You're a small business owner in the US with loads of experience, but you've hit a plateau in growth. You're frustrated, stressed, and at a loss. In the very worst of times during this period, you may even think to yourself "I guess that's it. It's time for me to go back to my day job." But you can't give up. Such growth stagnation is actually quite normal, and there are ways to reinvigorate your business to help increase sales and profits. It may not seem like the easiest or most intuitive way, but expanding overseas could help do the trick. Even if the market for your product seems to be saturated in the United States, you'll never know if expanding overseas is a lucrative opportunity until you do some research.
Yes it will be stressful and perhaps even feel overwhelming at times, but you're a successful entrepreneur with a lot of experience under your belt, don't let the complexities of international business and a bit of added stress scare you off. You've done this before, and this is your passion. Research is key.
Take some of these preliminary steps to see if international expansion is right for your business:
1. Educate yourself.
Familiarize yourself with the culture, the language, and the legal climate, no matter what size your company is. There's an urban legend about Chevrolet executives scratching their heads because one of their cars, "Nova"( translated in Spanish to 'doesn't go') was selling poorly in Latin American countries. Go figure. Regardless of whether this happened or not, you never want to be the company that tried to win over customers and expand your business to a foreign market but got lost in translation. Understand the customers you are selling to and market towards them.
2. Check out the competition.
Take a long, hard look at the market that you'll be selling in before deciding if a certain area is a good fit. In order to succeed in another country, your product will have to fulfil a need that is not currently being addressed by a local business. If your product is the proverbial 'better mousetrap' than what's available locally, it will need to be significantly better. In addition to being a new entrant into the local market, you may also have to overcome nationalistic tendencies that drive consumers to favor those products that are produced by domestic companies. Find out why and if it's worth your time to expand.
3. Determine the best way to get your product to the international market.
Once you've decided you want to expand in a certain area, you must determine how to get your product there. For example, you could export directly to consumers overseas, or you could engage a distributor who already has connections in the market you're planning to penetrate. You could also contract with an exporter in the US, who will export for you, or even manufacture the product in the target country and sell it there. No one said it's impossible to open a new location in another country.
4. Find a partner you can trust.
If you are going to send your product overseas, as opposed to having a physical presence there, you may be better off finding an exporter or distributor who has done this before. If you know other business owners who have successfully exported, don't be afraid to approach them and ask for guidance. You'll need someone you're comfortable working with as well as someone who can help with the legal and finance side on a local level. Do your homework and trust your gut.
5. Get acquainted with local labor laws.
Provided you hire employees oversees, it's important to know the ins and out of local labor laws as they vary from place to place. Low wages may be attractive, but some countries require much more extensive benefits than we usually see in the US, including vacation and family leave. Decide whether the people who supervise your employees should also be local, or if you should send someone from the home office.
6. Forecast your foreign sales separately from your domestic revenues.
While you will need to fund your foreign expansion from US sales at the beginning, it's important to know how long it will take for your international operations to be profitable. This will help you to determine whether or not it makes sense to take your business global.
7. Get insured.
If you do end up opening a new location, or generating revenue from outside of the US, it is important to make sure that you've disclosed the international nature of your business activities to business insurance provider.
Some small business insurance policies include both a geographical limit and a jurisdictional limit which help define what international activity is and isn't covered . Your geographical limit explains where your policy covers you to carry out work. Likewise, while your jurisdictional limit tells you where your policy covers potential claims brought against you. Remember, if you carry out work for a client outside the US you could face claims brought in a foreign court, even if you never physically leave the US yourself. Some contracts have a governing law and jurisdiction clause covering which courts will be responsible for governing any disputes. It's always better to take the time to talk to your insurer upfront so you can be sure your activities are covered, than to find out you're not properly insured when a summons lands on your desk.
And, if you are uninsured, make sure to get covered so you can continue expanding and taking on risk to help your small business thrive.
Expanding into a foreign market requires due diligence in many areas. But if your business is successful in the US and you do your research, this may just be the smoking gun your business needs to jumpstart its growth spurt.