We live in a global world, so much so that many business schools are discontinuing their “International MBA” programs, for the simple reason that all business is international. Most businesses import from, export to, or work directly in countries other than where their headquarters is located. For expanding your business abroad, here are some general ideas about how to make the best of your forays into new markets.
Know the market before engaging in business abroad
There are roughly five major regional markets in the world: the Americas, Europe, Africa, the Middle East, and APAC. Typically an organization knows they want to be in one (or more) of these regions; it’s the decision about which specific country markets they should be in that is the tough part. Check out 5 emerging markets ready for growth in 2016.
One thing to look at first is the competition: Who is already there? Who’s been successful? Who’s failed? When you know who you’re competing against, and look at their track record in a region or specific country, you’re starting with a leg up. For example, say you’re expanding into SE Asia and you see that a competitor failed in the Philippines, but a second is thriving in Thailand. The reason for this may be geography (Thailand is centrally located to the rest of the region), culture, or simply the nature of your product or service.
Knowing the market also includes knowing the basics of the country. Know the demographics and people, as this will help define your marketing and sales maps. Whether they are local nationals or expats who’ve lived in the country for some time, hire an experienced team. A team that knows their information thoroughly and the language gives your business a true upper hand.
They say that you should hire someone who knows a market before you hire the person that knows your product. The logic behind this is you can always teach someone about your product or service; it would take years for someone to understand the intricacies of a foreign market.
Testing the waters
Not so long ago, chances were that if you were a multinational company, you were also a large company. These giants enter markets with big budgets, poised to set up entities and hire tens to hundreds of employees.
With an increasingly globalized world, via the Internet, cell coverage, infrastructure, etc., more and more small- and medium-sized enterprises (SMEs) are sending their business abroad. Having smaller budgets, these companies must be cautious about entering uncharted territory. Perhaps the biggest hurdle for companies entering new markets is the task of learning and understanding local legal codes and customs.
A way to clear both of these hurdles is through exploring new markets using the international PEO model. The PEO model is both cheaper and faster than setting up an entity. PEO allows companies to enter a market with one of more employees on the ground hired locally and compliantly. It is Velocity Global’s job to understand labor laws, customary practices, and nuances of every market. We take away the regulatory and financial stress that comes along with expanding your business abroad.