For a small to midsize business owner that has hit a plateau in their local market, global expansion into new territories can easily increase market success. Many companies consider global expansion to reach higher goals that may not be possible in their current economic environment.
If this sounds familiar, or if you’ve ever considered international expansion, check out our top tips for international market success.
1. Take Advantage of Available Funding
Securing enough capital for overseas expansion is a struggle for many organizations. When taking a business overseas, most companies don’t realize that there is available funding depending on the country and industry. Many local and international governments want to boost their economies, so they incentivize companies looking to expand into their region.
One of the biggest oversights companies make is not taking advantage of these funding opportunities and leaving money on the table. By tapping into government and private sources of financing, companies can receive available resources that can be a valuable asset when growing overseas.
2. Develop a Solid Global Strategy
Many companies fail to fully strategize for global expansion. One of the most important tasks is to create a plan for your product or service: Conduct research to determine the likelihood of success for your product or service in a new market.
Consider investing in market research to help get a better idea of the business environment. While most local products and services are embraced overseas, there are a handful of products and services that may not translate well into different cultures.
Let's look at Walmart as an example. Walmart operates approximately 10,500 stores in 20 countries is the largest private employer in the U.S. and Mexico. Despite its global success, Walmart dramatically failed after nine years in Germany. While there isn’t a clear reason why the retail giant failed in Germany, many believe it had to due with cultural misalignment.
By using an agile expansion option like an employer of record (EOR) to establish a presence in a target country, companies can test out their business plan to measure its potential for success.
3. Go Lean for International Market Success
Speaking of agile expansion options, it’s best to keep it lean when taking a business overseas. An EOR can help an organization save money, time, and resources. In addition, if a market does not prove successful, an EOR makes it easier to compliantly exit a market with ease.
In comparison, companies that establish a full legal entity within a market can expect to spend thousands of dollars and multiple months. Additionally, if a market isn’t successful and a company needs to pull out, the cost and time it took to set up can be expected to triple in order to compliantly teardown operations.
On top of it all, a foreign subsidiary means a company is responsible to manage all compliance requirements and labor laws in any country they have operations.
4. Start Small and Expand When Needed
We mentioned using lean methods for global expansion but going lean can also apply to growing an international team. Managing a team across the globe is a challenge. Companies have to navigate cultural norms, communication, and relationships with management and employees. Getting everyone on the same page can be a large investment of time and resources.
Companies can consider hiring team members such as contractors, temporary employees, or part-time employees to kick off operations in your new markets. However, it's critical to keep in mind the misclassification risks associated with hiring contractors. For long-term growth, converting contractors to employees is a safer option for organizations that want to mitigate risk.
5. Pick a Global Expansion Partner for Market Success
Companies that enter foreign markets need to fully understand all aspects of the country’s laws and regulations. Companies can successfully do by partnering up with companies whose primary focus is to understand potential risks and recognize warning signs.
In-country partners include a local attorney to protect liability and a consultant to advise on local compliance. Or partner with an EOR, which handles the entire hiring process.
Picking the right global expansion partner can make all this difference in the global expansion experience.
6. Let Mistakes Happen
Global expansion is a tricky process, even for companies that have taken time to prepare and do their research. It is important for companies to give themselves and their international team time to learn the ropes and adjust to the new dynamic.
Allow time to nurture and empower an international team, and avoid becoming a “helicopter CEO.” Instead, understand that obstacles will arise and know how to approach them when they do.
7. Put in Plenty of Personal Effort
Finally, the most important aspect of international market success is getting boots on the ground, experiencing the market first-hand and learning about the culture to make sure it’s a good fit for your organization.
As mentioned previously, you can enter a new market easily and quickly with the right approach. In addition, many countries have ESTA (electronic system for travel authorization) agreements that make business travel a bit easier.
Before entering a country, check to see if you need a visa. Depending on how much time you spend in your target country, you may need to file a tax statement or apply for personal identification. Even opening a bank account can take many weeks to complete.
Simplify International Expansion With Velocity Global
Accomplish your expansion goals faster—while saving money and mitigating risk—by partnering with Velocity Global. Our EOR solution helps you quickly enter new markets without entity establishment, hire and pay top local talent, and ensure full compliance with international tax and employment laws so you can grow your business without limits.
Get in touch with our team to learn about your international expansion options and discover the best ways to achieve market success.