Preparing your business for overseas expansion is exciting, stressful, and a little terrifying. It’s definitely going to take you and your colleagues on an emotional rollercoaster. To better prepare yourself for the battles and victories ahead, we compiled five tips to make your overseas expansion successful. Most importantly, remember that you’re not in this alone. There are many experts that can help you throughout the journey. Let’s get started:
1. Ask Yourself: Is my Company Ready for Overseas Expansion?
This simple question is sometimes taken for granted when businesses are preparing for global growth. It’s important to be honest with yourself and take the time to ponder the implications of an overseas expansion.
You need to do your research and test the market before opening your doors in a new country. Plus, there are many compliance and regulatory issues to consider and every country varies, so you’ll want to work with a trusted partner that’s in-country or use Foreign Subsidiary as a Service (FSaaS) to make your startup process simple.
Things to do before taking the leap of faith into a new country:
- Buy a plane ticket and visit your target country. While there, pay attention to businesses in your industry. Notice any cultural differences and be ready to adjust your global strategy to accommodate your new audience.
- Understand your new consumer base. Are you positive that a customer base exists in your new country? Just because your product or service sells well in the States doesn’t mean that it will automatically succeed in a new market. Work with a partner that knows the customer base and culture to determine if your brand will work.
- Test the market. Sometimes the only way to tell if your product or service works is to test the market. Use FSaaS or International PEO to establish a legal presence in-country and get to work.
2. Work with a Trusted Partner
There are a number of hurdles companies face during an overseas expansion. Labor laws and regulations change, taxes are complex, and there’s a new culture to maneuver. Smart business owners understand that they don’t have to face these obstacles alone. One of the best ways to expand globally is with a trusted partner.
“Surround yourself with the best third-party advisors possible to meet all compliance needs as well as minimize headaches,” said Scott Buxton, VP of Finance at DataDog.
Failing to pay attention to in-country operating procedures can lead to costly liabilities. After misclassifying one independent contractor, one company lost nearly $350K. The company treated the contractor like a full-time employee in the foreign country, which is a huge risk. As a result, the contractor fought the working status in court and the employer was subject to paying back taxes and entitlements.
Whether you engage a consultant to advise, a local attorney to protect, or team up with a company like Velocity Global to manage your entire hiring process, you can avoid serious and very real pain points.
3. Plan Your Overseas Expansion Approach
Now that you understand the risks involved with overseas expansion, you can start preparing a global business strategy. Understand, first, that your local strategy may not apply to your new venture. Many companies are practicing an agile approach to international expansion.
Practicing the lean approach to global operations is a great option for smaller companies that are brand new to the market. By taking smaller, rapid steps that help prove their model before making the next investment, these companies minimize resource commitments and maximize their return on asset rate in shorter times.
Ways to stay agile in overseas expansion include:
- Remain flexible and open to changes.
- Update your global strategy after learning from your market test.
- Allow your international team to learn as they go. Think about your global expansion as an internal startup.
4. Develop an Action Plan for Failure – Just in Case
One of the pitfalls for many small to mid-size businesses is the lack of a long-term, concrete strategy that includes what to do if the business fails. We get it. Thinking about the demise of your business isn’t something anyone enjoys but businesses that succeed in the face of adversity are typically proactive, rather than reactive.
When you start to create your global operations strategy, develop action-oriented decisions. Also, a proactive strategy that seeks to go after multiple markets at the same time leads to a higher adoption rate internally and a greater chance of international growth.
In addition to a strategy for accelerated, actionable growth, include a plan of action that comes into play if operations fail. Ask yourself:
- What is our action plan if the market fails to adopt our product or service?
- How do we adapt our services to meet market demands?
- How quickly can we leave the market?
Using FSaaS is also ideal for companies that need to get out of a market fast and affordably. It’s better than establishing a foreign subsidiary, which can take months and thousands of dollars to dissolve.
5. Check-In Often
Keeping in contact with your overseas team keeps engagement high and ensures that operations are running smoothly. As a leader in your organization, it’s your responsibility to let your team, both locally and internationally, know that you’re available if they need help.
Corporate culture is just as important in your global office so keep lines of communication open, be transparent, and celebrate wins.
The best way to check-in is through pre-scheduled meetings via services like Skype and GoToMeeting. Scheduled meetings keep conversations organized and give your employees time to plan and prepare, which leads to increased productivity.
We’re here to help. If you have questions about overseas expansion and want to discuss FSaaS or International PEO, give us a call!