Maintaining a successful business in its country of origin is a difficult task, and expanding said business to a global network can seem more of an impossibility than a viable challenge. There are various advantages to taking on globalization: a diversified consumer base, increased revenue, and greater access to qualified talent across the world that could help you better your product, just to name a few. However, this endeavor is not without its disadvantages and fair share of work. If you’re looking at taking your business to the next level and expanding your target market, take these tips and concerns into consideration before pulling the trigger.
Explain Your Reasoning
Before taking the leap, you need to have a comprehensive view of your reasons for expanding on a global level. Are you looking to take advantage of an international fan base that’s been hankering for your brand or product? Before taking the leap, you need to know exactly why and how an expansion will work for your particular business model. From slowed sales in your original sector to filling a niche where it hasn’t yet been sated, taking the time to draw up a specified business plan will save you stress and money down the line.
Varied Market Desires
If you’re expanding outside of your original target country, you’ll need to ensure you market and tailor your product to a new batch of consumers. For an example of a failed international expansion, look at Groupon’s efforts in China. The company is an immense success in the U.S., offering deals on a variety of products and services, but when they tried to recreate that success within the Chinese market, their efforts failed. Why? Some critics point to their lack of awareness of the Chinese consumer market. Using foreign staffers who didn’t have the knowledge of what Chinese consumers wanted actually proved to be the company’s biggest mistake.
To see a success, look at Tipsy Elves. While their original audience was in the United States, the themed clothing company expanded their target consumer base to be worldwide. For example, instead of only offering Tipsy Elves American flag clothes, the company produces clothing specific to other countries and events, along with offering their general items like ugly Christmas sweaters and even ski suits. This helps them tap into a wider target audience and continuously expand their business in profitable areas like the U.K. and Canada. They saw a niche, and they filled it, all while appealing to varied markets.
Understand Your Destination
As mentioned earlier, Groupon didn’t understand the Chinese market, and in this ignorance, money was lost. Before setting up a new business plan or location in a foreign country, make sure you are educated on local policies, culture, and desires. You’ll need to take the time to become versed in local culture and ways of business; from business meetings to consumer outreach, it’s essential that you head in with a good idea of how you can best communicate your brand and ultimate company aims.
Another good example of this would be if you were a local car dealership or auto repair shop. In most cases you are probably thinking that your business is limited only to local customers and that there is no way to have a global presence. However, the truth is that anyone can become a global leader and authority from anywhere. Just think about how many people are searching through Google and YouTube everyday for videos on how to do an oil change, fix a flat tire or anything else a repair shop might do.
In short, any localized business can simply take the knowledge they already have and put it on the internet for everyone to see. While this may not result in new customers coming to your physical location, it will definitely grow your reach and brand in the process.
Plenty of Capital
Expanding your business to compete on a global level takes a great deal of capital. The cash will flow out quickly and steadily as you attempt to grow business roots in another country, but the hard part comes in balancing that flow of capital while remaining on task with your budget. If you don’t have the money to fund it yourself, you’ll need to inquire about other forms of loans and investors who may be willing to put money behind your venture. Whether it’s peer to peer lending from a website like Propser.com or a traditional bank loan to get your new branch off the ground, it’s always a good idea to speak with several financial advisors to determine how you will best be able to afford your efforts.
It’s a Marathon, Not a Sprint
Don’t expect to see profit right away; if a quick increase in income is the ultimate reason you’re expanding, reconsider your options. You’ll need to start all over again with distributors, vendors, and manufacturers, not to mention find the appropriate staff to cover business ends from across the globe, so give yourself ample time to hit all the marks.
Expanding your business internationally is no walk in the park, but if you’re considering taking this step for your company, use these guidelines as a jumping off point to determine the viability of this course.