Expanding Your Business in New Countries: What You Need to Know
Are you thinking about expanding your business internationally? As Dylan Thomas once said, “Do not go gentle into that good night.” My take on that is “Do not go gentle into that international market.” Go fiercely, but prepare! Here are six factors to consider before you land your first international customer.
1. Select one country and focus on success there. Many small business owners decide to take their business international, and attempt to enter four or five countries at once without achieving success in any of them. They may react to a lead via email from Sweden, follow up with a person they met at a trade show in Germany, or produce an order based on a check that arrives from Dubai. All of these scenarios offer international expansion opportunity. However, each will require a concentrated team effort to get the products to the customer with the expectation of repeat business. Without a strategy–such as selecting one market to penetrate–the likelihood of success over the long term is fairly low.
2. Pick one in demand product or service. Is there demand for your product or service in the country you hope to enter? Check first to see if there is. If there’s no demand, there is no business. It’s that simple. A couple of places to help determine if your company’s product and services are marketable overseas are: Export.gov Market Research Index, Datamyne, PIERS and Import Genius.
3. Choose a market that is easy to access. Take a look at the product or service you plan to export, and ask yourself how many of your competitors are already conducting business in that market. If there is a fair amount of competition, it’s a good sign that the market is ripe for your type of product or service. However, it also indicates you will have a healthy amount of competition. Singapore, for example, might be ideal for your offerings. How easy is it to transact business in Singapore? The World Bank Group’s ranking of economies will guide you on the ease of doing business in more than 180 countries. If there are competing products and services in your market of choice, will you be able to differentiate your offerings significantly enough to capture new customers?
4. Decide on the best foreign market entry strategy. Should you start by exporting? Alternatively, have you considered selling through an intermediary (trading company) that buys your product locally and re-sells to its distribution base of customers in a foreign country? You never learn who the end customers are, but it’s easy to make the sale. What about licensing or franchising your product to an individual or organization in an overseas market? At the beginning there is no best way to get started other than to do what seems natural and take it a step at a time until you get things right. Check with your local U.S. Small Business Administration office to determine the best way to enter a foreign country based on your company’s capabilities, comfort level and offerings. SBA is dedicated to providing support to small businesses across the nation.
5. Invest in both human capital and dollars. Will your international growth be based on the profitability of your domestic operation or on a pay-as-you-go method? Will every employee be on board to ensure a companywide commitment? Come up with an international expansion plan that outlines how you will fund the activity and use this as a guide as you move forward.
6. Learn how to collect payment on overseas sales transactions. This is the single most critical, yet insanely overlooked, detail. Ask your potential customer what his preferred method of payment is. Chances are he already has experience with international transactions and you can adopt a system that works for both of you.
Now that you know what is required to sell to a new country, the next step is to adapt your products and services to meet the needs of the marketplace. We’ll look at those considerations in a subsequent article.
Laurel Delaney runs Chicago-based GlobeTrade.com, a leading management consulting and marketing solutions company dedicated to helping entrepreneurs and small businesses go global. She is the creator of The Global Small Business Blog, ranked No. 1 in the world for entrepreneurs and small businesses interested in going global. She is currently at work on a new book on exporting to be published February 2014. You can reach Laurel via email.