The dream of many businesses is to grow and expand. Going global means expanding international markets and boosting your growth overseas.
Preparing for Your Entrepreneurial Venture to Obtain an International Expansion
Although not easy, the benefits are great. The process of globalization, if done correctly, can bring growth upon growth, but you’ll still need a steady hand that requires skill and preparation.
The steps below will help you prepare better for your entrepreneurial venture to obtain an international expansion.
Conduct Market Research
Before you start your expansion journey you’ll need to analyze where your business it’s going and where it wants to get to.
Before you decide to fully commit to a different location, take time to properly research the new market.
You can send internal teams to conduct focus groups or work with an in-country market research firm, so you fully evaluate how local buyers perceive your service and product.
You must conduct a critical analysis of your service in the desired market before you take steps to global expansion.
Prepare market segmentation analysis to see if there’s potential for your business to sell as it is a critical success factor in international expansion.
The International Market Segmentation (IMS) suggests that targeting decisions and international segmentation employ a two-stage process.
The first one is macro-segmentation which assesses countries for market attractiveness, meaning market potential and market size.
The other one, micro-segmentation, is consumer-level based on social and personal values.
The macro-segmentation carries out analysis on information about different countries to identify the ones that are the most valuable markets to enter.
Get the Necessary Paperwork
If you want to establish your business internationally, there are many essential formalities and documentation one must consider, and bear in mind that all-important paperwork should be done correctly.
That means you’ll need to find a legal advisor or the right accountant from a foreign country to obtain trade licenses and legal permits. You’ll also have to establish a bank account in the destination country.
For example, if you’re expanding your business in the U.S. bear in mind that you’ll need to prepare all the important documents and they have to be properly translated to be able to enter the country.
The USCIS translation certification requirements are a bit difficult to achieve, so working with a professional translator will help you avoid rejection, background checks, and slow application processes.
Other documents you’ll need to consider include visa applications, and insurance to cover your business and employees.
Remember to hire local solicitors to help you with the inquiries and maintain all records. All documents should be genuine and issued by a valid institution or authority.
Develop Growth Strategy
Note that cultural, governmental, and economic conditions will differ in each country, so you must adopt a localized strategy, as well as a business plan.
Besides developing a plan that will lead to success in the chosen market, it should also align with your business’s overall strategy.
Remember that developing a localized strategy is an important driver of success.
Develop a tactical project that includes KPIs, goals, and accounts for the limitations set by any budget you may have.
Determine your growth options that can take the form of exporting, licensing arrangements, partnerships, acquisitions, and mergers, or creating an entity through the help of a PEO (Professional Employer Organization).
Use success metrics to measure the costs and progress, and ultimately your strategy will be dependent on the business model you decide to follow.
Keep in mind that you’ll need to determine if it would be more efficient to partner up with a local agency or set up a separate company.
And one very important thing is to determine which country is the right area for you to expand into.
Know the Tax and Legal Requirements
Knowing the tax and legal requirements of the country you’re expanding to is another key factor you should consider.
You wouldn’t want to fall victim to compliance issues.
Some countries have a large number of requirements, so review government and industry-specific regulations in advance so you’ll obtain the necessary certifications.
One of the most vital business obligations to get right is tax. Before beginning your expansion make sure to navigate the local tax laws, together with any international tax laws that may apply.
Check if there’s a trade agreement between the host country and your country that might afford you tax benefits.
For example, in the UK there are at least 6 ways to set up a company, each with its own tax status.
You can also consider outsourcing your accounting, tax, and payroll. A PEO can offer payroll management and can deduct the relevant taxes at the source which will make your job much easier.
They can include social security payments and additional benefits like life or medical insurance.
Plan Your Budget
With all the data gained from the previous steps, along with the knowledge you have about your business and finances, you can create a final budget.
Make sure it’s aggressive, progressive, and ultimately attainable. You can create a 3-year budget with a rolling 12-month business plan, including the relevant KPIs.
You can update and review every 6 months.
Once you’ve begun your expansion process, make sure to perform operating reviews at each quarter.
This will ensure you’re keeping on track with planned costs, so make sure you communicate the plans clearly with your teams.
Granular level detail is a wise practice, so establish a near real-time budget to correspond with data reporting which will give you an up-to-date and adaptive view of your financials.
Also, you might want to consider working with a global PEO if you’re looking to create an adaptive budget.
Working with one can reduce expansion costs by up to 70% over an in-house implementation, and a partnership with a PEO may provide you with the ultimate peace of mind.
Note that each strategy will be different when it comes to the real thing, and there might be big changes depending on environmental factors like trade agreements, exchange rates, and political relationships.
In Closing
The opportunities that the global market offers are undeniable. Growing businesses need to consider a wide range of factors when entering new markets.
Going through and calculating the potential and differences of varying expansion methods is a long-winded task.
There is plenty of other information one must consider when thinking of expanding their business overseas, but we’ve covered what seems to be essential.
It might be the perfect starting point for businesses prepared for the next big step. And remember, your planning must be detailed, broad, and dynamic.
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