Via LinkedIn : There are always inherent risks involved when expanding your business in the international market. Calculating the risks and addressing each one will require additional planning, but will undoubtedly save both time and money!
7 Tips to get you started…
TIP #1 – MASTER YOUR OWN MARKET FIRST
Having solid operations at “home” is usually the first step to a successful international expansion. Becoming knowledgeable in the production, and the overall business experience in your own marketplace will give you the initial confidence to attract strategic partners.
TIP #2 – SEEK OUT LOCAL EXPERTS, KNOW YOUR LIMITATIONS
Learning through trial and error can cost a lot of time and money. Especially, when we are talking about international markets where your knowledge may be limited by factors such as culture, customs and language. Work with local experts that can support your operations.
Search for partners that can complement your business model in areas such as sales, operations, supply chain, legal, accounting and distribution. Also investigate the availability of local talent to manage and run your operations. Allowing for a fast and dynamic local decision-making process is vital for a successful expansion.
It will cost you something. But, the money and time you will save will be far less than what you would have wasted doing it on your own.
TIP #3 – DIFFERENT MARKETS, DIFFERENT BUSINESS
Approaching new markets with the same best practices that make you successful in your home market might work, however you may need to adopt a new way of doing things. Sticking with a business method because it is familiar and works at home may result in a negative perception of your brand at launch.
Language. Culture. Infrastructure. Local advertising? Competition? How will people come to know your product or business? Look at the motivation and influencers of your end customers; they may be different than those in your home market. What works “here” does not work everywhere. Be aware of the key differences and plan in advance.
TIP #4 – WORK WITH PEOPLE, NOT JUST MONEY
A key-motivating factor for expanding your business into new markets is of course, increasing revenue. However, you also need to spend time cultivating relationships with the people on the ground. Building good relationships with your representatives in new markets will foster the development of respect, understanding and knowledge between your respective businesses. Setting out your values, expectations and goals early on, will aid communication and help you avoid costly misunderstandings. Trust, respect and mutual support will grow as you partner over time to build market share, grow revenue, and enjoy sustainable profitability. Find what your partners are good at and leverage it. Fill in the blanks and support them where they are weak. Good relationships result in a good customer experience. Everyone is happy.
If you only focus on the money, then you will miss out on what makes businesses thrive, communication and attention. Others may look for opportunities to jump ship – maybe to your competitors. It’s just not worth it. Take the time – build the relationship.
TIP # 5 – CULTURE IS KEY
Business language, greetings, titles, business cards, conversational topics, negotiation, introductions, business meals, public behavior… All these and more need to be handled within the culture where you are doing business. Tips and guidelines are available for many cultures.
But what about colors, pricing standards, truth in advertising, humor, product naming, packaging? Culture drives attitudes and behaviors in business partners and would-be customers, and new market entrants need to be ready to adjust – to “localize” where it’s important.
Cultural differences can trip you up if you don’t pay attention – little things mean more, so do your homework and pay attention to detail right from the beginning! Bonus: you’ll have more fun and build stronger relationships!
TIP # 6 – DISTANCE IS A CHALLENGE
Pankaj Ghemewat, in his Harvard Business Review article Distance Still Matters, suggests a framework of evaluating markets that looks at “distance” through a number of lenses:
Geographic (share a border, adequate transportation or communication systems, physical remoteness, time zones)
- Cultural (religion, race, social norms, language)
- Administrative (currency, trading arrangements)
- Economic (income, distribution/channel quality)
- How do you manage customer service or working with vendors?
- Does the distribution system support your product?
- Will the buying criteria still be the same?
- How about localization needs?
- Is sharing a language more important than geographic proximity?
The answers to these questions may be different depending on your product, and where your company is in its life cycle of international business. Understanding what is most relevant, and acting on it, will be a key driver to your successful international expansion.
TIP # 7 – THE PRODUCT PLUS…
- Sales and channel tools
- Customer service and support
Some companies have adaptability and flexibility for their products from the get-go. But others are required to tweak their products to suit new markets.
You may or may not need to adapt the product itself to local markets, but you will likely need some adaptation of materials, packaging, training and sales materials into the local language – to be successful.
Growing your business and entering new markets is not always and easy task. There can be both clear and subtle risks, which require attention and care. Though it may take a little extra time at the outset, thinking ahead and addressing each issue will save you time and money in the long run.