Exporting your brand abroad can be an attractive venture, and many entrepreneurs would jump at the opportunity.
However, the road to international expansion can be fraught with pitfalls.
Between establishing a new customer base, finding reliable partners, learning new laws and regulations, and becoming familiar with local customs, the road to building a global business can be a difficult one.
While not all companies are up to the challenge, some are. Before you decide to take the plunge abroad, there are several factors to consider.
Below is everything you need to know before expanding your business internationally.
What are the challenges of international business?
No significant business decision is without obstacles, but global expansion comes with its own set of roadblocks. Here are some challenges you should be prepared for.
Language and cultural differences
Language can be a barrier when you expand your business to the Internet. If you are lucky, you will fall into countries where English is commonly used. Otherwise, it is recommended that you hire bilingual staff who can translate for your business.
If you lack the budget to hire full-time translators, you can outsource tasks such as customer service abroad. It is also essential to understand that there may be cultural and linguistic differences within a country.
You probably expect differences in regulations and languages, so you should hire a lawyer from the country you are moving to.
But you may also need a local person’s perspective to understand how culture and even taste might affect the market for certain consumer goods and services.
International compliance and regulatory issues
Learning the different tax codes, trade regulations, and packaging standards of different countries can be difficult.
Many experts say that compliance is the biggest challenge most companies faced when expanding abroad.
Compliance laws differ from country to country. In Dubai, for example, you need an ICV certificate which can be obtained within a short turnaround time. While in other countries, it takes months to complete the necessary documents for compliance and to set up a company.
Foreign banks may also be reluctant to take on the administrative burden of an account based in another country.
Therefore, you may need to set up a foreign business entity and a separate bank account to make transaction management worthwhile for the banks.
Depending on the country you come from, the business world can be fast or slow-moving. In the UAE, for example, the business world moves fast.
Things will always take longer to settle abroad, but that’s not necessarily a sign of a lack of momentum. It takes patience and preparation for multiple interactions to build trust.
One way to speed up your company’s operations abroad is to ensure that you are in good standing and that all your paperwork is up to date.
Also, check the turnaround time of a company set up in the country where you want to expand your business. For example, business set up in the UAE has a relatively quick turnaround time.
It is not easy to persuade a foreign customer to trust your brand when a similar product is manufactured in their country of origin.
As a small- or medium-business owner, you will, therefore, have to convince the international market that your brands are reliable and better than those of the competition.
Ask yourself these questions:
- Why would customers buy from you rather than from the local champion?
- Can you penetrate the market? If you can, would you be profitable under these circumstances?
Best tips for international expansion
If you’re ready to take on the challenges of international trade, here’s a list of tips to get you started on the right foot.
Find the right partners and team
If you plan to expand globally, you will need a quality team or partner. Even if your partner takes the form of a mentor, you’ll need someone you can trust and who can vouch for you.
So the first thing to do is to set up a local team to ensure that you are in good standing both legally and culturally.
Having a local manager can help ensure the company’s compliance in each new market. Working with a local partner can also help communicate your company’s unique selling point in a meaningful way to your local audience.
Businesses expanding internationally should not rush to find reliable and secure strategic alliances. Instead, one needs to exercise care and be meticulous in establishing local partnerships. Ask questions, do your research and don’t assume that the biggest is automatically the best.
Always do your due diligence
Before making important business decisions, you need to think about all possible scenarios, especially in times of global expansion.
Therefore, it is recommended that you spend some time in the country where you want to set up your business. An information-gathering trip can be a focal point for developing an action plan.
Visit potential customers, distributors, and even competitors who manufacture complementary or competing products.
After a visit, you will discover all the concrete facts about your product’s ability to sell, at what price to sell, how to sell it and who your competitors are.
Rely on experts
If you are looking to expand internationally, understand that you need help. Even though you’ve probably done everything on your own so far, it’s important to remember that you need expert advice to be sure of your decisions.
Rely on some experts to guide you, at least in the early stages. You don’t need to reinvent the wheel; rely on people who have already been where you’re at.
Expanding your business internationally can result in significant growth and increased profits. Explore all your options and do your homework before making a decision, and it could be the best decision you’ll ever make.
If an opportunity presents one or more of these benefits, it is worth pursuing. However, stay focused on your goal and don’t go chasing every opportunity that seems big but has limits.
Also Read: 5 Tips for Entrepreneurship at a Young Age