Ready to Take Your Business Global? Follow These Steps

06/23/2022

With a potential recession looming, expansion into new markets can help grow your revenue and increase your competitive advantage.

The world feels topsy turvy at the moment - with inflation rates rising every month, energy prices rising, a cost of living crisis and now, a potential recession looming in 2023. As a business leader, your first instinct might be to restrict budgets, cut back on product development and postpone/stop expansion plans. 

But the reality is that a recession is often the best time to expand your business into new markets. Not only will global expansion open the door to new revenue streams, but it'll also help you cement your position as an industry leader and gain the advantage over your competitors. 

The data supports this. According to the Borderless Business study by Standard Chartered, a majority of U.S. companies expect an increase in global expansion over the next 6-12 months. In fact, 49% of the US companies surveyed saw their best growth opportunities outside of their home region, compared to 35% in June 2020. 

Global expansion
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Fail to prepare or prepare to fail

Now, that doesn't mean things will be easy and the revenue will come easily and quickly. It won't. So, make sure you understand this. 

But it will come eventually and it will have a lasting impact on your business as a whole. You just have to be willing to put in the work and be patient to reap the rewards. We've outlined some key steps you need to take to make your expansion a successful endeavor. 

Benjamin Franklin said, “By failing to prepare, you are preparing to fail." Those were wise words and ring true even today. 

A big part of planning and preparing for your global expansion requires researching the size, scope and operations of buyers in other countries. 

Before you do anything, you need to ask yourself some important questions about your business and goals. And you have to be prepared to fail - and have a plan for what you'll do if that happens. While you might think doing so is a bit pessimistic and jinxing fate, it isn't. It's making sure you don't get surprised if things don't work out and are able to bounce back and keep the rest of your business running smoothly and growing. 

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Narrow down your choice of countries wisely

Deciding the time is right to take your company global can be a great feeling. But that's just a feeling. Now, comes the real work. 

You need to be careful about which country/region you choose to expand to and do as much research, due diligence and competitive benchmarking before you decide where you're going to land. 

Here are some questions you should ask yourself to help you choose:

  • Which countries/regions have good access to the specialist talent we'll need to set up and grow our business?
  • Is there a serious product gap and high demand/need for our products/services in certain countries? 
  • Which countries have a stable economy? What are the country’s macroeconomic indicators such as, GDP, CPI, exchange and interest rates combined with a firm-level analysis?
  • Do certain countries/regions have regulations that would make it difficult to build and/or sell our products? 
  • How expensive will the logistics be for setting up an office in certain countries/regions? What's the most cost-effective country/region to set up, where there's also a market gap and high product need/interest? 
Global logistics

Perhaps you want to expand slowly. If that's the case, you could pick a country that's geographically close to your own so you don't end up overspending. 

If you're a very hands-on CEO and want to handle as much of the business as possible, but don’t know more than your native language, you'll likely want to pick a country where they speak your native language. Of course, you could also hire local experts and specialists and let them focus on building the new business in that country and focus your efforts elsewhere. 

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Benchmark and learn from other businesses

Now that you’ve narrowed down your list of countries, you need to research the business sector in these areas.

Look specifically at businesses similar to your own. They don’t have to be exactly the same, but the more accurate they are to your own business can help you compare possible success rates. We suggest running a credit check to compare how well they are performing. Check out to our “Using Credit Reports To Protect Your Business” section further into the article to learn how.

You may think that “no one is doing what I’m doing”, but in reality, there will always be a connection somewhere. Look for the similarities and draw the data from there.

This stage can take a lot of time and money as you investigate the businesses' wants, desires, and spending habits. The more accurate you are, the more likely you will understand your new demographic.

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Assess the impact on your business

It's not enough to have a hunch or guess that global expansion will work in your company's favor. You need to do as much research as possible to get a clear estimation of how the expansion will affect your business - either positively or negatively. 

Some of this research will include:

  • Market segmentation and product gap analysis to see if your products/services will sell in that market
  • Target buyer research 
  • SWOT analysis to see how your business would stack up against competitors#
  • Estimated time it will take to reach your target sales numbers
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Make sure it's a good cultural fit

Build relationships with suppliers and sellers in your chosen country(ies)

To set up shop in a new country, you'll have to spend some time there and possibly live in the area for years. To manage this move, you need to be comfortable in the country.

Each country has its own culture, which includes different business etiquette. In China, for example, it's customary to provide a gift to someone you're conducting business with. But in the US, that can be seen as bribery and is seen as a no-no when doing business. In France, punctuality is considered a casual concept and staying late is more common than starting on time. 

Before committing to a country, make sure you understand their cultural values, norms, rules. Don't expand into a new market/country and expect to do things the way you've always done them back home. That's a surefire recipe for failure. You'll need to be able to adapt, adjust and accommodate the local cultural norms, especially when you hire local talent to grow your business in that market. 

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Get a good sense of the local infrastructure

 

Depending on what type of business you have, you may need to transport a lot of products to customers via lorries, trains or planes. So, you'll need to consider the country's road systems and navigation expectations to understand how the costs and type of transport will affect your business.

More time might be needed to get your products from destination A to destination B, especially if the transport has to travel through many different countries. The cost of travel may create a financial barrier you were unaware of. On top of this, you'll likely deal with customs in the transition. Make sure you research how each country deals with imported goods, including finances, time scales and restrictions.

Consider your route, the safety of that route and the time it takes to complete the route too. At this point, you're just sketching ideas, so the finer details don’t need to be exact. But if you don’t consider these scenarios, you may end up spending more money or time than expected.

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Create a contingency plan

While you're mapping out your expansion plans, your current business may need to prop up any loans or agreements you take on in the new market.

If your expansion plans fail, then your original business could take a hit too. Remember that “roughly 20% of new businesses worldwide fail within their first year”,

Whilst creating an expansion plan always have a contingency plan too

Small businesses are the most likely to fall into this trap, expecting the transition to continue smoothly forgetting the risk to their own business.

Your contingency plan should contain an “It’s not working” red line, which tells you that you’re losing too much money in the transition. Understanding how much risk you are willing to take, and stopping continuation before it harms your business too much, can help you stay afloat should the worst happen.

Now that you are sure of the country you’re picking, and you have a safety net to protect you should your expansion fail, you can begin your journey of going global.

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Create a detailed strategy

 

Generally speaking, there are 3 types of global expansion strategies. There are “Standardization”, “International” and “Multinational."

Standardization

Standardization is when you sell the same product, as it is, in every location. This means you don’t change the labeling, the selling technique or anything else. This can make creation and transportation easier, as countries can share products when supply is low.

International

International is when you sell and buy products from other countries. Your country of origin continues to be the main area in which your products or business reside, but you make contacts with businesses around the world. This can give you more control if a country's financial market collapses.

Multinational

Multinational strategies are when you reshape your business to sell better in each country. 

For example, in western countries, individualism creates a culture of unique identities. Ads match this idea suggesting their products will make you more interesting and special. While in Eastern Asia, concepts of collectivism and community are strong, so branding your products to reflect heritage would be more profitable.

Understanding how you want to market your product or service means creating a detailed strategy based on one of these three ideas.

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Make sure your business structure is international-friendly

When you create this second head to your business, you need to ensure a structure is in place to allow the two heads to speak.

A solution that works in one country may not be helpful in another. Allowing each area to make its own decisions, but still communicate openly with the HQ office will allow each sector to edit and adjust to the new cultures without delay. 

Ensuring open communication will also allow each location of your business to see how they are coping with changes, and learn if their adjustments can be used elsewhere. They can understand how different directions may be needed to overcome obstacles.

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Get familiar with the legal system and regulations

Every country has its own legal system, which you need to navigate through. Ideally, you should hire a business lawyer in the country you're planning to expand to. They can teach you about the laws of the country, what taxes you will need to pay and what is considered a legal product.

If you have a large business, it's wise to invest in legal representation to help with any legal considerations or instances that may occur. If you have a small business, then you should hire a lawyer every time a new product or service is introduced.

Just as you should be aware of the legal system inside the business you have chosen, you need to be aware of the government laws too. This includes how much you should pay your employees, the taxes you should be paying, the code of conduct you need to follow, and the country's employee rights.

International law

The best people to talk to, when it comes to business, are the successful business owners in the country you are joining. Talk to these businesses, especially ones that are in your sector, and ask them; how they target their audience, how the months or seasons change their demographic, how pricing matches public opinion, and what to be aware of.

These local champions will have all the experience needed to be successful in their own country, so make sure to talk to them and use their knowledge wisely.

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Find and forge relationships with local suppliers

Just as you should develop relationships with the experts and successful businesses in your sector, you should be connecting with the suppliers and sellers that are sought after in the country too. “Businesses that cultivate partner relations with lead generation and coaching are 63% more likely to accomplish their revenue goals.

Creating these relationships will give you better insight into how businesses run in these countries. You may even develop reduced rates with the suppliers and sellers as a beginner’s favor. This, of course, isn’t guaranteed, but building up relationships can help you develop more lucrative deals as you grow.

Hire a local interpreter to make things easier

If you already speak the language of the country, then hiring an interpreter may not be needed. That being said, you may still need a cultural interpreter to help you bridge the gap in social knowledge.

Countries like the US, Canada, Australia, the UK and so on all speak English, but they all have their own lexicon and cultural connections which means context, and subtext can become mistranslated.

Hiring an interpreter for a culture barrier rather than a language barrier can also help you create targeted adverts that play with the country's sense of humor. Despite sharing the same language, the cultural differences could create insulting or humorous undertones that you wouldn’t have considered in your own country.

Secondly, if you don’t know the language at all, you should be hiring a translator. Period. It doesn’t matter if you are learning the language, or if your native tongue is spoken as a secondary language, being unable to communicate to the masses will hamper your success.

Choose a country that imports from your country

Although this section could arguably be higher up on the list, your choice of country is often safest when you consider who imports from your home. Countries that already import and take goods from your home location are more likely to approve of your products. This could be done with little change to the product or labeling.

Talk to other companies within your country who successfully export their products and how this process has affected their business. 

Find and work with a foreign distributor

Finding and securing a global partner is often the hardest part of the transition. Once you have a foreign distributor for your product, you can tell them your product and let them figure out who to sell it to and where the best location in the country is. 

They will buy a large quantity of your product, so they can distribute it to their stores or network. This means you just need to be in communication with one company, and yet you will still have your product in locations.

To find a foreign distributor, locate a business in your area which originated in a different country (specifically the one you are opening your expanded business into). 

This business will have a representative for your country. They will also have connections in trade groups and possibly other countries too.

Networking with businesses like this can help you find a foreign distributor and develop a working relationship with them.

Attend foreign affairs to get the lay of the land

Each country will have a foreign trade fair for you to explore. Find one which suits your niche, whether that's food, mechanics, music, agriculture, or anything else.

In these foreign trade fairs, you can talk to other creators and businesses which are expanding their companies to new locations and are “dipping their toes” into the collective pool to see how their concepts would translate.

You can use these fairs to network and learn about successful pathways and avoidable mistakes, while also seeing the competition and how to diversify your brand.

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Create an international billing system

Billing system

One of the main reasons why small businesses refuse to go global is due to the complex nature of currency exchange. However, there are many avenues that business owners can go down to reduce the work that comes with currency exchange.

For example, you can set up international billing systems, which can deliver invoices online in multiple different languages and currencies. These SWIFT (Society for Worldwide Interbank Financial Telecommunication) systems can include the needed tax changes and fee guides for the country you are working in. 

Finding the one which is best for your company means weighing up your current bank loans and deals, the exchange rates you are working with, and the laws of the country you are entering into.

Use your financial advisor to help you navigate through these waters.

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Localize your products or services

Look at the products and services being sold around the country you are expanding to. What type of language do people use when they discuss this product, what images are normally associated with the product, and what other connections have you noticed between the companies.

Using this knowledge you can make your product seem more local to the area. You can use the same language techniques, colorations, imagery, and overall atmosphere to create a sense of locality.

Using a focus group, you should compare your idea with the people of the area. See if you have hit the mark or missed the essence of the community vibe.

Getting the balance right, you should be able to create a product that feels natural in the country you are expanding to but doesn’t feel like a copy or cheap version of something already existing.

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Don't be afraid to revise your business model as you go

Once you have made a business model, you want to stick to it as much as possible. It is your guide in the sea of uncertainty. However, as you continue active learning and building your business in a new country, you will notice when some aspects of your model aren't working.

Do not ignore this issue. When you find that something isn’t working for you, learn from this mistake or slow progression and adapt. Don’t think that you have to stick to your business model, as theories don’t always become solid practice. 

As we have said time and time again - what works in one location will not work in another. Edit your methods as you go, while keeping your goals in mind. 

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Protect your business from financial, legal and compliance risks

There's nothing worse than being surprised by unforeseen financial, legal and compliance risks. Those can have serious consequences for your business reputation, while also putting your business at risk of being shut down due to excessive costs, payment delays and compliance fines. 

But the good news is that there are certainly ways to protect your business. Having the right data available will play a huge part in this. 

Three ways to protect your business are by using credit reports, creating a paper trail, and talking to the locals.

Don't sign any and every customer that comes your way - dig into their business credit reports

Given that 20% of new businesses fail, you can't afford to be lax about which customers you choose to work with. Don't just accept any and every customer. That might seem like the best thing to do, especially as you won't have a large number of customers in the new market at the start. But that could end up hurting you in the long-term. 

Always, I repeat, always do your own due diligence on potential customers. Run a business credit check to see how they're paying their bills, how many days beyond terms (DBT) late payments are and what level of risk they pose to your business. You don't want to end up signing a multi-year contract with a customer that's in the process of filing for bankruptcy, do you? 

Along with credit checks, you also need to run compliance checks on any potential customers. This will prove incredibly valuable as it will show you if a potential customer comes up on any global adverse media, PEP (politically exposed persons) profiles, sanctions lists and enforcement databases. If you end up working with Politically Exposed Persons or companies that have been sanctioned unknowingly, you could find your business being fined, which could halt any further international expansion. 

You also need to consider reputational risk. Many countries around the world have different working conditions and methods, some of which are frowned upon within the US. Would working with companies that employ such tactics affect your brand reputation at home if your customers were to discover this?

Credit reports

Create a paper trail for auditing purposes

When you make a deal with businesses, money will be exchanged. If a business is indebted to you, then they should pay you back within the agreed time frame. However, it can be easy to lose this agreement if you don’t create a paper trail.

To make sure payments are paid back in full and on time, create a paper trail of every deal you've created. This way, you can demand action from the country's financial schemes and protection, if the business doesn’t pay up.

This is where it can be helpful to review international credit reports. Not only will you get a clear picture of their international credit score and credit limit, you'll also be able to see how well they pay their bills and how many days beyond terms (DBT) their payments are. This information is a goldmine and can help you manage your cash flow better, prioritize debt collections and make more informed decisions on which customers to work with (and which to terminate relationships with). 

Get the inside scoop from the locals 

One of the most important ways to protect yourself is to know what everyone else is doing. What is common practice to someone else will be new information to you, and scammers will see you as an easy target. Ask the locals how they deal with common and basic threats, so you can prepare against risks you may be unaware of.

steve carpenter

About the Author

Steve Carpenter, Country Director, North America, Creditsafe

Steve Carpenter oversees business operations, sales, P&L, product and data. With an impressive 16-year tenure at Creditsafe, Steve has played an integral role in the company's international expansion efforts, spearheading global data acquisition and fostering global partnerships.

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