Considering the fact that expanding your business elsewhere within the same country can be challenging, going global can seem like a daunting task.
Yet, for some many kinds of businesses exploring expansion opportunities in other countries is often obvious and sometimes a necessary course of action.
Done for the right reasons and with the right strategies, expanding overseas can result in all kinds of long term business gains and profitability.
Businesses often exhaust their potential for growth locally. This could be a factor of the market size being small, market growth being slow, or too much competitiveness.
Tapping into overseas markets can solve these problems quickly. Many regions in Asia, Latin America, and Africa are potentially huge and rapidly growing markets with low competition. Early movers into these markets can enjoy exceptional growth and long term benefits.
One of the key issues addressed by taking your business to another country is high operating expenses. These are primarily manifested in the form of labor costs and taxes.
Tens of thousands of US companies, for example, have relocated their manufacturing facilities and even their corporate headquarters to regions with abundant low-cost labor, or highly favorable tax laws, or both.
They save billions annually by doing so and gain goodwill by creating employment and stimulating economic growth in regions that need it.
Having operations in two or more geographies contributes to reducing dependence on local market conditions in any one region. All markets display fluctuations, cyclical variations, and uncertainties.
Any destabilizing economic effects in one region can be offset by having portions of the business running profitably in others. This gives small businesses a greater chance of survival.
The first issue to address when moving to a new country is of culture and language. Before you build a business you must build relationships.
Addressing legal formalities, setting up a distribution channel, hiring employees and contracting suppliers requires interpersonal communication, all of which is greatly influenced by culture.
Even in other English speaking countries the slang, mannerisms and body language often differ greatly. You must ensure that your approach, as well as your offering, is compatible with the local culture.
A foreign country may impose its own tariffs, duties, and restrictions on the size and type of imports, as well as on foreign investment. They may mandate hiring a percentage of the workforce locally.
The laws related to doing business, filing returns, paying taxes and hiring employees can be very different from your country of origin. The usual way of dealing with these considerations is to hire legal experts locally.
Next, you must consider demand. You cannot presume that your products and services will have the same demand in the new geography. If the awareness about your products in the new market is low, it could be an opportunity to carve out a profitable niche.
However, you must effectively use marketing techniques to build awareness before you can sell well. The competition will invariably follow and you must factor that into your strategy as well.
Any new business venture requires preparation and an in-depth understanding of what you are getting into. Thorough research on your part is necessary for uncovering important facts such as the amount of competition, market trends, and the potential for long term profitability.
Your research may also uncover important details that could make your expansion easier and cheaper.
Many governments provide tax breaks and incentives for entrepreneurs. In the competition for ranking higher on the World Bank’s Ease of Doing Business Index, many governments are progressively removing red tape and bureaucracy for business starters.
#4 Moving money
Your business unit abroad will likely take some time to become profitable and financially self-sufficient. Till then you will need to move funds across borders for investment in infrastructure, purchasing assets, paying suppliers, processing payroll and so on.
Cross border transactions almost always involve mandatory currency exchange at rates dictated by the money transfer channel you pick. Conventional banks are consistently reported to be the least efficient. International money transfers also involve fees charged by service providers.
Once again conventional banks rank among the most expensive in percentage terms, especially for regular/repetitive transactions.
One recommendation is to use efficient and agile money transfer services such as Ria Money Transfer to send money online to set up your business in your new destination. Once your new unit becomes well-established, you can use the same trusted service to repatriate the profits.
Is your business thinking about moving to a different country?
About the Author
Sharon Kalipai is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency in Denver, CO. When she’s not writing, she loves to travel, dance and read books.