One of the primary goals of any business is to provide an excellent product or service that attracts customers and brings in revenue. However, as your business establishes itself in the market successfully, you may begin to wonder about the next steps. While some small businesses thrive for decades without significant changes, most will find that growth and innovation are vital for long-term survival.
Taking your business global can infuse your company with an expanded customer base and increased profits. But the process might seem daunting, especially for small businesses. We’ve spoken to international business experts to get advice on when you should consider expanding internationally and the steps to take to make your company a global hit.
Going global is an exciting opportunity, but it requires careful preparation. Follow these steps to successfully bring your business abroad.
Before investing time and money into foreign market expansion, you must evaluate your current operations carefully. Expansion requires a significant investment of resources, so you must ensure your business is well-equipped.
“[Businesses] should have a solid foundation in their home market and a proven business model,” advised Jennifer Mea, founder and CEO of Crestpoint Consulting. “They should also assess if there is a demand for their product or service in the target country and if they have the necessary resources and capabilities to enter a new market successfully.”
To make it internationally, your business should be established firmly at home. But expanding to a new market, even if there is demand, doesn’t necessarily mean replicating success is guaranteed. A successful expansion requires evaluating all operational components.
“An often overlooked but vital step is ensuring that your business has the operational backbone to support expansion,” explained Brian Lim, founder and CEO of The Emazing Group. “This includes scaling up customer service [and] supply chains and ensuring your IT infrastructure can handle new challenges.”
Once you’ve determined that your company is ready to go international, it’s time to research the countries where you hope to do business. Detailed research is essential because you’re starting from square one in a place where you have no experience.
Thorough research is crucial to understanding the economic and political situation of the countries you consider. The right conditions could make a territory a prime choice for expansion. Meanwhile, poor conditions, even in a country with a high demand for your product, signal you should think twice.
Dok Kwon, chief operating officer of international Korean barbecue restaurant Cupbop, recommended “doing careful due diligence on the market, including, but not limited to the players, consumer demand and preference, size … potentially finding a partner, figuring out supply chains ― to name a few.”
Market research will help you determine where your product’s demand exists and how you can successfully connect with potential new customers. Research should also shed light on demographics and the cultural norms and preferences that could impact your expansion.
“This research will help tailor business strategy and adapt offerings to meet local market needs,” Mea explained.
Research is critical for understanding what it takes to expand to a foreign market and can help you determine where your product or service might succeed. However, the scope of your expansion depends on your goals and your current business’s size.
Expanding to every market where you could potentially succeed doesn’t always make sense. Narrow down the countries and territories you’re considering based on your research. For example, choose a location where you won’t face competition or a nearby country that allows you to use your current suppliers.
When you focus on markets that will be easy to enter and thrive in, you set yourself up for continued growth and future expansion.
It’s never a good idea to go into a new business venture blind. Speaking with experts can help your international expansion go off without a hitch.
Mea recommends consulting a market research firm to help determine when, where and how to enter a new country. “[They] can provide in-depth insights into target markets, including customer preferences, competitive landscape and regulatory requirements.”
You should also reach out to organizations in your home country that have established business and political relationships with the country where you hope to expand.
“[Work] closely with government entities, trade commissions and cultural organizations from your home country to build goodwill and rapport with the target country,” recommended J. Skyler Fernandes, founder and general partner of global venture capital fund VU Venture Partners. “This can ease market entry and help overcome regulatory or cultural hurdles.”
Different countries operate within different cultural norms. To expand successfully, you must understand the specific nuances of the environment where you will operate. That means learning the local people’s beliefs, history, tastes and preferences.
Grasping the local culture will help shape your business strategy, including dealing with partners and communicating with the public. Neglecting cultural differences and committing international marketing mistakes could spell disaster for your brand ― even at home.
The local culture will inform your operations and day-to-day personal interactions. Understanding international business customs will help you build relationships with local partners, suppliers, gatekeepers and employees. It will also help you avoid misunderstandings that could stop your expansion in its tracks.
You must adapt to reach your target customer in a foreign market. That means doing more than translating your existing marketing content into the local language.
“While language adaptation is important, true localization goes beyond translation. It involves understanding cultural nuances, consumer behavior and preferences,” explained Fernandes. “For instance, in some cultures, colors and symbols have specific connotations that can impact your branding and marketing strategies.”
Adapting can mean making changes to what you sell. For example, translating a product name literally may result in unfortunate connotations in the local language. You must also pay attention to what people love and what drives people away and adapt your products accordingly.
“Companies often falter by underestimating the importance of local culture and practices,” noted Lim. “A classic faux pas is to assume what worked at home will work abroad. It’s essential to adapt your business plan to the local context, which might mean altering your marketing strategy, adjusting your product or service offerings or even changing your business model.”
Many countries have more than one official language; various groups may even use different languages in the same city. Consider your business translation needs carefully to ensure you communicate your message correctly.
One of the most complex aspects of going global is ensuring you adhere to local laws and regulations. When researching a target country, compile a list of the documentation you’ll need to open and run your business.
David Bloom, chief development and growth officer of Capriotti’s and Wing Zone, suggested asking “[if] you have the required business entities and legal documentation, trademark protections and financial capability of transacting with the proposed market.”
You should also familiarize yourself with labor laws and regulations before hiring new employees. Pay attention to wage standards and other legal requirements you must comply with, including health insurance or paid time off.
Tax requirements are another crucial consideration. Beyond understanding what taxes your business will pay and how to withhold from employees’ wages, you should study how operating in another country can affect your business taxes at home.
When in doubt, consult a specialized attorney to help set up your business’s legal structure in the new country.
Choose a payroll service that can handle international operations. For example, read our Papaya Global review to learn how this international PEO can help you set up your business to legally employ and pay people in new jurisdictions.
People are vital to any prosperous business. You’ve surely invested time and effort in fostering a company culture at home that attracts top talent and brings in loyal customers. Replicating that culture should be a priority as you build your international team.
Company leaders should be able to effectively train and communicate with local employees, respecting cultural nuances and business norms. Dedicated local employees are a valuable resource and can help you connect with the local culture and build your reputation. Your business should also develop relationships with local partners, suppliers and government officials.
Bloom recommended seeking reliable local partners who already know how to operate in the new market and can help you navigate new waters. “When you have a great experienced development partner in the market, you may still run into many of the same issues and obstacles, but at least you have the resources, expertise and commitment in [the] market that can work through the potential solutions to create long-term success,” Bloom said.
Micah Shepard, CEO of Schaeffler Asia, says finding local partners benefits your business by providing a deeper understanding of the market you’re entering. It may take some effort to find and develop these relationships, but Shepard said that “connecting with the local Amcham [American Chamber of Commerce] could be a good starting point for finding a good partner.”
After researching the country where you plan to expand, considering local laws and culture and building relationships, it is time to set concrete goals and write a business plan.
Bloom said you should begin by asking fundamental questions about how your business will enter the market. “Is your product or service in demand within the region and you are satisfying an existing need or are you seeking to educate and expose the market to a completely new product or service,” Bloom said. “The answer to this question will generate very different business strategies and take you down very different startup plans.”
Still, every strategy should be as detailed as possible. That means considering every aspect of how you will operate in the new country.
“It is crucial to develop a detailed business plan that includes financial projections, marketing and sales strategies and a timeline for implementation,” added Mea.
Growing your business globally can be highly beneficial but it’s also risky. There are many upfront costs and if things go south, you don’t want your business at home to tank.
“Remember to keep some buffer, as there are always unexpected costs and challenges when starting up,” Shepard advised.
While you can’t always predict economic and political fluctuations abroad, you should ensure your company can withstand the cost of failure abroad.
Deciding to go global can seem even more challenging than the process of expanding abroad. The experts we spoke to agree that it isn’t the size of your business that matters. Your business’s strength, status in the domestic market and long-term goals are critical.
Consider the following to ensure a global expansion is the right move.
If there’s still domestic growth potential, including expanding to another state, focusing your resources at home might make sense. Establishing operations in a new country is challenging and expensive and, as Kwon pointed out, there are usually fewer hurdles domestically.
“I would say [expansion makes sense] when the business in the core market is solid and when the potential upside in international opportunities outweighs growth opportunities in the core market,” Kwon advised.
Global expansion may be the right move if you’ve reached market saturation, you’re facing increased competition or you’ve discovered an untapped market where international demand would bring in new customers and increased revenue.
While foreign markets might seem like a great way to grow your business, you must ensure your operations are strong enough to support such an endeavor. You should be firmly established with stable sales and a solid business structure.
Several tools can help you evaluate your business to determine if it can support an international expansion:
As Mea pointed out, “[these analyses] can help a company assess its internal capabilities and external market conditions to make an informed decision.”
Sometimes, the best way to know if international expansion is right for your company is to consult an outside expert.
“I would suggest [a] third-party assessment,” advised Kyle Jones, co-founder of iCRYO. “If you’re thinking about expanding, but you’re not sure if you’re ready or not, hire a third-party company to assess your ability to expand.”
A third party with experience in international growth can determine if your company has what it takes to make it in a foreign market. If you’re not quite ready, they can help point you in the right direction.
To ensure your global expansion goes off without a hitch, consider the following tips.
If you want your international business to succeed, you must ensure the timing is right. It’s a massive undertaking with much at stake, so you don’t want to rush into it before you’re ready.
“I would say that the number one mistake I see brands make is going international way too soon,” Bloom shared. “It always looks a lot simpler when you are sitting in a boardroom thousands of miles away. The realities of opening a new venture in a new country are always a lot more complicated and time-consuming than they seem.”
Operating in a new country requires a significant investment. Understandably, that might put off many small business owners without millions in the bank. Fernandes recommends starting small by breaking into the market through online retail. You can reach customers and determine demand without shelling out a lot of cash.
If you realize there’s demand and want to launch physical locations in the new country, Fernandes suggests microtargeting. “Rather than entering a new country with a broad approach, identify and focus on specific market segments or niches within that country,” Fernandes suggested. “Tailoring your offerings to meet the specific needs of these segments can yield higher success rates.”
Repeating your success in another country isn’t as simple as making a carbon copy of your operations and translating them into a new language. If you want your product or service to be a hit, you must tailor your offering to the unique needs and customs of the people you are targeting.
“One of the key mistakes is applying what makes you successful in your home market [and hoping it] will make you successful in the new market in terms of management style, marketing and product adoptions,” said Shepard. “My motto is to think globally but act locally.”
People are your greatest asset when bringing your business abroad. Locals understand the culture and how business works in their home country. They can help you navigate tricky issues you may not be aware of or understand.
“It is important to avoid making assumptions and to invest in building strong local networks and partnerships,” Mea advised.
Developing relationships with locals, whether employees or partners, will root your company in the new market and help it thrive.
International expansion is a logical next step for many businesses, from small operations to large enterprises. Growing a global company leads to new customers, increased revenue, further innovation and a burnished reputation.
Even if you’re starting small in a tiny market close to home, take the time to research and plan carefully. The work you put in today will pay off later as your company’s international presence increases. Leading your business to international success is a surefire way to ensure your company sticks around for the long run.