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11 Critical Factors to Successfully Expand Your Business Abroad

An increasing window of opportunities has shown itself for businesses over the past decades. Due to a significant increase in cross-border trading and the rise of international corporates. A major part of the current globalization is fueled by shifts in the economic, financial and communicational possibilities.

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Let me explain.

Small -& medium sized enterprises and startups are given the opportunities to expand their business activities overseas. It’s important to recognize the impact and compare the pros and cons of these new opportunities with accompanying risks.

Let’s put it into perspective:

Every entrepreneur has to understand the fundamental pillars such as:

  1. Target market
  2. Buying & spending behavior
  3. Local competition
  4. Market trends
  5. Legal requirements & procedures

In this article, I’ve listed 11 critical factors that ensure a push in the right direction when you’re considering to take your product or service abroad. There’s no “secret formula” or “all-in-one solution” in order to succeed. That being said, I hope it’ll help to set out some valuable benchmarks on your journey.

Let’s get started.

1) Business Plan

Every market is unique and given shape by its government, culture, and economic infrastructure. That being said, a proper business plan is essential for any business entering a new market. Wrap your head around the following examples:

  • Create a short and long-term strategy
  • Set goals and objectives
  • Map out suitable company structure
  • Set realistic annual budget
  • Set realistic goals to measure growth and progress
  • Set realistic deadlines

Keep in mind, a business plan shouldn’t be a 100-page plan with tons of little details that may or may not be relevant. Try to keep it short, concise and realistic. You can find an example of a one-page business plan here. It’s a perfect example to begin with.

2) Financial Planning

Financial planning can be divided into two separate strategies:

  • Short -term
  • Long-term

The key here is to be realistic. Although it might be hard to pinpoint exactly what your spending and costs will look like, try to be as thorough as possible when making estimations. The goal is to create a budget plan for at least 3-5 years. In case you’re looking for some more in-depth information check out this article published on Forbes.

Is that it?

Even before starting, I can already promise that a financial plan is required to be updated regularly. Not merely for the sake of the statistics, but also to review your business’s performance and KPI’s. It goes without saying that a financial overview is a great resource to bring your business to the next level.

3) Tax

Local corporate tax policies and procedures can be very complicated. Make sure to report in a timely matter about required documentation to the local governmental institutions. Outsourcing might be a good opportunity here if your budget allows it.

So, what else?

  • Bank account.
  • Risk & compliance plan.
  • Research money transfer costs and through what channel.
  • Research financial funnels
  • Research local VAT & profit tax regulations.

4) Business Structure

Will it be mandatory for you to hire part -or full-time employees?

Take into consideration what impact the following could have on your business:

  • Culture
  • Language
  • Governmental Institutions (customs)
  • Etc

5) Marketing Strategy

Establish a team with local market entry strategy experience and local marketing experience. How to address the sales department, value proposition, pricing etc.

Form a team familiar with local marketing strategies, knowledge, and experience. Also, ask yourself:

What makes you different from the local competition, and what are your Unique Selling Points (USP)?

The team’s activities should mainly evolve around:

  • Sales model implementation
  • Sales methodology implementation
  • Introduction of existing product to new market or new product, new market
  • Identify KPI’s
  • Price comparison models
  • Social visibility

Running a successful business in your home country isn’t a guarantee for success abroad. Employee engagement & motivation is important, but how are you going to do that? Regardless of what country you’re in, employees want to feel important, respected and appreciated.

  • Evaluate current business structure.
  • Design company policies and procedures.
  • Research effective systems to motivate employees (i.e. bonus system)
  • Ensure smooth technical integration with local infrastructure.

6) Legal Practises

Avoid any potential legal issues in a new country of entry. Mostly, dealing with legal procedures and regulations can be very time-consuming. Outweigh the pros and cons of hiring a local agency or individual entity to handle any legal cases. Generally speaking, it’ll costs you some money but it’ll probably be worth it.

In addition, consider the following:

  • Local industry rules, regulations, and required certifications.
  • Immigration rules & regulations, customs, import & export, and work-permits, Visa handling.
  • Ownership laws.

7) Insurance  

Many entrepreneurs tend to pass on this subject or underestimate its importance. However, consider two important differences:

  • Individual insurance
  • Business insurance

When you decide to relocate to another country, alone or with a family, it’s best to sign up for an international health insurance plan. It varies per industry but considering a business insurance might be applicable.

Just a few example questions you might want to answer:

  • Are you going to hire a local team?
  • Are you going to rent an office space?
  • Are you selling products that might cause harm, if used incorrectly?

Similar to an individual health insurance plan: It’s always better to be safe than sorry!

8) Local Networking

Networking might be one of the most important aspects of running a business, regardless of what industry it operates in. Arguably even more so when conducting business cross-borders. A great local network can be the key to success in a certain area, it’s an incredible resource. It’s not always clear what a certain relationship will bring you but always expect the unexpected. Many business owners have met and established valuable relationships by just being at a specific place, on a specific time.

One more thing…

9) Dig Deep

Clearly, you want to fully grasp the process of expanding abroad before the actual move. Therefore, it’s recommended to research and explore these areas:

  1. Cluster potential customer groups by performing a market segmentation analysis in order to determine whether there’s reasonable demand for your product or service.
  2. Unfamiliar with what steps to take for a market segmentation analysis? Read this article here.
  3. Compare the actual performance of competitors against potential -& desired performance with a gap analysis.
  4. SWOT Analysis: Identify your strengths, weaknesses, potential opportunities, and threats.

10) The Launch

Execute a gap analysis, or at least partly. The next steps are there to boost the success rate of launching a new product or service:

  • Be familiar with all relevant governmental rules and regulations.
  • Grammar check, check double check. It’s easy to make a translation error, yet easy to avoid!
  • You might want to register for trademark rights or patent laws, if applicable for your industry.
  • Establish proper quality standards and maintain as such.
  • Local networking.
  • Explore different ways to ship your products/service and what location will be most suitable as the main office.

11) Don’t fall for quick scams

There’s no such thing as “Follow these steps, 100% success guaranteed”. This article is not different, it’s not a quick-fix or your golden ticket to a successful entrepreneur. However, going cross-borders with your product or service is a huge challenge and you’ll need to rely on your rock-solid entrepreneurial backbone to overcome many disappointments and let downs.

Trust me, you’ll experience them all. Like we all did.

Then why move abroad?

Easy: the higher the risk, the bigger the reward! But in all seriousness, it’s a great opportunity for entrepreneurs to expand their business and a great challenge, something most entrepreneurs will not shy away from.

With this article, I hope to highlight some of the most important aspects of expanding abroad while summarizing some examples that’ll be some food for thought!

To your continued success.

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