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3 Tips to Consider When Starting a Business Abroad

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By Monday, 14 September 2020 09:59 AM Current | Bio | Archive

Expanding a business locally is hard enough – but trying to expand across borders in a country that you're unfamiliar with is exponentially more challenging. Are you prepared to do so? That's a question every globally-minded entrepreneur must consider when expanding territorial reach from one part of the world to another.

Why International Expansion?

Research shows that 82% of shoppers make at least one purchase from an international merchant each year. Yet despite this overwhelming majority, just 1% of American small businesses export goods overseas.American businesses that get serious about international expansion can enjoy a host of benefits, including:

  • New customer base. When you enter into a new country, you automatically gain access to a new audience. The hope is that this audience turns into a new customer base who will buy your products, goods and services.
  • Increased revenue. The cost of expansion can be high on the front end, but the hope is that this access to new customers will eventually lead to an uptick in revenue that allows the business to grow.
  • Product diversification. As you expand, you'll discover that the features and products that work here in the United States aren't necessarily as effective or in-demand in other countries around the world. This forces you to innovate and diversify your products, which ultimately catalyzes creativity.
  • Less sensitivity. When your business is focused entirely on one country, you're highly sensitive to changes in the domestic economy and marketplace. By shifting your focus to international horizons, you become less sensitive to any one market. The global economy now defines you.
  • Deeper talent pool. In addition to reaching more potential customers, your international growth also affords you the opportunity to engage a deeper talent pool. This paves the way for better hiring decisions and stronger corporate culture.
  • Cost savings. While your expansion may initially increase costs, the long-term benefit is cost savings across the board. International growth allows you to forge stronger partnerships in manufacturing (among other things) and make your supply chain exponentially more efficient.

Most businesses shy away from expansion because they feel like it'll require time, money, r additional resources that they don't have. And while it's true that it can be resource intensive, the upfront investment shouldn't hold you back. After all, there could be a robust return waiting on the other side.

3 Tips for Expanding Your Business Abroad

When you scan a list of benefits like that, it's easy to get fired up about international expansion and assume that it's something your business needs to invest in. But it's equally important that you explore the risks and understand the challenges.

We don't have the time to walk you through every single possible risk that could stem from global expansion, but we do want to take a moment to briefly touch on some of the issues and elements you should consider when launching a business internationally. It's recommended that you begin with:

Compliance and Regulatory Issues

It's one thing to have an idea or inspiration for global expansion. But is it even practical? International compliance and regulatory issues can be a major headache. This is often true regardless of whether you're going into a smaller, less-developed country or a larger country with strong U.S. ties.

Hiring

Hiring is one of the more important factors in global expansion. It's also something that too many businesses ignore or downplay on the front end.

"Whether you're launching a business here locally or expanding into a foreign market, you have to prioritize recruitment and hiring," says Pierre Pradier, co-founder of NH Global Partners. "And you also have to understand that the process of recruiting talent looks different in every country and culture."

Trying to handle hiring on your own – without any context of international markets, customers, and recruitment norms – is nearly impossible. You'd do well to work with someone who understands this space and can recommend the correct course of action.

Branding and Packaging

Something as simple as your brand and packaging can create its own set of challenges in a foreign market. Don't assume that you can just move products from the U.S. to a foreign country and begin selling.

"In Europe, your instructions, even for the simplest product, will be in multiple languages, sometimes up to 24 languages," writes Stanley Chao, an international business consultant. "If your product is sold more regionally, you will have to consider the increase in packaging cost associated with labeling."

Again, trying to take on this challenge with your own internal resources is hard, if not impossible. You need the right partners to help you make the best decisions for your business.

Weighing Opportunities Against Risk

It's impossible to make a sweeping generalization about whether businesses should expand internationally or whether they should focus their efforts on domestic growth. But this much we do know: Building a business abroad provides numerous benefits. And the businesses that carefully consider each element in the equation will fare better than those who reach speedy conclusions.

Become a business that moves with a high degree of intentionality and good things will happen!

Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant. Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he's also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. Read Larry Alton's Reports — More Here.

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American businesses that get serious about international expansion can enjoy a host of benefits.
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2020-59-14
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