There is a fact that every company wants to go global, but before deciding to expand internationally, you need to determine whether your startup is ready or not. So, how to know your business is ready for international expansion, and how to prepare before expanding? And, what to consider? Let’s have a look at this article to know the answer.
1. Consider the demand in foreign markets
Firstly, you need to determine whether there are demands for your products or services in the new market or not. If there is no demand, your financial resources, expertise, skilled people, market intelligence, etc. seem to be meaningless. In contrast, if you do not have enough resources, but there is an enormous demand for your products, it is your chance to expand your startup in parallel with enhancing your resources.
The market demand is always the most important factor. If you do not have enough capital, you can consider crowdfunding. If you lack skilled people, you can hire more. However, if there is no market demand, you can do nothing.
2. Consider your financial situation
After determining the market demand, you should consider your financial situation. Expanding internationally means you have to pay for long-term expenses until your business reaches a stable position in that market. In other words, your startup is not ready for global expansion if you cannot support it financially until it makes profits.
In global markets, it may take you up to 10 years to generate gains. During this time, you have to cover all expenditures; and it will be a challenge if your startup lacks capital. However, there are many ways to solve this problem such as crowdfunding, borrowing from families and friends, negotiating with providers, doing outside business activities, and so on.
There is no standard on how much money you should have before going global. Some believe that a company should have an average of US$10 million in revenues before extending to international markets. However, this detail is not applied to all successful international firms.
3. Consider other resources
Apart from finances, you should consider whether you have enough expertise, skilled people, and experience to sustain a venture. If your company doesn’t have these features, you should develop it domestically first.
Accumulating experience and insights is very important to how you operate a business in other markets. You can achieve it by conducting market researches or running your company locally for a suitable amount of time. Along with that, you can develop your human resources to be ready for advanced roles on an international scale.
4. Consider location
It means you have to consider where to expand your company. Furthermore, it is not so easy to choose locations to place your office, manufacturing plants, and even where to buy materials.
For instance, Asia-Pacific and Southeast Asia are now wonderful markets with great growth potentials. Consider which country or region to invest in and even whether to go on the same path as other companies do. It is as challenging as determining market demand. You should also consider placing your office and manufacturing plants in convenient positions, where you can not only communicate well with your partners but also make use of domestic potentials of the location.
5. Consider the logistics
One of the biggest challenges of international expansion is logistics, including storage, packaging, transportation, and labeling of goods throughout international routes. You also need to be compliant with international laws and regulations on exporting and importing overseas goods.
To make sure that the whole process is seamless, you will need freight forwarding services or a customs brokerage. That is the reason why you need to do research well before opening up your company to a new market; or else, you will end up with a lot of difficulties.
6. Consider cultural barriers
Your startup may face cultural barriers and differences while expanding internationally. Operating a business in a foreign market is not the same as that in the local. You need to understand the culture and customs of the target country to make sure you can approach your customers quickly and effectively.
You can consider hiring foreign employees for your company, who will help you to obtain licenses and permits to operate efficiently and legally. However, make sure you know the foreign employment laws clearly.
7. Consider the global nature of your startup
Some businesses are ready for international expansion from the get-go, for example, companies serving clients in several foreign markets. Businesses with global nature often have these following characteristics:
- Implement most business activities online
- Don’t need to establish a clear business network
- Don’t need to set up the physical bases of operations abroad
- Provide products requiring very little modification to be sold internationally
- Serve domestic and global customers the same way
The business of online content creation or monetizing mobile apps is a good example of these attributes. Publishing content to attract advertisers and make money does not require a solid local business presence or an international operation base. Moreover, there is no difference between products sold locally and those traded internationally in this business model.
Of course, international expansion is an ideal opportunity for startups to develop and grow. However, there are many things to weigh before deciding to extend your business globally. Before making a decision, you should also ask yourself some questions like how concerned you should be about paperwork, how you will navigate around cultural implications, whether you need an international partner or not, and what manpower your business requires.
There you have it – the top 7 things to consider and to answer the question of whether your startup is ready for international expansion. Think carefully before deciding. It is not so easy to correct a mistake in an international environment; therefore, be watch out for every factor that can affect your business.
If you have any questions or comments related to the above information, you can leave your words in the box below. Thanks for reading!