International expansion can bring exciting growth opportunities for companies both large and small. While going global may be an ideal move for your business, expanding into a foreign market is not without its challenges.
From cultural and language barriers to different regulatory requirements, there’s no doubt that global expansion can be complex. Here are seven common mistakes to avoid when planning to expand internationally:
Mistake #1: Failure to assess the company’s internal capabilities
Expanding into new international markets requires a tremendous dedication of time, resources and capital. Before you decide to expand into a foreign market, it’s essential that you assess your company’s readiness and commitment to going global. For example, is the management team committed and ready to meet global challenges? Does the company have a flexible organizational structure that can adapt to new markets? And, does the company have the financial and structural stability to sustain international growth? Of equal importance is making sure you have the available resources and staff to focus on global expansion while still maintaining your current domestic customer base.
Mistake #2: Lack of research
Before expanding internationally it is important to conduct thorough research on your potential market. The market analysis will not only help you determine if your products and/or services are a fit, but also help to identify barriers to market entry and potential risks. For example, what markets present the best opportunities for your business? Who are the key players in the market? Are there regulatory, legal or other factors that may impact your ability to penetrate the market? And, will your intellectual property be protected. It’s also a good idea to plan a visit to the country to gain first-hand knowledge of the local culture and infrastructure.
Mistake #3: Insufficient planning
Whatever the chosen approach to global expansion, successful execution depends on sufficient planning and preparation. There is no “one size fits all” formula to international expansion. Therefore, it is important to have clearly defined goals and a detailed action plan. For example, how will you allocate resources to serve both your domestic and international customers? How will your team drive and implement your strategy. The company’s internal operations and personnel will have a significant impact on whether a plan for international expansion will succeed or fail.
Mistake #4: Underestimating the power of relationships
Building relationships is key when doing business internationally. It’s important to develop personal relationships with people who understand the local market and have experience in your industry. These relationships may be in the form of a mentorship, strategic partnership or joint venture. Having local connections can help build rapport and credibility when dealing with distributors and suppliers. Building relationships is a long-term commitment. Therefore, you should build an internal team to manage and foster your international relationships.
Mistake #5: Ignoring cultural differences
How does your brand translate globally? Whether you are expanding from Germany to the United States or to China, sensitivity to cultural differences is critical. It’s important to consider how you will remain consistent in your branding while adapting to the environment. Different cultural norms in foreign countries may require you to modify your packaging or product to meet local standards and requirements. Also keep in mind that customer needs may vary from country to country.
Mistake #6: Expecting results too soon
Success in a foreign market takes time and requires a great deal of strategic planning. Therefore, you should not expect immediate results. When doing business internationally, you should focus on long-term dominance instead of immediate profitability.
Mistake #7: Failure to seek expert advice and assistance
When expanding to a foreign market, it’s always helpful to seek the advice of local professionals such as accountants, lawyers and bankers. Additionally, international business consultants can provide valuable help and expert advice specific to your company’s needs. Other good resources include government agencies, industry associations and local Chambers of Commerce.
With proper planning and preparation, international expansion can offer numerous opportunities for your company. Going global can help enhance your domestic competitiveness, increase sales and profits, and significantly improve your overall growth potential.