With November's Global Entrepreneurship Week in the rear-view mirror, it's a good time to consider your startup's footprint and seek out ways you can leverage international relationships. Historically, international expansion has been a difficult and complicated proposition that remained out of reach for all but the biggest businesses. Thanks to tech advances, the world is getting smaller and smaller, and new tools and technologies mean that it's possible for more entrepreneurs to go global and reap the rewards.
The Advantages of Expansion
If you've ever thought about going international, you probably have one big benefit in mind -- market expansion. Why limit your customer base to just one country when you could reach a much larger population? Expanded outreach is certainly a plus, but it's far from the only one.
Another opportunity lies in asset diversification, which insulates your organization from certain risks. Say your only market is in the U.S., and a recession brings consumer spending to a screeching halt. If you also sell your products in Europe and Asia, you'll likely feel less of an impact. Similarly, a new product release that flops in one area might have an entirely different reception elsewhere in the world. With an array of international locations, you have more options than ever.
International expansion can also give you an advantage over your domestic competition. If you expand to a new country and establish satellite research and design facilities, you're tapping into a talent pool that other companies don't have access to. As a result, you'll have a unique innovation engine that can improve your product offerings worldwide.
Expanding internationally can be intimidating. By breaking the initiative into smaller pieces, though, you can achieve impressive results. To go beyond your current borders, follow these three steps.
1. Build relationships that help you understand the local community.
One of the biggest mistakes business leaders can make is to assume that an overseas market will behave the same way as an existing domestic market. Thanks to differences in culture, geography, demographics, and psychographics, this assumption will almost always prove false. Interact with promising partners to get an accurate idea of the landscape. These relationships will be key to making sure your messaging and offerings effectively engage your ideal audience in a new territory.
Hilka Klinkenberg, founder of Etiquette International, recommends developing a relationship with prospective partners before you get down to business. "That entails making small talk and getting to know one another without [immediately] getting into business discussions," she advises. These days, it's entirely possible to conduct business digitally, but FaceTime will never completely replace face time. When you're considering an expansion that reaches outside of the U.S., one of the most valuable things you can do is visit the country first. You can certainly continue building relationships via tech, but establishing them in person is crucial.
2. Enrich your understanding of the global supply chain.
There's a reason it's called a supply chain -- each link needs to function effectively for optimal results. And the further you expand your operation? The more integral the supply chain becomes to your success. Mastering the global supply chain is what will ensure your product gets to the right customers in a timely fashion. As you establish relationships with manufacturers and suppliers abroad, ask as many questions as needed to get on the same page. International shipping is likewise complex, so research the rules and regulations around shipping the materials needed for your product.
And don't neglect to consult an international financial advisor. What you don't know about your supply chain can cost you. "Many countries offer incentives for U.S. companies to do business in their lands," explains Ali Hasan R., co-founder and CEO of supply chain pioneer ThroughPut, Inc. "Free Trade Agreements make it much easier and cheaper to export goods to myriad foreign markets. The only problem: Most U.S. manufacturers never inquire about discounts on port duties or refunds for certain sales." The lesson is clear: If you don't know, ask. You might be leaving money on the table that could fuel your company's next expansion.
3. Nail international pricing and payments.
When you're breaking into different markets, be sure to price your products or services appropriately for the new audience. For example, McDonald's marks up Big Macs by about $0.60 in Switzerland, while restaurants in Shanghai and Beijing will sell the sandwich for approximately $0.60 less than in the U.S. When formulating new prices, take into account factors such as the exchange rate and the affluence of your target customers to make your international foray a successful one.
Of course, once you decide how much to charge your new customers, you'll need to figure out how they will pay you. Serving customers around the globe used to add an unavoidable layer of complexity to your business, but new tools have emerged that make it easier than ever to broaden your reach. International payment processors such as Due allow you to accept other currencies, and invoice services automatically follow tax and fee guidelines for each sale.
Global business expansion represents a wealth of opportunity, but like global travel, it requires you to keep an open mind. Establishing strong personal relationships, educating yourself on regional business requirements, and putting the systems in place to accept international payments will all help ensure that your global ambitions prove fruitful.