3 Essential Tips for Creating a Global Expansion Strategy for Your Business
The smell of opportunity is in the air. With markets yet to be explored and revenue streams yet to be tapped into, potentially huge returns on reinvestments and products tailored specifically to your new customers, expanding your enterprise can be an exciting prospect.
Yet, it would be wise not to get your head into the clouds, there is still a lot of work to be done besides making the decision to go global. There are many reasons why you might want to go global, and there are undoubtedly various advantages.
However, it’s important to do it the right way, unless you’re intent on heading towards disaster. It’s essential you create a global expansion strategy and follow through because the stakes are high and mistakes can and will be costly.
Investing time and effort into your strategy is going to be worthwhile, as your strategy is going to be an invaluable ally in conquering foreign markets and getting a foothold. The decision to expand should not be taken lightly, but there are many reasons why it might seem like the best move to make.
Product sales life extension
Every service or product has a lifecycle. While specifics vary by industry, a product often goes through several stages, including conception and launch, market maturation, stabilization, decline, and eventually coming to an end.
Through an overseas expansion, you can effectively click the restart button, and begin the product’s lifecycle anew. If you believe your product or service will perform well, then introducing it to a new market could get you a fresh start and revitalize it.
Additionally, with the knowledge you’ve accumulated locally, you will be less likely to repeat the same mistakes globally.
Market presence diversification
Diversifying your market presence means that you will not be singularly dependent on the domestic market but will also be ready to seize opportunities in the new market. Therefore, you can balance out the losses in one market with the gains in another.
In this way, you can minimize your risks and maximize the rewards.
If you have noticed that there is a demand for your product globally and there is a unique opportunity for your business to expand, there is no reason not to. You can always start small in a foreign market and see what kind of results you are getting, and continue further developments from there.
Tapping into a foreign talent pool
With top-notch cyber security and a vast communications network, there is no reason not to go fishing in a foreign talent pool. Different document-sharing and communication platforms allow for a smooth communication flow and help keep team members focused on the task, no matter where they are from.
Unfortunately, the search for foreign talents does not come without its challenges. Besides having to strictly follow regulations, there are some specifics related to paying your foreign employees.
There are two main ways of paying your employees, the first one being to create a subsidiary or an entity through which you could pay your employees. The second way of paying foreign employees is through engaging an Employer of Record, effectively outsourcing payroll administration.
This can be of great help in hiring international employees and will ensure the whole process is done according to local laws and regulations.
Essential Tips for Creating a Global Expansion Strategy for Your Business: The strategies
Planning is half the battle, so here are some tips on how to choose the expansion strategy which fits your business.
– Adapt your business model to the circumstances of the country you’re expanding to
– Let your reputation do the PR for you; it’s crucial to build a strong brand on your home turf and expand from there once you’ve built up a well-known brand
– Do a comprehensive and thorough internal audit and determine your strengths, weaknesses and your ability to adapt
And here are the strategies:
Acquire and nurture
A tried and true method of international expansion is buying a foreign company and developing it as part of your business. In this way, you gain access to resources like talent, relationships, market knowledge, and infrastructure that would have taken years to develop if they hadn’t already been in place.
The issue with this method is that it’s costly and could take a lot of time due to local legislation.
Providing licencing agreements
A more frugal way of getting a foothold in a foreign land is licensing agreements.
In essence, you’re providing the use or marketing of your intellectual property for a fee, allowing you to ease your way into the foreign market in question and raise brand awareness, without investing much of your own resources.
If you’re not quite sure your company is going to thrive globally, licensing agreements are a good way to test the water.
Note, however, that licensing has some major setbacks. You essentially lose some control of your brand and direct contact with your customers. Whoever you’ve provided the license to is now the middleman, so be careful who you’re providing licenses to.
Complications could also arise with legal issues along with additional fees, so specialized legal advice will be necessary.
The old-school method
Starting from scratch in another country is the most traditional and the most expensive way to expand globally.
On the one hand, you keep absolute control of your business, avoid potential legal issues and have access to higher profit margins. On the other hand, the old-school method is going to take the biggest toll when it comes to invested capital and the time the company needs to become profitable.
Written by Brigitte Evans