Sure, the American market is huge – but if you want to take your venture to the next level, it’s likely you want to know how to expand your business internationally. If you’re growth-oriented, then going global offers a wealth of opportunity. For instance, existing products and services can gain more mileage in new markets. Equally, growing your business internationally can significantly diversify your customer base and mitigate any seasonal demand fluctuation at home. Finally, entering a global marketplace will teach you a lot about competition and how to improve your product or service.
However, the major reason for global expansion is, of course, to help your business grow. When it comes to how to grow a small business into a big business, entering into lucrative markets like Canada, Europe, Mexico, and Japan, is an important step. Furthermore, there is an incredible opportunity in less saturated markets with enormous potential for growth. However, identifying and capitalizing on the most profitable markets requires a strategy. In this article, we run down the foundations of how to expand your business internationally and kick-start your business growth.
Not so fast: Things to think about before diving in
Invariably, there are risks of expanding a business. Growing your business at home comes with its challenges – and these are only accentuated when you expand your business internationally. Therefore, there are two key questions you need to ask yourself before moving into a new market:
• Will the product appeal to the target market?
Before approaching a new customer base, it is imperative to do some market research. By and large, new markets will embrace American products – but don’t take this for granted. Sometimes, persuading consumers to purchase your product or service may require some consumer education.
• Is there the infrastructure for your product or service?
If you want to move into new markets, you’ll have to familiarize yourself with the country. You might even have to live there in the early stages. You have to ask yourself if this is a scenario you can handle. Furthermore, you need to establish whether or not your operation can cope with the available infrastructure. For example, are your supplies guaranteed? What’s the postal service like? How are the roads?
• Can you handle international communications?
From customer relations to your supply chain, never, ever, assume business will be done in English. Furthermore, you’ll need to tailor your marketing efforts to each country and adjust pricing, shipping, and payment terms according to the clientele.
If you encounter roadblocks at any of these questions, it doesn’t necessarily mean you can’t expand your business internationally – it just means you have to be strategic about where you go. Pick new markets where you can be sure you can deliver on your offer.
How to expand your business internationally: The first steps
1. Draw up an international business plan
Moving into new markets will require a new business plan. A strategy is essential, so begin your new campaign by assessing your readiness and commitment to expansion.
2. Conduct foreign market research
We touched on this above, but for emphasis – market research is critical. This may seem like an intimidating task, especially if you’re moving into a market where the majority of consumers don’t speak English. However, there are resources to help get you started; for example, the Department of Commerce has tons of information on foreign markets for American products and services.
3. Evaluate distribution channels
There are many different approaches to international distribution, so choose one that best suits your operation. For instance, you could open foreign-owned subsidiaries or work with international agents. Make sure your partners have a proven track record, reliable communications, and if you’re moving into a non-English market, full proficiency in the local language.
4. Familiarize yourself with exporting
A key step when it comes to how to expand your business internationally is getting to grips with exporting. Familiarize yourself with all the legal requirements in both the US and your chosen market. From here, you can learn how to set prices, negotiate deals, and navigate the cultural, legal, and economic differences. Furthermore, make sure your packaging and labeling meet local requirements and regulations.
5. Find financing
Financing new and growing business ventures is always a key concern. Research ways to tap into private and government financing for your new ambitions. For example, one of the most popular small business funding sources is the Export-Import Bank of the United States. This organization is an independent government agency that guarantees working capital loans for American exporters and offers exporters credit insurance in case of nonpayment by foreign buyers.
A final word: Importing products and services to the United States
Operating an international business isn’t just about exporting – you’ll need to learn how to navigate importing too. For many businesses, an international supply chain can provide higher quality, lower prices, and greater efficiency. Once upon a time, identifying these sources was a major challenge; but now, thanks to the magic of the Internet, things are a lot more straightforward.
So, if you’ve got an idea for an import business, start by focusing on countries whose imports have a favored status – this means lower taxes and associated costs. Once you’ve identified profitable sources, contact trade representatives – a good start is foreign and domestic trade fairs. An alternative route is to check out TradeNet, the U.S. government's online trade connection service. Here, you can find for links, databases, and advertisements about importation opportunities.
However, as is the case with exporting, it is crucial to do your research. When you’re evaluating a new prospective business partner, make sure you get references. Furthermore, make sure you get to know shipping procedures, costs, and timelines. Make sure the prospective supplier understands your requirements and hire a lawyer to check over any international trade contracts.
Going global: A world of opportunity
Sure, America is the land of opportunity – and with so many domestic consumers, most small businesses can expand almost indefinitely. However, by diversifying your client base internationally, you can protect your profits against a decline in the domestic area and kick-start your growth potential. Although when it comes to how to expand your business internationally strategy is paramount, there’s a whole world of business opportunities out there just waiting to be uncovered.