In the 1990s, global trade was doing just $200 billion a year. Three decades later, the figure is over $27 trillion.
As a small business operating locally in the United States, taking your business global is an ideal way to seize new markets and grow your revenues. However, doing business beyond your national borders is easier said than done. Many businesses have tried to engage in international trade and, for varied reasons, failed.
So, how do you expand your business and enter new markets successfully? Here’s a comprehensive guide on how to grow globally.
Is Your Business Ready to Scale?
Just because a global market is there for the taking doesn’t necessarily mean your business is ready to grab some of it. This is a common mistake among business owners who’re looking to take their business global. They rush into new markets without properly evaluating whether their businesses are ready to scale internationally.
As such, your first step to entering new marketing successfully is establishing whether your business is ready for it.
There are several aspects to look at when doing this evaluation.
Top on the list, of course, is your working capital. Expanding into new markets, especially in far-flung regions, can be an expensive commitment. There are new taxes to pay, possibly new offices to set, more employees to hire, and whatnot.
Do you have this money ready and well-budgeted for? In fact, most businesses don’t have enough capital to go global. They have to borrow from banks or raise money from other sources, such as venture capital firms.
Next, consider your product.
Does it have strong demand outside your local market? Are lots of people in other nations asking about it? Are there similar products in the new markets you want to enter? What about the cost of shipping the product to those markets?
You also need to consider whether you have the relevant in-house expertise to build a global business. You should have a team of employees who have adequate experience in international business operations. If you don’t, be sure to hire a consultant.
Identify the Right International Markets
You aren’t going to haphazardly start selling your products in as many countries as possible. Even if your product is generation strong global demand, some countries have to wait longer before you can enter their markets.
This brings us to the second step in growing a global business: new market identification.
You want to find markets that are not only ready but also have fewer entry barriers.
The question is: how do you identify these markets?
Prioritize Markets Closest to You
As a general rule of thumb, it’s advisable to start expanding into markets that are closest to you.
As a U.S-based company, for instance, it would be illogical to first expand into a country in the Asia Pacific region without considering countries that are closer home, like Canada and Mexico.
Expanding into a nearby country is a smart decision for a couple of reasons. There are fewer logistical challenges to overcome and it’s easier to set up a new office when all you have to do is drive across the border or take a short flight. Also, you probably are more familiar with the laws and regulations in a country that’s closer to you than you would be with a country that’s in another continent.
Evaluate Cultural Compatibility
Cultural compatibility matters a great deal when you’re trying to find a new market to expand into.
As a business in an English-speaking country, you produce and market your products to people who understand the language. Can you imagine the changes you will have to make if you introduced your product in a country that doesn’t speak English?
Let’s say you want to expand into Vietnam. The natives speak Vietnamese. This means you would need to change the information on your product packaging from English to Vietnamese. The same goes for your marketing campaigns.
In fact, to improve your chances of making a successful entry into Vietnam, you will need to hire a Vietnamese translation service before you even set up an office there and start hiring locals.
It’s important to do sufficient market research in order to identify the best markets to expand into. Without a strategic market identification strategy, you’ll end up making costly mistakes.
Choose an Entry Method
After identifying a new market, choose an appropriate market entry method.
There are several methods to choose from:
- Direct exporting
- Joint venture
- Company acquisition
- Greenfield investments.
The method you choose largely depends on the nature of the market you’re looking to enter, your capital, expertise, and nature of your product.
That being said, the easiest way to break into a market is through direct exporting. If you’re an online business that ships only within the United States, just advertise that you’re now taking orders from Canada. Once orders start streaming in, ship them across the border.
Alternatively, you can set up a wholly-owned subsidiary, complete with manufacturing and warehousing operations. You can then start selling your products locally. This is the greenfield investment method.
Like finding a new market, finding the right entry method calls for extensive research. Choosing an unsuitable method will cost your business a lot of time and money. By the time you’re figuring out that it’s not the right method, competitors would have already taken hold.
Break into New Markets and Grow Globally
Expanding into cross-border markets won’t just increase your profits. It will enable your business to grow globally, which means getting international recognition. This guide has fleshed out how you can take your business global and reap the benefits.
Put these tips to use and keep reading our blog for more insights.