Our previous post in the Ultimate Guide to Global Expansion series revealed five significant benefits of global expansion. Now that you understand what businesses gain from globalization, one question remains: What is the best way to get started?
The first step to successful global expansion is a comprehensive strategy that places businesses in a position to make global growth a reality. Expanding into the global marketplace is intimidating, so we compiled six steps to help your company build a sustainable, comprehensive growth plan.
Step 1: Develop Entry and Exit Tactics
Before entering a new country, you must be familiar with entry and exit requirements in your target market. A solid entry plan enables companies to act quickly when it is time to get new team members up and running in a new location. An exit plan is just as critical because, depending on the global expansion method, leaving a market will put financial and time constraints on internal resources.
In China, for example, it takes up to two years to receive government approval for a business to shut down its entity. A global expansion plan that started as a great idea quickly becomes a costly and time-consuming error when you are unprepared for the complex requirements for entering and exiting global markets. Companies that take a more agile approach to their global expansion avoid this mistake, allowing them to enter and exit almost any country with less time and financial commitments.
Step 2: Utilize an Agile Approach
An agile global expansion approach is a plan that takes small steps towards a long-term goal. When businesses use an agile methodology, they can quickly enter and exit almost any country—while avoiding the lengthy and complicated entity setup process.
Agile expansion allows you to adapt your business practices to better thrive in a foreign market. Before establishing infrastructure and fixed assets, your company must test out the market to ensure it is viable, and there is potential for long-term success.
Step 3: Conduct Market Research
After a company drafts an agile global expansion plan, the next step is to test product viability in the target market. Before fully committing to a geographic location, take time to do proper market research. Work with an in-country market research firm or send internal teams to conduct focus groups and fully evaluate how local buyers perceive your product or service.
Keep in mind that businesses need to adjust marketing and communications plans as a part of their global expansion strategy to appeal to their new audience’s expectations and desires. These adjustments include editing brand messaging and service offerings to ensure they align with cultural differences.
Step 4: Select A Global Hiring Method
Depending on a company’s unique situation and goals, there are four main global employment options:
- Use foreign independent contractors
- Register as a Non-Resident Employer
- Establish a foreign subsidiary
- Partner with an International Professional Employer Organization (PEO)
Misclassified workers lead to serious financial consequences. You can avoid these risks by thoroughly researching employment laws in your target market and hire accordingly.
In our next post in the Ultimate Guide to Global Expansion series, we discuss each of these hiring methods in-depth and reveal the benefits and challenges of each one.
Step 5: Plan to Hire Local Nationals
One of the leading global expansion drivers is access to top talent. A talented, diverse workforce is a company’s best resource in a foreign market and enables businesses to access critical skill sets that are not available in their domestic markets.
Besides access to experienced workers, hiring local talent provides vital insights into the country’s unique business culture and employee expectations. Understanding these cultural standards, and how they differ from your headquarters’ market, enables organizations to find long-term success in a new country.
Step 6: Partner Up
Before you choose a foreign market, there is a myriad of local laws and regulations you need to understand. Thoroughly evaluating these laws is intimidating, and it puts a significant burden on internal legal, HR, and finance teams.
Ignorance of these laws and regulations lead to severe fines, legal action, and loss of productivity. Hiring misclassified employees, for example, leads to hefty fines, reputational consequences, and even jail time. These penalties are common, but companies can avoid them entirely by partnering with a global expansion expert.
Learn More About Successful Global Expansion—With Less Risk
A trusted partner helps you mitigate risk and anticipate problems before they turn into considerable headaches—so you can save time and focus on growing your company.
Velocity Global’s International PEO solution enables businesses like yours to quickly expand into 185 countries and counting, without the time and financial commitments that a legal entity requires. To learn more about how International PEO will benefit your business, download the full Ultimate Guide to Global Expansion, or contact our team today.