As if building a successful company in a familiar marketplace wasn’t extremely challenging in its own right, expanding your business overseas is a challenge like no other. With the differing market fluctuations, unfamiliar competitors, unique consumer trends and tendencies, the unfamiliar legal systems and worst of all, the distinct economic and financial state of the country, expanding your business into foreign lands can prove to be a daunting task.
There’s plenty to do before you make this grand step in your brand’s career, preparations that will define the future of your company in the new marketplace. Let’s take a look at the five key steps you need to take in order to ensure a successful expansion beyond country borders.
It all starts with comprehensive market research
Researching the market is the first and most important task for every new business – regardless if it’s new in its own country, or someone else’s. Never underestimate the strength and saturation of the new market, and instead focus on acquiring deep industry insights that will help you enter the competitive arena safely, while quickly paving the road to financial stability and solvency.
To achieve this grand feat, you will first need to conduct a market segmentation analysis in order to determine whether or not your products will appeal to the local customers. You will also need a product gap analysis that will help you discover possible entry points via unsatisfied consumer demands. Is there a product in the industry that the local companies are not making? Good, this is your way in.
Aside from segmenting your target demographic and driving product innovation, you will also need an in-depth SWOT analysis that will help you put your standing in the new marketplace into perspective. Lastly, consider the market’s opportunity for growth and long-term stability – are there any socio-economic factors you should know about?
You will need a sound financial strategy
Arguably, the most important element of a successful overseas expansion is you financial plan. Without a shred of doubt, international expansion is not going to come at a small price. In fact, you can expect to make significant investments for the first several years before you start seeing a rise in revenue from your new overseas departments.
To make this financial shift as smooth and pain-free as possible, learning about and implementing a comprehensive trade finance scheme will be essential. Using various financing opportunities such as telegraphic transfer, open accounts, letters of credit, and import and export finance can help your business expand into the new marketplace more efficiently and effectively. That said, new supplier-buyer relationships are oftentimes delicate and unpredictable, which is why you will need to secure adequate financial support from your headquarters.
Do not rely on your overseas accounts just yet
Establishing a beachfront from the get go is a difficult task, and there is no guarantee that your products or services will start generating new income streams for your company right from the start. In fact, there is no guarantee that your new clients and customers will settle their invoices in the prescribed timeframe, and you might be looking at going weeks or months without payment.
Regardless, you will need to secure operating capital any way you can. You can funnel money from your base back home, but you can also consider debtor finance as a sound financing strategy that will help you maintain a positive relationship with the local market. The invoices will be paid in advance, while your new customers get accustomed to working with you, and develop a trusting relationship with your brand. Whichever way you choose to go, remember that getting money from your new clients and customers won’t be easy, so make the necessary preparations.
Develop a strong marketing strategy
Marketing is another major element of a successful 21st-century company, and it becomes even more of a vital growth factor when it comes to overseas expansion. The marketplace is new, exciting, and unfamiliar. The local culture is different from yours, the people trust their local businesses, and the local businesses know their market better than anyone.
This is not an enviable position you’re in, but it’s nothing a strong marketing campaign tailored for the local sensibilities won’t be able to fix. By conducting in-depth market research and bringing in local marketing experts, you can find out the local market likes and dislikes. With this information, you can create a comprehensive marketing plan entailing the use of social media and digital marketing in general, as well as offline media such as billboards, city lights, flyers, and radio and TV ads.
Tax and legal considerations
Last but not least, you will need an experienced legal team at your side to help you make your business compliant with the local legislature. Tax laws and market regulations are the things you can afford to misunderstand when you’re first stepping into the competitive arena, so make sure your overseas department is working by the local books.
Business expansion is a grand step forward for your company, but it’s also a challenging feat with many an obstacle on the road to success. With these considerations in mind, you can expand your company overseas in a safe and efficient way.