Ready to Expand Abroad? What Companies Need to Consider

‘Going global’ is the ambition of countless businesses and the dream of many an entrepreneur. The motivation may be to grow your brand image on an international scale, take advantage of a new gap in the market or more investor-friendly taxes and regulations, or a more personal motivation. Unfortunately, there can be many potential pitfalls along the way, and you should never expect expanding overseas to be an entirely painless process! Done correctly however, the possibility to grow your profits while helping another territory boost their own economic growth can be massively rewarding. If you think the time has come for your company to expand abroad, then here are the things you need to consider carefully before making your first move.

Thorough market research is essential

One of the biggest challenges when heading up a company that you’ve created from scratch and invested time and money in is staying objective about where you should expand abroad to. Perhaps you’ve always dreamed of taking your company to the country where you were born or the place you’ve always dreamed of retiring to one day. Perhaps your interest in expanding to a region has been sparked by getting word of a gap in the market there, and now you’ve got your heart set on the idea. If you want your expansion to be successful, however, you need to take preconceptions and emotions out of the equation for the moment.

This means conducting thorough market research – not just in the countries or territories that sparked the idea in the first place but in alternative locations, too. Market segmentation analyses, gap analyses against local products, and determining the size of the local market can all go a long way to informing your decision. You also need to bear in mind that importing your products will likely mean they need to be priced higher than competing local products (at least until the operation warrants investment in local production) – are people still going to be interested in purchasing it?

What infrastructure do you require?

Once you’ve established the locations that make sense for your product, you can narrow the list down further to those locations that have existing infrastructure which you’ll find useful in your expansion. If your production requires a lot of electricity, for example, you might want to shy away from territories prone to power outages, or shift your focus towards countries that offer renewable energy alternatives. How your products will be distributed, what financial and banking facilities you require, and whether the region can provide appropriate labor are all considerations you need to take into account. If a territory ticks all of your boxes except this one, then it might be worth getting in touch with local government to see if you can work together to address the issue.

Does the location actively support foreign investment?

If it’s your first time setting up shop overseas, then the process to expand abroad is going to be a lot less painful if you choose a location which encourages and provides support to companies wanting to invest there. Setting up a company in Mauritius for example, where the government has a dedicated Board of Investment and where there are providers whose sole function is assisting businesses with the transition and advising them each step of the way, which can be hugely beneficial.

How easy is it to put together a local team?

Even if you speak the same language, understanding the customs and culture of a new territory is not something you should try and tackle without local know-how. Partnering with local executive leadership organizations is your best bet, but if this isn’t an option then you need to consider how much time and effort would go into putting together a local team. The benefit of having one, however, cannot be overstated. Aside from their understanding of the culture and language nuances that might otherwise escape you, a native team will be able to offer insight into existing competitors in the region, what kinds of marketing would be most effective for the territory, and what the local people’s attitude towards international brands is.

Last but not least – Can you afford it?

At a minimum, you will need to prepare a 3-year budget and 12-month business plan to get a good grasp on what the cost to expand abroad is going to be. Bear in mind that you and other members of your management team may need to travel back and forth frequently, currencies may fluctuate, and the local economy may mean sales aren’t what you hoped for. The bigger your margin for error, the better prepared you’ll be to deal with setbacks and keep the project on track. With enough preparation, research and analysis however, there’s no reason your business can’t thrive in a new location – or the one after that.