International expansion is a risk. There will be language barriers and cultural misunderstandings, you could face recruitment and onboarding difficulties, and there might be economic and legal complexities.
If you want to play it safe, don't leave your home market. But if you want to drive growth by selling your product to a global market, perhaps you should start considering whether the time is right to expand overseas. Of course, wanting to sell to a global market but not being ready to do so is a recipe for disaster. However, analysing the seven indicators below will help you determine if now is the right time.
1. You have been successful in your national market
How have you faired locally? Hopefully, you have established a solid customer base nationally by providing a better service that the market loves and being more innovative than your competitors. Check that you have expanded as far and wide as possible in your home country, reaching all those untapped domestic market areas.
If you have already done this, you clearly have a robust business model and the business acumen to succeed. Expanding business overseas by targeting the right international market could be the next logical step in your business development. However, when launching overseas, it would be wise not to replicate your national strategy but to consider the countless cultural and legal differences in the target geography.
2. You already have happy customers
Happy customers mean your business is doing something right. Perhaps it’s your great marketing; perhaps it’s your innovative product; perhaps it’s your excellent tech support; perhaps it’s all thee.
Regardless of your winning formula, you know what it takes to make customers happy and build a loyal following at home—and this may mean you are well-positioned to expand your business internationally. However, expanding to foreign markets always requires a lot of research, competitor analysis, and an understanding of how to communicate abroad (even if they speak the same language).
History is littered with companies believing in their success without understanding the foreign market or tailoring their product to unique overseas needs—think Target's failed expansion to Canada, Starbucks's failed expansion to Australia, or Tesco's failed expansion to the US.
3. You have a clear vision and goals
Similar to your successful national strategy, an international strategy requires a clear vision and precisely defined goals. Are you looking to build the same brand and offer the same services in the target market, or will your offer a different product to reflect the local market's tastes? Having a clear vision and goals will serve as a guide and help you track progress.
However, before considering the vision and goals of overseas expansion, it's a good idea to ensure you are hitting your targets domestically. If you're not, it's probably wise to focus on strengthening sales nationally before thinking about moving overseas.
4. You have scaled nationally, but growth has slowed
If you have executed a slick business plan and scaled your business significantly in your local market within the past five years, it might be time to think about hiring talent and expanding overseas. Business might be performing well, but driving further growth nationally could be difficult.
International expansion, however, could be a tremendous opportunity to access previously untapped markets and for exponential growth. After all, if you have succeeded nationally, your offering could be a roaring success overseas.
The hardest part of international expansion and accessing fresh opportunities is working out how to establish your presence in the target market. There are many ways to do this, such as setting up your own entity or partnering with a local firm. Every method has pros and cons, but ultimately, the right decision depends on your appetite for risk and how much time and money you are willing to spend on the expansion.
5. Overseas markets are showing a lot of interest
One clear indicator that you are ready to expand overseas is when demand in foreign markets increases significantly. Until now, you have most likely focused your marketing efforts on your national customer base. However, international customers beginning to buy your product or service (or just inquiring about it) is an excellent sign that there could be further international demand.
Of course, we don't mean that you should immediately start sending your team abroad just because you had one inquiry from a foreign email address. But a steady stream of international customers making purchases or requesting information over a sustained period could be a helpful indicator that you should start researching your expansion.
When investigating potential markets in which to expand, it’s always a good idea to follow the demand. However, there are a host of other important considerations, including economic indicators, established international competition, online behaviour, business-to-business potential, culture, and demographics. What country would be the best fit for your business, and does this place have easy access to additional markets?
6. You are excited about expanding business overseas (but understand the challenges)
This one sounds obvious, but to expand internationally successfully, you need to be motivated to do so. It will undoubtedly be challenging and never straightforward, but (if done correctly) the growth potential is enormous.
After establishing that your product or service will work in your target overseas market, analysing the hurdles is a good place to start.
- What are the language barriers, and how will you overcome them?
- How will you attract, recruit, and onboard employees?
- What compliance issues will you face?
- What are the differences between US employment law and foreign employment law?
- What are the risks?
- How will you make payments abroad?
There are many details to ponder that cumulatively add to a lot of work, taking considerable time and effort and deviating resources from your main objective: expanding business overseas. And getting bogged down in so many details can often do something worse—zap enthusiasm.
Therefore, to preserve your initial excitement, it is essential to avoid getting mired by complexities. Engaging an experienced overseas global expansion partner can help you focus on the expansion while someone else minimises risk and complies with foreign laws.
7. You can balance local presence with international oversight
For your overseas expansion to be successful, you need the right team abroad. This could mean sending your best people from head office, but doing so has many risks: They are your best team at home but might have little-to-no understanding of the target market. And what happens to your domestic operation with your best team abroad?
The best solution will likely be having a local team abroad that understands the market, balanced with international oversight from the head office.
You could open a virtual subsidiary that enables you to expand overseas without the cost and risk of a traditional subsidiary company—this gives you complete control over your international operation. And your local partner can help you operate efficiently whilst handling specific aspects of your operations.
However, finding the best individual approach for your business is essential if you decide to operate abroad. Different companies' needs and desires vary, but all will want to approach expansion sure that they can meet the scaling demands of an increased customer base.
Scaling your business through overseas expansion is a profoundly personal experience. There is no one way to know you might be ready, but there are many indicators that the time might be right.
While there is no easy route to a successful overseas expansion, choosing a suitable method for overseas expansion, controlling what you can, and minimising the risks put you in a solid position to succeed and crack the target market.