Despite the economic downturn in recent years, many businesses are still exploring international markets when it is time to grow their business.
As a business that has operated on a global scale for over 30 years, and have also organised overseas relocations for a variety of businesses, we have put together some key areas that businesses should seriously consider when planning to expand overseas.
Research the industry
Conducting thorough market research may increases the likelihood of success and should always consist of both primary and secondary research.
Undertaking market segmentation analysis, product gap analysis and SWOT analysis against the local competition so that you understand the need, the pricing models and the size of the market.
Consider the factors and constraints that could prevent you from being successful in another country, there are numerous conditions such as economic and governmental that could impact the way that you conduct your business and how successful it can be.
How advanced is the technology in the market that you are moving into, could it be that your offering could be made obsolete within the next five-to-ten years, or are there countries that are not as developed as your initial choice, where your product would have a longer lifespan?
Identify the barriers
While the country that you are looking to expand into may have the perfect market, it’s unrealistic to think that you will not encounter barriers.
The UK regulatory rules are among the most complex and there are various pitfalls to be aware of when expanding abroad. Corporation tax, VAT and Employment taxes are just some of the taxes that you will find may change or increase in the UK when you expand overseas, and will face the same taxes in the country that you are moving too.
When it comes to compliance, how this affects you will depend on the nature of your business. One example would be for a business that is product based, you may be required to print the instructions in multiple languages, and this will impact production costs that will need to be recouped.
It’s not just communicating with clients and prospects where problems may arise, being able to communicate clearly to vendors and outsourcing businesses is vital to run efficiently and productively; employing staff that are bilingual will aid with translation issues. If your business does not respect the cultures of the country that they are operating in, you might find that it hinders your success.
Find a local liaison
Whether that is in the form of a business partner or a mentor, it is best practice to take advice and guidance from someone who is local and can support you in your new venture overseas.
They will be able to offer valuable insights to local competition, as well as customs and practices.
Business culture differs from country to country; the UK and USA tend to keep business relationships just that and will focus purely on what it takes to close a deal. While, in the Far East getting to know potential clients is a personal affair and the relationships stretches beyond the boardroom and its numerous lunches or dinners to ensure a trusting relationship is built.
Building relationships and a support network with other local business creates an element of trust in your new surroundings, it also provides an opportunity to build brand advocates and build host/beneficiary relationships – a successful way to build new business and gain a competitive advantage.
Develop a business plan
The original business plan that was created may not translate into foreign markets, in some cases a brand new plan is required.
Along with the usual detail that these plans include, be sure to include the history and successes that company has encountered so far. Include details of staff that you are considering relocating and their duties and achievements, along with local business partners or investors and your research into the local markets.
Expanding a business into one that operates overseas is a mammoth task; but as these markets offer an opportunity for exponential growth, it is a task that has the potential to enhance your chance for success.
Paul Fletcher is MD of FN Worldwide.
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