A boost in operations goes beyond the U.S. borders for many businesses, which makes the global expansion definition incredibly important. If your company is in talks for international growth, we’ve pulled together a few best practices that can help you start planning a strategy.
Going global is an increasingly promising option for companies that want to hit the next level. International markets open up the door for new talent and customer acquisition, which creates opportunities to drive more revenue and innovation.
Global expansion is taking operations into a new, overseas market. Companies establish a legal presence in the new country through a foreign subsidiary or one of the agile methods that we will explain later in this article.
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.
There are difficulties involved with growing business abroad, but it's a vital part of a company's strategy to obtain long-term growth.
If your company is considering international expansion, a few booming markets in 2023 include Singapore, Ireland, Denmark, Hungary, Luxembourg, and Hong Kong.
To help your team understand 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 strategy should highlight goals, target markets, and cultural connections to keep your headquarters aligned with your overseas operations.
Read also: Top 5 Global Expansion Strategies
1. Use an agile approach
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 solely rely on international independent contractors to get work accomplished.
Instead, a more agile approach would be to partner with a global expansion expert, like an employer of record (EOR). An EOR allows organizations to quickly enter new markets without entity establishment while ensuring full compliance with local tax and labor laws.
Working with an EOR partner to handle regulatory requirements and difficult tasks like hiring international staff and administering global payroll and benefits can help your company get established in a new country quickly and efficiently.
Also, partnering with an EOR allows you to avoid investing in large assets and commitments until you’re certain that your move will be a success. By taking smaller, flexible steps in international growth, you’ll typically find greater results.
Learn more: What Is an Employer of Record (EOR)?
2. Embrace the culture
Your target country’s culture will be a key section of your global expansion strategy. Before committing to a market, even with one of the agile approaches listed above, 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 includes 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.
3. Establish international partnerships
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.
Also, consider 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 compliments your service or product may be another way to get quickly introduced to the foreign marketplace.
4. Rely on an experienced team
If you need assistance with global expansion or simply want to know if this type of growth is the best option for your company, contact Velocity Global today.
Below are answers to common questions about global expansion:
What Is global expansion?
Global expansion refers to a company's decision to establish a presence and grow in overseas markets for strategic or financial goals or incentives.
What do you consider for global expansion?
Global expansion considerations should include:
- Cultural differences
- Governmental barriers to entry
- International partnerships
- Entity establishment or alternatives
- Human resource administration
What is the benefit of global expansion?
The benefits of global expansion are many, including:
- Facilitating growth
- Establishing new revenue streams
- Capitalizing on government incentives
- Improving global market perception
- Gaining access to larger talent pools