Are you thinking about expanding your business overseas? Is your business ready to make the move?
As your business grows, we know that expanding international markets to boost your growth overseas is an attractive prospect. You’re drawn by the idea of new clients and new opportunities. When you do start thinking about exporting or setting up operations abroad, it is critical however to take a step back and make sure your business is ready.
This article will go through the eight steps you need to make sure your business is ready for markets abroad.
Be Clear on Why
Ask yourself why you want to expand to international markets? Make sure it’s part of a carefully thought-out growth strategy. Many expansions fail because they started from a chance contact at a trade show or a request received via the Internet but didn’t match the company’s goals or capacities.
Get Buy-In From the Team
Be sure your team and stakeholders are on board for a long-term commitment to your project. Developing a market often requires more time and resources than companies expect. If owners, senior managers, bankers and key suppliers aren’t all on board, your commitment may fade, jeopardizing the venture.
Do an Internal Check-Up
Take a close look at your readiness, including an evaluation of your current resources, strengths and weaknesses. Make sure your company’s fundamentals are strong, including financial management, sales and marketing processes, innovation strategy and operational efficiency.
Line up Financing
Be sure you have the financial capacity to stay the course until sales start rolling in. Insufficient financial resources are a common problem in international expansions and can have a serious impact on your entire company.
Start-up costs for foreign ventures are often higher than planned, while revenues are lower, especially during the first months. For example, payment terms are often longer in transactions abroad.
Avoid the common mistake of using your everyday cash to finance your international project instead of getting a business loan to cover expenses. The consequences can be an unexpected cash squeeze and a last-minute scramble for financing, which won’t impress lenders and may lead to unfavorable terms.
Research Risk Insurance Options
Expanding into international markets can involve credit, political and currency risks . These include non-payment by a buyer abroad, expropriation of your assets by a government abroad and fluctuation in the value of your currency relative to the target market’s currency. Insurance is available to help exporters mitigate these risks. It may also help you to get additional working capital from your financial institution to support your export expansion.
Work on Your Soft Skills
Take time to hone your soft skills—your patience, communication skills, and cultural sensitivity. These are important for building trust with partners abroad and helping you to adapt to another business culture.
Appoint and Reward a Project Manager
Assign a senior member of your team to oversee your expansion project, and compensate that person, in part, based on the performance of the venture. This person or team will monitor all departments for deliverables, cultivate long-term relationships with partners abroad and be held accountable for the project’s success.
Don’t Wait Too Long
Avoid the mistake of waiting until your product is “perfect” before you consider exporting. Your international competitors won’t wait for you before expanding onto your home turf. Besides, experiences gained from an international venture could help you improve your offerings both at home and internationally.
Entering into new markets is an exciting part of business but you should make sure the business is ready to do so. It can be a great opportunity for growth and exposure but should be managed properly. Following these eight tips can help you launch your business overseas with confidence and set the business up for success.