The domestic market is enormous. However, it may not be enough to sustain business growth. Going global is often the most logical step for taking business to the next level. However, mistakes made when going global can be disastrous for your business. Let’s discuss the right way to grow your business internationally.
Verify that your would-be customers exist in volume
Before you start to market and sell products in other markets, verify that customers exist there. Just because a product or service sells well in your country, doesn’t mean it will do so in others. Compare your product to what is already there to get an idea as to whether or not you could move into that space. If your product or service is novel, you might become the dominant provider—if the target market is willing to adopt it. A market segmentation analysis could help you determine if it would sell.
Don’t assume that you’ll be able to convince foreign customers to trust your brand, especially if there is already a familiar, similar product in their home country. Do a product gap analysis against local products to verify that there is actually demand not satisfied by a local provider.
Understand the Legal and Regulatory Environment
You must understand the legal environment before you enter a market. Meeting packaging standards for different countries by itself can be a challenge. Business regulations have to be met, or you could be hit with fines and fees. This is especially true when it comes to certifying products as safe in accordance to local standards. Taxes are a tangled mess in and of themselves, and you have to deal with that in every market you enter.
Financing business ventures in another country can be a problem in and of itself. Foreign banks may be reluctant to deal with U.S. businesses because of onerous American tax reporting requirements. Consider working with a service like Lending Express to raise capital for your expansion.
Consider the entire business model
Once you’ve outlined a potential business model, total up the likely cost of delivering products and support services. This is the time to verify you can still clear a profit selling products in that market at the volume you expect. Be very careful about assuming you can raise prices to cover your costs. Perform a SWOT analysis to determine if the market would buy your product at the price you’d have to charge to cover your operating costs.
Target one market at a time
Take the time to thoroughly research each market and cultivate the relationships necessary for success. Establish executives who will focus on that market and recruit local talent for everything you need to do. Start marketing and delivering the product. Make sure your local logistics and distribution network is working. Track the market’s response. If necessary, tweak the product model or translation of marketing and tech support materials. A planned, focused initiative is more likely to succeed, and because it has your attention, you can respond appropriately to issues when they arise in a timely manner.
While the domestic market is enough for many small businesses, expanding into global markets provides incredible opportunity for growth when done right. Take the time to determine the right markets to expand into and plan your endeavor to maximize your chances for success.