International expansion can be appealing and many small businesses thanks to modern technology can now take their business around the world. However, just because you can do business internationally does not mean it is a good business idea. International expansion is a big decision and no major business decision is without its impediments. Global expansion presents some real obstacles, including everything from culture and language barriers to packaging. So, when deciding whether doing business abroad is right for you, consider these five factors:
Language barriers and cultural differences
It is important to understand that there may be cultural and language differences even within a country. Language barriers can be damaging to some businesses if they are not addressed properly and the cultural difference can make or break a business. If your product or service is not adding value or meeting the needs of the local markets you are trying to reach as a business, then there is no need to conduct business overseas. It is therefore vital to understand the local communities and what their values and needs are. Determining whether you would need to hire bilingual staff to bridge the gap in communication, hire professional and certified translators and/or interpreters or perhaps do website localization, are crucial decisions in ensuring you learn about business etiquette in foreign countries. Expresstranslate provides NAATI certified translators who can help you better understand the local culture, and help businesses pursue an overseas venture.
International compliance and regulatory issues
Each and every country has its own set of laws, compliance and regulations that foreign businesses have to abide to when entering a market. Those laws and legal decisions need to be considered well in advance to ensure there are no barriers for the business. A long-lasting success business who wants to thrive in foreign markets need to be flexible enough to work within the local laws and regulation guidelines. Make sure to seek legal expert counsel for overseas business practices to identify any issues.
One of the main things you need to consider is how much it will cost to expand internationally. Doing business overseas does not happen overnight and is not a cheap process, it comes with a range of costs; from travel, customs, shipping and manufacturing to office space. Make ure that sufficient capital is available to invest in such venture and there are no unexpected cash flow issues. A great way to mitigate that risk is to develop a list of all costs the international business will incur and ensure it balances against the potential revenue and profit. With the right preparation and capital, international expansion might prove to be a very successful move.
Products have to be localized. What it means is that the product, depending on the market, needs to have different packaging, foreign language instructions and for electronic items, may need different voltages. One cannot simply expect to resell a country-targeted product in a foreign country. Packaging standards, laws and regulations vary from country to country. For instance, legal requirements for disclaimers may be vastly different and can impact a decision to move internationally. Some countries might have strict rules and laws which may not align with the product you are trying to sell overseas. In countries like Australia and New Zealand, it may be enough to include instructions in English only. However, bringing a product in Europe, even for the smallest product, the instructions and directions will need to be in multiple languages.
Economic and political stability – Harvard link
Perhaps one of the most important factors when contemplating an international business expansion is the stability of the local government and its authority. Government stability is the epitome of conducting a business overseas, it’s importance in regard to contract integrity, protection policies for businesses, immigration and employment security and rights, trademark and intellectual property, government assistance programs for businesses and access to needed resources and materials are crucial. A good plan includes weighing in the risk associated with such expansion overseas. Make use of historical data and information or make sure to liaise with local experts over the political and business stability before considering such expansion. There are countries with higher risk and with unpredictability and economic risk directly affect consumer purchasing power. Unpredictability from a command economy introduces higher risks for businesses. There are independent measures of risk, published by Harvard Business Review, which may help weigh in if certain countries represent high risk and whether it is best to void those countries for the time being.
Those are five factors to consider when expanding a business overseas. This is by no means a complete list and each factor has been discussed briefly. But they are a great starting point for a business to go on and think about perhaps more personalised factors that could potentially affect its success in a foreign market. Bottom line, these considerations as well as the right amount of research of the local market, time and dedication as well as money; can potentially give new dimensions to a business.