Starting and running a business within your home country is nothing compared with going international. Not only do you have to spend the same effort, time, and money, you would have spent if you were investing at home, but you also have to incorporate additional fees, currency differences, transportation, as well as other cultural challenges that you may be confronted with.
In truth, going international is not for the fainthearted, but with adequate research and planning, your exporting and international expansion efforts could pay off in the long run. But there is still a substantial amount of risk involved if you want to enter a foreign market by exporting or setting up operations there. To mitigate these risks, you need a structured and strategic approach to make sure that your resources are not only adequately utilized, but that they produce your desired results too. To help you achieve this, we've compiled a list of some basic steps to an international expansion process.
Step 1: Honest assessment of your position
As a business owner, the first step you need to take on your quest to conquer a foreign market is self-assessment. For starters, scrutinize your business thoroughly to know where you stand and to see how prepared you are for this new phase of your growth.
- Your personal status
Maybe your international efforts involve exporting or setting up a business in a foreign country, the first thing you need to do is analyze your personal position as an individual. Remember, even though your business is an independent entity, you remain an ambassador for it. So you need to be sure that you are on the clear in terms of traveling (are you eligible for an ESTA visa if your target country is the US), are you free of criminal records (some countries look at this), what is your personal history in your home country (some of your potential competitors in the new market might research this in an effort to dent your image). By and large, you must ensure that you are on the clear on a personal note. After all, you don't want your personal issues and business history, getting in the way of your new growth.
- Your finances
Does your business have the financial capacity to make a long-term commitment to your foreign project? If not, then, foreign expansion isn't right for you, at least for now. Call in your lawyers and financial advisors, evaluate your business financial position, and determine whether or not you have what it takes to survive the foreign market on a financial note.
- Your leadership
In case you run a board business, be sure that the owners and senior managers are all on board. If you are a sole proprietor, be sure to get extra hands to work with at home and abroad. By and large, make sure you get the outside expertise you need to support management.
- Your team
Check your team; do you have adequate marketing, sales, and other human resources? What additional personnel do you need?
- Your products or services
What do you think will make your products or services stand out in the crowd of competitors? Does your business have a history of adapting to market changes?
Step 2: Finding the best market
The second step in the right direction is researching potential foreign markets. To do this, you will need to assess the available markets yourself or with the help of an expert. Screen them thoroughly both for opportunities and risk factors. Ask around about the markets, check online, and make inquiries. How easy is it to do business in a given foreign market? Investigate regulatory laws and red tapes, cultural laws, and taxation. Look at every possible risk involved, including those to your intellectual property. Research whether there is a potential for the products or services you are offering. If there is, what is the historical consumer reaction to those products in the country? And don't forget to investigate local culture and customs too, as this may influence how your package, brand, and market your product. After all, you wouldn't want to damage an otherwise rewarding business relationship by making a cultural faux pas.
Step 3: Plan and execute
By now, you must have arrived at a final decision. So what is left is for you to determine your plan and point of attack. This stage is the most crucial, as it could make or mar your months of research. In case you require external funding, be sure to state your objectives and tactics so clearly that you are able to convince any lender or potential investor. The plan should spell out the following information:
- An accurate budget outlining the exact amount of money you'll need to complete the project
- The countries (foreign market) you are targeting
- Opportunities and risks you foresee in the market
- What the perceived level of competition is
- How you will market and distribute your offerings within the country.