Global expansion is an increasingly promising option for companies that want to grow both revenue and influence in new regions. International markets open up the door for new customers and talent acquisition, creating opportunities to drive more revenue and innovation. But before companies decide to take on new international markets, getting a firm grasp of what global expansion means and involves is essential.
So, What is Global Expansion?
Global expansion is taking operations into new, overseas markets. Companies establish a legal presence in the new country through a foreign subsidiary or an agile alternative that we will explain later in this post.
Despite its popularity, many companies find it difficult to expand overseas because of compliance and regulatory barriers. In fact, 57% of U.S. companies have cited a restrictive regulatory environment as the main barrier to globalization.
While there certainly are challenges involved with global expansion, it is a vital part of a company’s strategy to obtain desired growth. According to Rutgers, 80% of executives believe that a company needs to enter an international market to achieve long-term growth. And, according to 50% of U.S. and UK tech firms, growing their customer base is the main driver of global expansion.
Global Expansion Best Practices
To help your team get an idea of what it takes to expand overseas, we’ve compiled a condensed list of best practices for global expansion. First and foremost, we suggest putting together a strategy for international growth. Your company’s global expansion strategy should highlight goals, target markets, and cultural connections to keep your headquarters aligned with your overseas operations.
Use an Agile Approach to Global Expansion
Take comfort in knowing that your company doesn’t need to fully commit to a country by establishing a foreign subsidiary. Your team also doesn’t need to rely solely on international independent contractors to get work accomplished. In fact, choosing to go with independent contractors is incredibly risky—and potentially very expensive. However, choosing International PEO (Professional Employer Organization) as an agile alternative helps you avoid the risks of misclassified contractors, and provides much more flexibility than traditional entity establishment.
Working with a third-party provider to handle regulatory requirements and difficult tasks like international payroll can help your company establish itself in a new country quickly and efficiently. Basically, avoid investing in large assets and commitments until you’re certain that your move will be a success. If for any reason your target market does not meet your needs, International PEO lets you exit that market quickly, without the costly and incredibly slow process of tearing down an entity. By taking smaller, flexible steps in international growth, you’ll typically find greater results.
Embrace the Culture During Your Global Expansion
Your target country’s culture will be a key piece of your global expansion strategy. Before committing to a market, test the market through personal research.
Whether it’s you, your business partner, or the entire team, the decision-makers in a company need to visit the target market and spend some real time there. While overseas, learn about the customs, people, places, and successful businesses. This research should also include a clear investigation of your competitors.
The primary cultural differences you’ll find relate to language, religion, management style, gender discrimination, skills, personalities, and education. In order for your company to find success, you’ll need to determine if your firm can adapt to the cultural differences and determine how to do so in a way that stays true to your business.
One of the most effective ways to learn the culture is by establishing partnerships with local, trusted experts. Find an international partner that has access to an extensive network of potential customers and employees. This helps you quickly gain access to the market when you establish your legal presence. Your partner may end up developing new business opportunities if you’re not readily available to travel overseas, which makes their network incredibly valuable.
Consider also developing relationships with local legal providers, human resource leaders, benefits brokers, and recruiters. Plus, consider various strategic business partnerships with local companies. A company that complements your service or product may be another way to get quickly introduced to the foreign marketplace.
Rely on an Experienced Team
With capabilities in over 185 countries, our team of expansion experts can help you create a legal presence in virtually any market. If you need assistance with your global expansion strategy, or simply want more information to determine if this type of growth is the best option for your company, reach out to Velocity Global today.