You might be looking at expanding overseas for many reasons including higher sales, greater profits, lower costs, market diversification and the acquisition of new skills and technologies.
If you are considering entering a new overseas market, the potential challenges can seem overwhelming. Distance, difference in languages, new rules and regulations and the complexity of operating in multiple countries may persuade some companies to remain in the home country rather than expand abroad.
Of course, by staying at home, you could be missing out on potential sales that could be vital for growing your business.
The first step in entering any new overseas market is to set your goals. Be specific in what goals you are looking to achieve in the new market and on what timeline. Also take care that your market entry goals match your overall business goals.
Once you have set your market entry goals, then you can move on to market selection.
When determining what potential market to select, knowledge is crucial. A successful market entry requires a thorough analysis of the potential market including geopolitical overview, market size, expected economic growth, demographics, and business environment. It is also crucial for companies to understand who their potential customers competitors are and how consumers in the target market act. You will be surprised at the variations between similar looking markets and you will need to understand how this may affect your market selection choices.
You will likely have to make multiple in person visits to your targeted market to gain a better understanding of the opportunities and to gain first-hand knowledge of the market. Many governments or industry associations either have funds available for new market entries or organize business missions and thus can be used to offset some of your costs.
It should be highlighted that this research should not be a one-time action but instead an ongoing process so that you are aware of the changes that are happening in your chosen market.
After you have completed your market research, the information that you have collected should help you choose the best way for your company to enter a new market. This could mean export only, the use of a local agent or distributor, entering into a joint venture or even the creation of a standalone company. Each of these options brings a set of challenges and opportunities for an expanding company and should be considered carefully.
Finally, an underestimated aspect of an international market expansion is the time, personnel and energy required to make such an expansion a success. In most parts of the world, the personal relationship is key to building a business relationship and this can only be done in-person.
As well, depending on your chosen market, you may find that things simply take longer to happen from business licenses to closing a sale to collecting payment than you are used to in your home country. If you are prepared for the long term when entering a new market and able to show others that you are committed to that market, you are likely to find greater success.