Five Key Steps To Expanding Internationally
Global markets and international business are the subjects of daily updates across all media. As a business owner, it is virtually impossible not to consider international expansion. International business does carry risk, but doing nothing is also risky. In an increasingly global business climate, you may wake up to new overseas competitors in your own backyard.
These are the five key areas to consider before expanding internationally:
Start by reviewing where competitive products are sold globally. What does the local market demand look like and what market share does the competition have? How does your product stack up against this? You may need to modify your current product to create differentiation to what’s already in place. As part of this analysis, you will need to compare the pricing for the local product to yours adjusting for the exchange rate. In looking at the various potential global markets, be aware of the expected economic growth rates. It is much easier to gain a foothold in a growing economy where opportunities are expanding.
Impact on Your Business
Expanding internationally will put a strain on your existing employees. It is helpful to select one person to be the “go to” for this effort. Further, it is almost impossible to run the international effort solely from your current headquarters. Once you have identified the market with the most potential, hiring a local executive to be the point person for you is essential. Beyond the hands-on effort, this person can provide critical ongoing market intelligence.
A successful outcome is in many ways the result of good planning. Both short-term and medium term goals should be established with action steps along with assigning responsibilities. As part of the market review, a SWOT (Strength, Weakness, Opportunity, and Threat) analysis should be created which includes your competition. The needed investment and expected cash flow should also be considered. You will also need to consider foreign exchange and a repatriation strategy. Start with small calculated risks. If you are planning to sell to the European market, for example, consider establishing a subsidiary in Ireland – it’s English speaking with a good time zone and fully integrated into the EU.
All this may seem somewhat daunting….
“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” Henry Ford
Market Entry Strategy
As part of the preparation for entering the new market, a comprehensive marketing and sales strategy is needed. What is your local branding strategy? What sales approach will work best in the local market? How will you differentiate your product from the competition? How will you price your product compared to the competition?
Tax and Legal Preparedness
Having local Tax and Legal representation will greatly improve the likelihood of a successful product launch. There are several taxes that should be considered: payroll, sales, and VAT. In addition, legal considerations include a review of government and industry-specific regulations, as well as, patent and trademark issues.
Expanding your business internationally has both risks and rewards. Taking the time to fully understand the new market and selecting experienced local partners will greatly improve the probability of success.