5 Advantages of Expanding a Business Internationally
By Jamie Elgie
Expanding cross-borders is incredibly exciting, especially if this is the first time your business is doing so. There are many advantages of expanding a business internationally, including revenue growth, competitive advantages, stability, and more. We’ll also cover where you should start your research when choosing a new market. So, let’s dive in.
When selecting the right location to expand business internationally, keep the following advantages in mind:
1. New revenue opportunities
This is especially important for US business owners to realize. In the United States, thinking is often fairly US-centric, and this causes people to underestimate the importance of foreign markets. Think of it like this: The United States accounts for less than 5 percent of the consumer market. Around three-quarters of world purchasing power and over 95 percent of world consumers are outside America’s borders. That leaves a huge swath, 95 percent, of potential customers for your business. The opportunities for growth and increased revenue by expanding globally are significant, especially with proper planning.
2. Stay ahead of the competition
This advantage only applies if you are an early entrance into the new market. Being first helps you gain strength in the market, and allows your business to dominate when compared to competitors. You’ll have an edge over anyone who comes after you, as it’s always harder to compete with a brand that consumers know and like. Additionally, being first in the new marketplace may mean you will be the first business to have access to new technology or processes that can be used to improve your business and productivity. Going global also provides a reputation boost, which can positively impact your reputation locally and internationally. People often think more highly of global companies, placing their trust in a product that people all over the world use and approve of.
This is a huge benefit to many businesses, especially when expanding. Expanding into new markets can feel risky, but if done well, an expansion can protect you from risk. Imagine you have an established business in one country, but suddenly new regulations make it more expensive to produce your end product, cutting into profits. With international investments and locations, you can offset these potential losses in other markets.
Related Read: 5 Reasons Why Companies Go Global
When things are lagging in one area of the world, another may be booming, ensuring steady income no matter what is happening in the world. You can also add new products and add other unique offerings in a new location to diversify your revenue.
4. Access to a pool of global talent
Setting up shop in another market allows you to hire and retain staff with distinct talents. When you go global, you may need to add staff to your new location, creating additional opportunities for growth and innovation. You will increase the number of available languages you can do business in, currency options, etc. With a global talent base, you will have access to a wider range of perspectives and ideas. Employees of different backgrounds working together can learn from each other, and this can result in exciting ideas and processes that will contribute to your growth.
Related Read: Factors to Consider When Entering a New Market
5. Foreign investment opportunities
Expanding business internationally provides a chance to make lucrative partnerships and access the latest resources abroad. Investment opportunities are also a possibility, especially as you now have access to profits in local currency. These investment opportunities may not exist in your home country. Another thing to consider is the potential for incentives. Some countries and cities offer incentives to businesses that move and invest in the region, which can help offset the cost of expansion. This can also increase profits and is certainly an attractive perk of setting up a location in a foreign market.
It’s always important to weigh the pros and cons of any potential new location. Review the opportunities through the lens of the standard benefits and ensure that wherever you choose is the best location for your business to be.
What to Consider When Expanding Globally
Expanding internationally can bring revenue growth, stability, and innovation to your business. Before making the jump, it’s vital to have the full picture. Here are some important items to consider as you do your research:
Can you afford to move and expand? Some owners get so caught up in the excitement of expansion that they underestimate the potential time it can take to become profitable in a new market. Take a close look at costs and consult others who have expanded into the same market.
Customer support behaviors and expectations
Every market is different, and researching customer behaviors and expectations is important when expanding. You will also want to ensure your marketing is tailored to that specific region. Some things that are culturally acceptable at home may not be abroad, and vice versa. Either way, these processes are not turnkey, so research is necessary. This is one area where hiring local staff will also be useful. They will have valuable knowledge about customer expectations helping you prevent missteps and wasting time or money.
Language barriers can create challenges for a business’ overseas operations. It’s very important to communicate effectively and accurately, especially when it comes to signing contracts. If you do not have fluent knowledge of the predominant language in the new area, you will want to ensure someone you trust is there to help. This could be a professional translator or a capable new employee.
Economic and political stability
Don’t let dollar signs blind you to the reality of the new location you are expanding to. Considering the economic and political stability of the region is necessary. It may not be worth the expense to start a new venture in an unstable area.
You will want to be aware of what kinds of currency are accepted, what types of payment are used, and typical exchange rates for any area you are entering into for business. You don’t want to be blindsided by exchange costs or discover that you cannot accommodate your customer’s preferred payment method.
Global payment processing
When you are an international entity, you will need to consider all the different ways your customers want to pay. You don’t want to miss out on sales because you don’t offer a certain platform. For example, WeChat Pay and Alipay are extremely popular, almost ubiquitous, in China. Entering the Chinese market without offering these payment options would likely deter potential customers.
The World Is at Your Fingertips
As our world becomes more connected, companies should be constantly looking for ways to expand and gain profit from international markets. As you set your sights on cross-border commerce, having the right vendors, partners, and consultants will make your journey to success faster and more effective.
Related Read: Cross-Border Payments: What Merchants Should Know
Is Expanding into China a Part of Your Plan?
If you are exploring expanding into China, we have the perfect place to start your research. In our step-by-step guide, you’ll learn how to enter the Chinese market and launch your business internationally. Download the guide here!