If your business has maxed out its reach in U.S. markets, it may be time to expand globally. Expanding globally offers new growth opportunities but also comes with unique challenges. Here are six things to consider before taking your business global.
[Read more: 5 Quantifiable Ways to Determine It's Time to Grow or Expand Your Business]
Market potential
The first thing to consider is the demand for your products and services in international markets. Choosing the right market can determine whether your business’s global expansion succeeds or fails.
Start by choosing three to five potential markets that are buying products similar to the ones you offer. Consider which markets are the largest, which are growing the fastest, and which have smaller markets but high growth potential.
It’s also a good idea to research any local or international competitors in those areas. Competitors are a good sign because it shows there’s a product/market fit.
The costs
Many profitable companies make the mistake of expanding too soon and over-extending themselves financially. That’s why it’s crucial to evaluate all the costs before expanding internationally.
You’ll have to budget for the overhead and manufacturing costs, as well as the cost of marketing your products and services in the new region. You’ll also have to decide how to fund the expansion — for example, you might decide to take on debt or use cash reserves. If you choose to access your cash reserves, just make sure you still have enough working capital to manage the day-to-day operations.
But no matter how much time you spend planning, unexpected costs are going to arise. So it’s always better to budget for about 10% more than you think you’ll need.
It’s a good idea to visit any countries where you’re considering operating to get a better sense of who you’ll be working with.
Legal and regulatory requirements
There are tons of legal issues you have to consider when planning a global expansion. Even if you choose not to create an overseas subsidiary, you’re still bound by the laws and regulations in the area you’re operating. So you’ll need to learn about the consumer laws, employee regulations, and data protection rules.
Additionally, different countries have different regulations regarding employment protections. The structure of the employment contract, benefits, and even expectations around work schedules can be quite different. A professional employer organization (PEO) can help you navigate many of these employment challenges.
[Read more: Managing Employee Benefits: Understanding ASOs & PEOs]
Cultural differences
Every country has a slightly different culture, so you’ll have to keep this in mind if you plan to hire abroad. The first thing you need to learn is the communication style of that culture since this will affect how you interview, hire, and manage those employees.
It’s a good idea to visit any countries where you’re considering operating to get a better sense of who you’ll be working with. Plus, this will give you an opportunity to start establishing relationships with local customers and vendors.
Necessary infrastructure
In all likelihood, your current infrastructure won’t be able to support a global expansion. Evaluate your current plan and make notes of any gaps based on the market size and growth potential of your target market.
For example, you may need to set up new offices, warehouses, or distribution centers to meet the production demand. You’ll also have to consider any technology requirements, like IT systems or networking infrastructure.
Once you’ve outlined the necessary infrastructure, you can come up with a timeline and plan for implementing everything. This plan will likely be subject to change, so it’s important to continually monitor and update the plan as necessary.
Set up a payment system
When you’re operating in a global market, you’ll likely have to deal with foreign currency. Fortunately, there are currency exchanges and payment systems that make this process much easier. Look for an affordable credit card processor that allows you to offer multiple payment options to your customers.
[Read more: 5 Tips for Ensuring Your Business Has Enough Cash on Hand]
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