You need to score at least two out of three to qualify for a good case
What are the justifications for doing this?
When is the timing right?
What is the best way to do this?
These are three of the most important questions to ask when it comes to overseas business expansion.
This post aims to answer these questions and offer insights on how to make the most out of the globalized business landscape.
Why should you consider expanding?
There are three possibilities:
- You want to generate more revenue.
- There’s demand in a new market that matches the products or services you are offering.
- The local market is getting too crowded and local customers no longer favour your brand.
Businesses naturally expand to make more money.
It’s inherent among businessmen to seek more. It’s not necessarily being greedy.
It’s just illogical to forego opportunities for growth, especially when the facts on the ground are favourable.
It is also instinctive for determined and astute businessmen to branch out to a new market with a high demand for products similar to what they are selling. Businesses typically spend time and resources to discover new markets.
It does not make sense not expanding when a new viable market has been found.
Moreover, it’s only commonsensical to expand when a surfeit of competitors have entered the present market for your business.
When your products are no longer preferred by the customers you used to call frequenters or patrons, it’s high time to consider expanding overseas.
These three reasons for expanding are generally interrelated. You need at least two of them for you to put up a good case for expansion.
It’s not enough that you just want to generate more revenues. There should also be demand in the new market you want to expand into, or you are forced to find other greener pastures as stronger competitors slowly eat away your customer base.
When is the right time to expand?
You may have encountered eager pundits who would say that the right time for business expansion is “now” or “as soon as possible.”
Know that haste almost never gets you to the best outcomes.
Expanding your enterprise overseas needs to be meticulously planned and should only be done once you are ready.
How do you know when you are ready for expansion? The following circumstances should be good indicators.
- Your customers are asking more from you and you have a growing customer base abroad.
They could be looking for a product that is related to your present line of products, and something you are capable of offering. Not responding to the clamour or demand can make your customers go to your competitors.
- You have regular customers and steady profits.
It’s not a sound business decision to be satisfied with a constant stream of revenues and profits. If you are already on a comfortable point in your business venture, it’s the best time to explore other opportunities and reach out to new markets.
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- The sector or field your business is in is expanding or evolving.
You can’t be stagnant when the industry your business is operating in is advancing. Refusing to level up will not only mean sustained stagnation but will most likely result in falling revenues and profits. Your business may even head to devolution or irrelevance.
- You have a lot of unused cash.
If your business is too liquidy, it’s only logical to find ways to put the free cash to good use. Expanding internationally is an ambitious endeavour but definitely worth considering.
- A new market, especially overseas, presents a tempting scenario of high demand and profitability.
This does not mean that you have to instantly grab an opportunity you deem feasible. Make sure you study the new market carefully. Be cautious but have some optimism to try uncharted grounds after seeing high potential demand, good purchasing power among prospective customers, and overall market receptiveness to what you are offering.
How should you expand your business?
Is there a formula for expanding your brand overseas? Nope.
The how’s of business expansion are dependent on the kind of business you have and the market you are trying to exploit. However, the following guidelines should be helpful.
- Meticulously and scientifically study the new market and carefully plan your strategy.
This sounds cliché, but it’s still worth repeating. You can’t just go to war without the knowledge of the terrain, opponents, preparations, and the right weapons.
Conduct thorough foreign market research and feasibility study to find out if it’s really worth expanding to the market you are considering, or if you should try other new markets. Arm your venture with accurate and relevant information about the competition, potential customers, and the most suitable business tactics and marketing campaigns.
- Localize or make your branding and promotions compatible with the new market.
Yes, the process of adapting your strategy for a foreign market you want to capture is also called localization. You have greater chances of success in your attempt to go global by thinking local (at the standpoint of the new market you want for your business).
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Localization, however, is not just about translating your product labels, slogan, advertisements, or brand jingle into the language of the prospective customers in the new market. It’s a more sophisticated form of language-to-language as the resulting translations have to be culturally sensitive, appropriate, not offensive, and relatable to the target customers.
To achieve the best results for your marketing campaigns and to make it easier for potential customers to get accustomed to your products, it’s important that everything is localized.
- Form a committed and proficient team.
For any business activity, human resources are a vital component. If you want success, you have to make sure that the people you work with are competent and convinced in the goals you seek to achieve for your business.
- Develop solid plans and contingencies.
You should have all the standard business plans and more, from the financial to the strategy, operations, and even the growth plans. It’s important to have details and projections to work with, so you can formulate courses of actions in case events don’t turn out as expected.
Study how you should deal with the government or regulations in the new market. Learn the best tactics for setting prices. Don’t forget to carefully organize your logistics. Find the best ways to lower operating costs while maximizing profits.
- Consider all the leverage you can use.
Moreover, it is advisable to use everything you can to facilitate success. You can forge tie-ups or collaborations with local players (in the foreign market). See how far your business network or connections can take you to cushion the difficulties you may encounter.
Once you have solid answers to the why, when, and how questions for your overseas expansion, it’s safe to say that you are on the right track.
Expanding overseas entails major capital outlays and challenges that can test the limits of your business acumen and management skills. You need to plan and be prepared for the many hurdles that may come your way.
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