If you own a successful business, sooner or later you’re probably going to consider expanding it into new markets abroad. Beginning business ventures in overseas markets can be a thrilling prospect, but stepping into uncharted territory means you have to be well prepared. It’s vital to collect information about the target foreign market as well as put a plan in place in order to assess your business’ potential for a successful expansion. Here are five steps to follow before taking your business abroad.
1. Assess Your Financial Capabilities
Starting a business always requires significant financial investment, and the same can be said when considering entering new markets abroad. In fact, you may need a larger budget for launching a new company in a foreign country compared to opening a new branch or office in a country where you already run your business. Before starting this venture, you must assess your current financial condition and its long-term prospects.
Draw up an approximate budget needed to take your business abroad. Remember that in the beginning, you will need to make many business trips in order to properly establish contacts and get a sense of how the market works. Money will also be needed to register a new company, rent an office or other facilities, hire staff, purchase necessary equipment, and all the other little costs that add up. Don’t forget that it may take years for these investments to recoup and begin to yield a profit, so it’s important to analyze all the potential costs and make a conclusion about whether you’re able to finance this venture.
2. Hire a Market Research Company
The specifics of running a business overseas can have many nuances that you must consider before starting. The most reasonable decision is to hire a company that is able to prepare a report on the state of the foreign market you’re going to enter. The information provided should contain data about the industry leaders and their brands, the purchasing power of the target audience, market needs, and competition. Make sure that your products or services fit the requirements of local consumers and their purchasing power will allow you to generate the profit you want.
3. Study the Political Climate in the Country
Countries with stable political and economic climates provide more prerequisites for creating a prosperous business. On the contrary, in times of political disturbance, the future of your business can be vague. There are cases when new political regimes seized and expropriated the property of foreign companies, which means an irretrievable loss of all investments for those businesses. In addition, political instability can lead to an economic crisis which can seriously affect your ability to achieve your desired profit.
4. Learn the Language and Cultural Differences
Take into consideration that people in foreign countries may not speak English fluently. In order to come across as professional, polite,and interested, try to learn the language of the country where you’re going to open an office. Even if English is the dominant language in the target country, don’t forget about regional features and dialects. This is especially important when promoting your business online.
Conduct research that includes trying to find the most relevant keywords that people use when searching online for your products or services. Even different regions with speakers of the same language can use completely different keywords when searching. These keywords need to be identified when creating content so it’s relevant for a local audience.
Take cultural differences into account as well. What is considered to be common in your country may cause a cultural shock or even be banned in other countries. Find out if your employees are comfortable living and working according to the laws and customs of the foreign country or whether it will cause you problems in the long run.
5. Make Local Connections
It’s clear that an acquaintanceship with the right people helps a lot in promoting your business. Perhaps you have contacts with influencers whom you met at international trade shows, conferences, or business meetings, or you might know companies you can partner with to market your products or services. In any case, getting to know locals who are aware of the local market and the specifics of running a business will be extremely useful when launching your venture abroad.