Expanding overseas? Follow These Steps to Ensure Success
Entrepreneur's New Year’s Guide
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Oftentimes, when companies are operating in the same region for a while, they hit a growth plateau. At this juncture, it is imperative for organizations to expand their operations, preferably overseas, to cater to and grow among an entirely new user base. Although expanding overseas sounds like an exciting prospect for the progress of an organization, shifting base can be an incredibly cumbersome and laborious job. From getting permits to studying the target base, it can take months of research and development before the actual expansion is underway.
Challenges faced by companies expanding overseas
Companies, especially small scale ones, face numerous challenges while expanding overseas. One of the most significant roadblocks of moving overseas is adapting to the different cultures and traditions of an entirely new country or continent. Further, companies expanding overseas may underestimate their new cross-border competition and fail to devise competitive strategies. Sometimes, companies fail to meet regulatory processes of a certain area due to a lack of awareness. They might also fail to study their new market and through their product or service, introduce a solution to a problem that does not exist in the market they are targeting. All the aforementioned reasons hinder the growth of expanding companies and prevent them from lifting off the ground even if they are well established in their original area of operation.
However, the benefits of expanding to a fresh, untapped market outweigh the risks by leaps and bounds. If yours is a company that needs to expand overseas, here are some steps you can follow to make the transition smooth and ensure success:
Identify your competition
Before you decide if an area is a good fit for your company, gauge the market for related businesses and companies working in the same industry. To be successful in a new area, your product or service should bridge an existing gap in the market. If you are offering a solution to a problem that does not exist in the market, your product or service is at risk for failure. Further, if you are introducing a product or service that already exists in the market at a higher price, customers might overlook your offering. To ensure success, you need to introduce a product or service that is significantly better than those that already exist, and is affordable as well. An in depth analysis of the existing competition and a thorough comparison of their products with your offerings will ensure that you are not thwarted upon arrival at your new location.
Carry out ground level research
Ground level market research should be the next step before setting up shop in a new location. You can never have too much data about the needs and preferences of your target market. In order to establish yourself as a reliable and beneficial brand, you will need to know exactly what your target market lacks and how you can add to it significantly through your offering. Try and paint a full picture of the industry, its existing players and where it lags. Carry out segmented research to identify a target base, prepare a gap analysis to identify what consumer needs are not being met and carry out a SWOT analysis to identify if your brand will fulfil these needs in the most efficient way possible. Through ground level research, you will connect with your potential client base and get a good glimpse at the temperaments and requirements of the people you will be selling to.
Meeting regulatory requirements
Business regulations, tax codes, legal requirements and packaging standards differ from region to region and it is extremely important to gain complete knowledge about them beforehand. Ensure that you do your due diligence and refrain from breaking any laws due to the lack of awareness. Set up your tax and finance infrastructure in advance to avoid last minute hassles. In this case, it can be a good idea to learn from the experiences of other companies that have already expanded to your potential new market. Get as much information as you can about the regulatory requirements that they had to meet before starting operations in the area. Further, ensure everything is in place legally and get the necessary documents and permits before embarking on your entrepreneurial journey in that area.
Develop a regional strategy before going global
A company expanding globally usually focuses on its existing local and all-encompassing global strategy. However, companies also need to create a regional strategy to cater to the specific target group of its new location. It is also a good idea to strengthen your regional strategy for your existing location. Companies that have a steadfast presence in their home base have higher chances of recognition and recall in their new area of operation, and subsequently, higher chances of success.
Have a clear demarcation in terms of numbers and timelines
Carefully calculate and define your timelines in terms of product launch, sales targets and profits over given time periods. However, do not be too rigid with these timelines as the initial months after expansion may be slow for your business. Nevertheless, with a clearly defined target market, a powerful marketing strategy and a high quality product, business is bound to pick up and you will conquer your new market in no time.
Look for a local partner you can trust
Finding a local partner in your new location is the best way to capture your customer base with targeted marketing and segmentation. Look for someone who has garnered substantial knowledge about the market and can help you earn profits with minimal setbacks and delays. This is especially beneficial if you plan to send your products to the overseas location without being physically present there yourself. A local partner can also help you with his familiarity with the regulatory requirements of the region while also connecting you to his existing network in the industry.
When you have taken care of all the aforementioned guidelines, your company is sure to taste success as it readies to expand to the new area, ready to take its first step towards becoming a global enterprise.