Overseas Business Expansion: Questions You Have To Answer Before Making Plans
One of the many benefits of running a business in the modern world is the access to benefits of globalization. For decades, the only way that most people could run their business was by appealing to their local population and — if they were lucky — the national population. Few businesses had the clout and finances available to branch out into other countries.
Times have changed hugely, and it’s now more than possible for even relatively small businesses to consider expanding into another country. Some countries are more popular than others; Malaysia and Singapore are known for their business-friendly attitudes, while the UK and Australia tend to appeal due to the fact that the cultural realities of the population are similar to here in the US. However, wherever in the world you envision your country being able to expand, it’s now more possible than ever to do just that.
Still, while it may be possible, is global expansion always a good thing? If you have been contemplating such a move, then you are likely savvy enough to know that you must approach the entire subject with caution. In an effort to aid you in that caution, below, you will find a list of questions that you must be able to answer before you begin to make moves to allow for global expansion of your business. Without satisfying these criteria, your venture into the globalized market might not elicit the results you have been hoping for.
So, without further ado, here’s the questions you need to be able to deal with effectively if you’re considering expanding your company overseas…
Are business operations positive and stable in your home country?
If you’re going to be expanding overseas, then you have to be certain that your business at home is going to be able to cope with such a move. If you have any concerns about the operations of your US-based business over the next 12 months, then now is not the time to expand overseas. There’s little point in branching out to other countries if doing so costs you dearly in regards to the main business that you rely on.
Can you explain why, in five words, you have chosen that specific country to move your business into?
The selection of the country you move to needs to be careful, considered, and very concise. If you cannot summarize why you have chosen a particular country to expand into first, this suggests that more research is needed.
Do you know the local traditions and customs?
It’s always worth taking the time to learn more about the country you’re going to move into, especially if it is a country where the traditions and customs may be very different to what we have here in the US. Research — both in terms of reading and actually visiting the country — is going to stand you in very good stead.
Do you know the local language?
If not, this isn’t necessarily going to be a problem. If you’re moving into countries such as Malaysia or Singapore, then the chances are you will be able to manage such an expansion without learning the local language— this is one of the benefits of English being the lingua franca of the business world. However, if you’re moving into areas that don’t have quite such a strong connection with English, then you’ll need to either learn the language, or be willing to hire an overseas team of native speakers.
Do you know enough about the economy you’d be moving into?
Wherever you’re expanding to in the world, you need to ensure you get into the habit of researching and understanding the basics of the economic situation in that country. So that means you’ll need to get into the habit of reading news about the UK exit from the European Union; the next Australian fiscal budget; the Malaysia property news; the Singapore economic developments… and so on and so forth, relevant to the country you have chosen to expand into.
If you don’t have a strong grip on the overall economic — and preferably also the political — landscape in the country you are expanding into, then you’re going to struggle to make the right decisions about your new venture. Background research is an absolute essential, so read up on your country of choice’s current affairs until you’re as au fait with them as you are with news from the US.
Is there a call for your business in the country in question?
You can skip this question if you’re intending to move into a new country but continue to offer your services in the US.
If you’re moving into a new country in the hopes of finding a new customer base, then you’re going to have to undertake thorough market research to ensure there is a need for your company in the country. If you get any sense of market saturation in your sector, it may be best to look for another country where your business will be able to stand out more from the competition.
Do you need to hire new staff?
If so, do you know the labor laws in the country you’re expanding into? Have you done research to ensure there are adequate candidates available? These are all key questions you need to answer before you consider making a move a reality because, without staff, your expansion is likely to be a non-starter.
Do you have a plan for exiting that country if the operation is no longer viable?
Business people tend to intensely dislike exit plans. Exit plans suggest that something may go wrong in the operations of a business, and entrepreneurs are — by their very nature — optimistic people who are always planning for what happens when things go right.
However, when moving into another country, the risk of things not going as you intend is huge. You are moving into unfamiliar territory; even if you do all you can to familiarize yourself with the country (as you should), you’re still making a huge change, and there will always be the potential for things to go wrong. If they do, how are you going to cope?
While it might feel like tempting fate to plan an exit strategy for a venture that has not even had the chance to officially begin, it’s a step you have to take. You don’t have to formulate an exit strategy that will result in no financial loss to your company — as this is nigh-on impossible — but you do need to have basic information on the withdrawal process and how it may impact the company as a whole.
Do you have a backup plan?
In the event that you have to use your exit strategy, what happens next? You should have a plan for the future growth of your business in this circumstance. This plan doesn’t need to be particularly detailed, but a general idea of what you will do in the aftermath of an overseas withdrawal is something you have to consider. Hopefully this plan will never be used, but if you do have to implement it, you’ll be glad you had a basic idea in place and ready to be built on if the worst did happen.
Globalization has been a force for good, but it has also encouraged some businesses to push too far, too soon. By ensuring that any steps you take into the global market are cautious and deeply considered, you’ll be sure to be able to advance your business forward in a way that is genuinely beneficial to your business’ future. Good luck!