues should provide enough insight and shed enough light on what your next steps should be.

Overseas competition

There is also always the lingering question about competition.  What’s to say that your product doesn’t get drowned out by the competition in the first year of business?  There are no such guarantees, but these also aren’t predetermined outcomes.  The global marketplace is a massive and varied hub.  The needs and interests will vary from city to city, let alone nation to nation.  For this reason, you might even find that your product is doing better in a foreign market than it was doing in the home market.  Price is an important factor, but it is not always the determining factor to a product’s success.  Quality, customer service, PR and taste are just as crucial factors to determine whether or not your product is a good fit for a certain market.

AI_Exporting blog

 

Risks and over complication

The other major factors or fear of exporting comes from a fear of risk and over complication of the process.  Doing business anywhere has inherent risks and those risks are usually insulated in some way.  Same goes for the process of exporting.  For starters, as a small to medium sized business, you have a plethora of grants and loan programs that are both privately and federally funded.  Counseling, advocacy and research resources are all available on the www.export.gov website.  Here you can find more specific information and do the required research before you begin your next step.