Confronting 6 Snarling Expansion Fears
Expanding into international markets can be scary. The culture can be unfamiliar, the language might be new and the business prospect might appear incredibly risky. But, it can also be an amazing opportunity for expanding a core business.
Check out these factors that inspire entrepreneurial fear before expanding into new markets -- and learn how to overcome them:
1. The cultural gap.
Entrepreneurs know that they don’t always understand the intricate weave that comprises a country's business culture, including its norms for recruiting, vendor negotiations, lead generation, sales and marketing.
This fear can be remedied, however, by being open and ready to learn. Research the market as much as possible. Learn the language. Ask a trusted colleague or partner for advice. Listen to any counsel granted for free or seek reliable paid advisors. Just don’t forget to listen to them.
2. A lack of money.
Underestimating the costs of entering a new market and thus venturing abroad underfunded is a significant concern for many entrepreneurs. They know that many startups expanding into new markets find themselves unprepared for the high costs of setting up their business and want to avoid that mistake.
Study the target market ahead of time and plan for higher expenses and a long setup period. If possible, have more capital than seems necessary.
3. The product's suitability.
Just because a product or service sells in one country doesn’t mean it will in another. Entrepreneurs are aware of this and worry about expanding into a new market.
A little bit of research can go a long way toward putting such fears to rest. By researching cultural, financial, regulatory and legal aspects of the new market, entrepreneurs can figure out how to customize their product or service and realize success.
Companies that are fairly well established in one market can make the mistake of transferring assumptions from the home market to a newly formed division. Fresh operations in new markets can require time to take off.
Carefully plan for the launch and future growth and prod the local team in the new market, but set realistic and attainable goals for the new division. Don’t assume that everything that worked in one country will work in another. Each market is different. While entrepreneurs should definitely try methods that proved successful in elsewhere, they should stay alert and be open to change. Have a plan B and plan C. Don’t fixate on past proven methods.
4. Hiring unknowns.
When expanding into new markets, many entrepreneurs are unsure about whom to hire and might promote someone from their organization who lacks relevant experience. While the employees might know the business well, they might not be experts in the culture overseas.
Instead, hire locally to create a new team focused on building, executing tasks and growing the business. These staffers can easily learn about the company, but the local culture is harder to pick up.
5. Management inefficiency.
When expanding a company abroad, figuring out the best management structure for running multiple operations can be tough. Many companies make the mistake of holding on to control from headquarters, even though people there may lack the experience or ability to manage a remote operation.
The wrong management structure can make everyone miserable and impede a local team’s ability to grow the business. Make sure top managers are involved only when they can add value and encourage them to learn and be open to the experience and expertise of the local operation.
Be flexible enough to accept and embrace change, even if it requires frequent rethinking or restructuring.
6. Regulatory risks.
Entrepreneurs can be nervous about legal complications jeopardizing an expansion effort. Before venturing into new territory, study the regulations for that industry and look for potential compliance challenges. Then form a business strategy to reduce the risk.
Be sure to have a legal advisor to avoid receiving an injunction or a cease and desist order that could kill a young operation.
What are other hurdles to international expansion that you've overcome?