How to expand your business globally: before you start
When your business is already successful on the local market you might be searching for new growth ideas. Expanding to the foreign markets seems like a good plan to take your business to a whole new level. But before you start getting ready for this challenge, you’ll have to consider a couple of key factors that can either help or harm your business:
1. Is the target culture ready for your products?
Your products and services are not sold and promoted in a vacuum. In most cases the culture, language, shopping habits and purchasing processes will be different in the market you want to expand to. Your offer might not be equally attractive abroad as it is on your local market or the message you want to convey will fall flat in another culture. Your organic gluten-free, sugar-free sweets that hit the UK market may be totally out of place on the Chinese or Moroccan market if you don’t tweak your marketing campaigns and packaging. Your products might be completely new on the foreign market or the foreign market might not seem to be ready for your brilliant ideas. Then you’ll have to invest some time and money in educating your customers. But to do this, you’ll need to know more about the habits and behaviour of your potential customers. For example, if you want to sell your organic sugar-free products in Morocco, you can shift the focus of your marketing campaigns. Instead targeting your ads at the consumers who consciously choose healthy products, as you would do it in your local market, you could target your campaigns at the diabetics who don’t want to eliminate sugar alternatives from their diet. The latter trend is more common in Morocco than the organic food fad, so your marketing campaigns could be much more effective if you focus on other features of your products and different phenomena on the target market.
2. Do you know how to do business in the new country?
A thorough research about your new target country won’t be enough if you don’t know how to apply your knowledge or how to bridge the gap between your home and foreign market. You’ll need to be physically present in the new country, especially at the beginning of your business operations abroad. Even if you choose to work with a local distributor, business trips and meetings are inevitable. To make sure everything runs smoothly, you’ll need to know how to do business in the foreign culture and be able to communicate effortlessly. What is obvious and common in your home market (e.g. negotiation styles or greeting procedures), might be rare or unheard of in another country. Lack of knowledge or experience can easily lead to confusion, misunderstanding or even rejection, so find out how to behave and what to expect from your business partners and customers abroad. Learning a new greeting procedure, a different presentation style, negotiation pattern or body language won’t be sufficient if you ignore the language issue. You can’t assume that everyone speaks and understands English, so make sure both sides can communicate efficiently, e.g. by hiring interpreters. Proper business behaviour and clear language are key factors in your journey to the foreign market.
3. Can you deliver your products on time?
Markets differ not only on the cultural or linguistic level, but also in the area of transport and infrastructure. Before you decide to expand to another country remember to take the logistics into account. Can you easily ship your products abroad without extra costs? Can you rely on the safe sea transport in case of large quantities? Are you sure your products won’t be stuck in customs? What is the road infrastructure in your country of choice? Can you deliver on time? And are you sure “on time” in your culture means the same as “on time” in another culture? Find the answers to these questions before you start to plan your business expansion. It may turn out that little details will make a big difference, especially if something goes wrong. Talk to other business people, visit the country and research every single step of your potential expansion.
4. Are you ready to overcome any legal barriers?
Apart from the culture, language and infrastructure there’s one more important factor that can decide about the failure or success of your venture: the law. The regulatory environment in a foreign market is usually the biggest barrier to global expansion. Before you set your foot abroad, find out about the costs of legally establishing your business, protection of intellectual property, custom duties, corporate income taxes, real estate costs, employee wage and benefit requirements, licenses… Think about every possible scenario and every possible aspect of your business activity, and consult a local lawyer to make sure you are familiar with all the appropriate laws. A thorough and early research can help you discover many potential challenges that will occur later during your business expansion. For example, you might find out that in the country you want to expand to many business activities are sped up or made possible through bribery and corruption. If that’s the case, you’ll need to consider whether it’s better to move your focus elsewhere before it’s too late and too costly or to work with consultants and lawyers to make sure you comply with the local and foreign anticorruption laws.
From culture, through langue to business behaviour and legal requirements – there are many factors that can influence your business activities abroad. Don’t wait until the last minute and analyse your potential new market thoroughly before taking a step towards the global adventure. As time-consuming as it may seem, a detailed research and careful preparation is an essential part of the business expansion, no matter which market you want to conquer.
Are you planning to grow your business abroad? How can you adapt to the foreign culture?
Dorota Pawlak is a localization consultant for digital and Web 3.0 brands. She enjoys helping businesses enter new markets and is passionate about cultures, languages, and technology.
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