Setting eyes on international expansion is a pretty natural progression for an SME or even a mid-cap organization that has succeeded in finding success in domestic markets. However, before you embark on this type of venture, you need to establish a concise business growth strategy that is necessary for ensuring long-term sustainability.
You will find several good reasons why your SME or mid-cap business can look to invest in a new market overseas. There are several influencing factors such as possible economic crisis at home or the opening of new avenues in emerging economies etc. Although there are immense opportunities there are some challenges as well. Here are some tips.
1. Perform a Market Study
Performing a market study might seem like an obvious way of starting an international expansion. But many SMEs rush into setting up or exporting a branch of their business overseas without taking time to properly analyze the target market.
For gauging the viability of your products and services in a new market, you must first identify the demand for your services in the local markets. One of the common pitfalls for several organizations is not taking the time out for assessing the level of adaption required for the new country to get received properly.
However, as important as market study is, customer satisfaction plays also a huge role. Customer service surveys have the advantage of asking for input rather than simply scraping from general usage data. People love to feel that their opinions and experiences matter. Nonetheless, this would be a plus for your business because knowing what other cultures think about your product makes it easier for you to thrive into that market.
2. Identify all the Opportunities
After you have acquired the knowledge of the target market, you are likely to be in a better position to correctly identify the opportunities available locally. Before making a beginning, you need to select the best suitable sales channel for your product in the local markets. You need to prepare a sales strategy and launch a prospecting mission.
You can take part in trade fairs for these other similar events that are related to your niche. Trade fairs are a good way of identifying possible business opportunities and assessing the extent of these opportunities. You can also learn more about the competition and connect with the local players for possible collaboration.
3. Have a Local Presence
The next step you need to take for your business expansion strategy is the establishment of a local presence. There are many ways available for doing this. You may use local representatives, open a local branch, or create a subsidiary for launching a joint venture.
If you intend to start operations globally, you can get in touch with experts of global PEOs for help. There is a range of alternatives available for SMEs to select from while entering a new market. You may even consider going into a joint venture for tackling a closed market. It is a pre-requisite for some jurisdictions.
4. Hire Local Talent
In case you are serious about taking your business globally, you also may be required to hire local employees at some stage or the other. There are several advantages associated with this. These local candidates have more knowledge about the local market.
They can help in raising your credibility locally. In some countries where there are lower wages on offer, there are lesser fiscal contributions and social charges. This will lead to fewer incurring costs for your company. Some countries also have specialized workforces for specific fields.
5. Create a Strategy for Currency Hedging
There is a constant risk involved in volatility in the foreign exchange market. It is one of the common challenges you will have to face while entering a new country for business. Any possible adverse changes in the foreign exchange market may have a significant impact on the profit margins of your business and payments made to the employees abroad.
While hedging against this risk it is important to create a hedging strategy by using financial products such as forward contracts. You can consider the options of natural/selective/ systematic hedging to mitigate the risk in dealing with foreign exchange.
After you have implemented these five tips during your international business expansion, you will have the requisite knowledge of things on your hands. You will be aware of the most sustainable sales channels for the company.
You can think about adapting your manufacturing capabilities for identifying the correct distributors. It is also necessary to have a strong supply chain process in place and a risk management plan in place for identifying and tackling other risks in the supply chain before they become a headache.