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Going global can be confusing and daunting for any small and medium-sized business (SME) owner. With so many considerations to take into account, it’s no wonder that many entrepreneurs become overwhelmed by the idea of expanding their operations beyond their home country.
But with the right approach and mindset, going global can be an incredibly rewarding experience that can help your business reach new heights of success. Chances are you may already be conducting business beyond your home market (i.e., many U.S.-based companies already sell to customers in Mexico and Canada) but you want to take a more strategic approach to your long-term global expansion plans.
In this blog, we’ll take a look at some key considerations for small and medium-sized businesses looking to go global, as well as some tips for getting started and avoiding overwhelm.
1. Get Your House in Order:
The first step in any global expansion effort is to do an in depth review of your business at home to make sure you’re ready to go global. This could entail conducting an international readiness assessment, which Factum Global can help perform. You must review your entire operation – from your financials and technology, to your product and service offerings and internal culture.
Ask yourself, do I have enough financial and human resources allocated to support my expansion into a new market? Are my systems able to “communicate” internationally, including accepting foreign currencies? Are my product and service offerings applicable in a new market? Are my people equipped to work with others in a foreign culture or do they need cultural intelligence training? More on this shortly.
You also want to make sure your leadership team is “on board.” Without a commitment from the C-Suite and Board of Directors, an expansion effort will certainly result in failure. Understand “why” you want to begin working globally and eliminate as many doubts from the key decision-makers before proceeding.
Let us know how we can help you convince your leadership that now is the time to expand globally, like we’ve done for so many of our clients.
2. Know Your Market:
Once you have confidence in your home market operations, the next step is to thoroughly research your target market. This means understanding the cultural, economic, and legal landscape of the countries you’re considering expanding into. You’ll want to take into account factors such as language barriers, local customs and traditions, consumer preferences, and regulatory requirements.
One useful tool for gaining insight into your target market is market research. This can include conducting surveys or focus groups, analyzing online consumer behavior, or consulting with local experts in your target countries. You’ll also learn a lot about the viability of your own organization, products, and services in your target market.
3. Plan Your Finances:
Expanding globally can be a significant financial investment, so it’s important to have a solid understanding of your financial position and the costs involved in going global.
This includes considering expenses such as marketing and advertising, legal and regulatory fees, travel and accommodation costs, and any necessary infrastructure or technology upgrades.
You’ll also need to develop a clear financial plan that takes into account your anticipated revenues and cash flow projections. This will help you determine whether you’re ready to expand internationally and whether your business can sustain itself during the initial phases of your expansion.
4. Consider Your Operating Model, Infrastructure and Technology:
There are different strategies for expanding globally and having a firm understanding of your operating model is key to success. Some organizations chose to maintain decision-making control at headquarters where they focus on efficiencies and economies of scale, while others may prefer to empower leaders on-the-ground to make decisions and build sustainable operations based on localization and responsiveness to local market needs. Expanding globally will likely require you to invest in new infrastructure and technology. This may include setting up local offices, hiring local staff, developing new supply chain networks, and implementing new software or systems to support your operations.
It’s important to carefully consider the infrastructure requirements of each of your target markets, as these may differ significantly from those in your home country and from one another, depending on your operating model. For example, if you decide to empower local leaders to make decisions and focus on market responsiveness, you may need to invest in new technology to comply with local regulatory requirements or to meet the preferences of local consumers. On the other hand, if you decide to maintain control of decision-making at headquarters, you will require systems that enable effective and timely communication and are designed with global audiences in mind.
5. Build a Local Network:
One of the most important considerations when expanding globally is building a local network of partners, suppliers, and customers. This means establishing relationships with local vendors, distributors, and service providers, as well as building a strong customer base in your target market.
Building a local network can take time, so it’s important to start laying the groundwork as early as possible with a solid marketing strategy. This may involve attending trade shows, networking events, or industry conferences in your target countries, as well as building relationships with local industry associations or chambers of commerce.
6. Stay Up-to-Date on Regulations:
Expanding globally means navigating a complex web of regulatory requirements, including tax laws, trade regulations, and employment laws. It’s essential to stay up-to-date on these regulations and to work closely with local experts to ensure compliance.
This may involve hiring local legal counsel, partnering with a local business consultant who can provide guidance on regulatory compliance in your target countries, or retaining the services of a global consulting firm such as Factum Global to do this work for you. It’s also important to stay informed about any changes to regulations or laws that may affect your business operations.
Getting Started!
- Make sure that international business is right for your organization. While global business is a source of limitless opportunities, it is not for everyone.
- Review your own business at home and determine whether you’re ready for expansion or if you need to continue focusing on building your domestic market.
- Conduct thorough market research to understand the opportunities, addressable market, and the cultural, economic, and legal landscape of your target markets.
- Develop a clear financial plan that takes into account the costs of going global and your anticipated revenues and cash flow projections.
- Invest in new infrastructure and technology as needed to support your global operations.
- Build a local network of partners, suppliers, and customers in your target markets.
- Stay up-to-date on regulatory requirements and work with local experts to ensure compliance.
CONCLUSION
Global expansion can be an exciting opportunity for small and medium-sized enterprises to grow their business and reach new markets. However, it is important for SMEs to approach this process strategically and avoid being overwhelmed.
This involves getting leadership buy-in and commitment, conducting thorough research, developing a clear plan, building a strong team, and maintaining effective communication throughout the expansion process.
SMEs should also be prepared to adapt to new cultural, legal, and economic contexts, and be open to learning from their experiences. By taking a measured approach and seeking out expert advice where necessary, SMEs can minimize the risks associated with global expansion and position themselves for long-term success in a rapidly changing global marketplace.
You got this!
