There are a number of advantages to expanding internationally such as new partnerships, tax incentives, streamlining efficiencies and faster growth. However, there are also a number of hurdles to overcome. These challenges can seem daunting but choosing the optimal location and careful planning can help you to succeed.
Language and cultural barriers
It is easy for confusions to occur even when you expand to a country that speaks the same language. For example, Australians and Brits speak the same language but the word “thong” has different meanings to them. Imagine what can happen when expanding into a country with a completely different language and culture.
Communication is likely to be a challenge and it helps to have someone on the team that speaks the local language. Working with a local specialist can help guide you on the idiosyncrasies of the market and provide valuable insights to help firm up the foundations upon which you enter a new country.
What if there’s a local company selling the same type of product as you? Factors such as import tariffs, fees, the likelihood of slower turnaround times, and exchange rates could put you at a disadvantage.
You will need to be aware of what your local competitors are doing to counteract any of the advantages they have. Try to build relationships with local businesses and use them to help you in areas such as logistics, storage and shipping.
Compliance and tax issues
Dealing with tariffs, fees and taxes for international trade can be an obstacle, especially for smaller companies. You must meet the compliance regulations of the country you’re expanding to or this could hinder your expansion plans.
Study the details before you get started and make sure you understand all tax and legal requirements so that you know what boxes you need to tick. You’re likely to find differences in import and export laws, property ownership, hiring and firing, and laws governing data security, advertising and marketing. It helps to have legal counsel to assist you.
Managing a supply chain across international boundaries can be challenging. You take the risk of delays, goods not showing up at all or being impounded in customs. Proper planning is essential before you rush into international expansion.
You need to develop a strategy, a business plan and work out your budget. It is madness to try and trade in a new country without a solid well thought out plan of action.
In the developing world, you can face issues such as not enough power to sustain operations or inadequate roads for getting in supplies to build facilities. Getting reliable interact access is another issue. Depending on the region you’re considering, you need to make sure the local infrastructure is able to support your operations.
Another challenge with foreign locations is finding the right people at the right levels. You may need to hire staff in the country you’re targeting and this means you have to put trust in new people and it increases your overheads.
Just as important as finding local talent is the ability to attract current employees to relocate in order to create business continuity.
You need to make sure your organization is ready for expansion and that you have the right people in place to handle it. If you do it right, the increased revenue will make up for any extra staff you hire.
International expansion can open the door to increased revenue but you need to be able to connect with partners and customers in your target nation to do it successfully.