Realizing you’re ready to expand is a major milestone for any company, regardless of whether you’re a startup or a well-established local business. Sure, it’s not going to be easy, but with the right strategy and leadership, there’s no reason your expansion, be it national or international, shouldn’t be a roaring success.
Any savvy business owner knows that growing in the wrong way — or indeed in the wrong places — can devastate a small company. So before you book that one-way ticket to the farthest reach of the earth where you’re certain your business will make light work of the local competition, ensure to conduct your due diligence with extensive research.
The nuances of what makes a location financially viable and potentially lucrative are deeply grounded in basic economics.
Let’s say you’ve invested heavily in Germany and are keeping track of their consumer price indices. You note the country’s inflation is on the rise. An informed business owner would instantly recognize an imminent increase in interest rates by the country’s local bank, which would hurt your equities were you to set up shop in the middle of Berlin.
Then there’s the gross domestic product, which represents the market value of all final goods and services produced within a country in a given period of time. GDP is an integral economic indicator to watch out for when you’re considering expansion because it directly informs you on how the country is performing. Rising GDP and benign inflation rates generally indicate that a country is a fertile ground for nascent business opportunities.
Registering Your Business
The difference in the time it takes to register your business from country to country is staggering. In New Zealand, your company could be registered within a day. In Venezuela, South Africa and India, it could take over a month. These variations stem from numerous factors, not least regulations, infrastructure and bureaucracy.
Furthermore, you obviously need to consider what practical and logistical obstacles you could be up against in any given location, such as the availability of electricity, water, technology, premises and talent. What are the costs of labor and materials? What is the average local wage for those positions you’re seeking to fill?
None of this is to assert that expanding to a country where there are obstacles is a bad idea in itself — only that you need to be absolutely sure your destination’s market will mitigate your setup costs. Which is why it’s imperative to conduct market studies.
Conducting Market Studies
It doesn’t matter where you’re considering expanding; you should still be asking yourself the same fundamental questions and then conducting research into each:
• Is the new market large enough to be worth the expansion? Ideally, you should seek to be moving into a market at least the size of your home market, if not bigger.
• Will your product or service be welcomed in the market? Collate local opinions; conduct surveys. Research the performances of analogous businesses already operating in the area.
• Is the competition beatable? It’s all very well if you have a fancy website and your competition has a low-grade one, but if they have a solid network and fantastic local reputation, then outperforming them will by no means be a given.
Employment And Tax Regulations
Since the laws of the land govern everything from whom you can employ to how you’re required to comply with business tax, investigating the regulations of your potential destination is imperative.
All this being said, the employment and tax regulations per se should not stop your business from setting up if market conditions are highly favorable. Just preempt the associated issues that could arise and seek guidance from relocation experts to guarantee compliance and minimize risk.
Economic And Political Stability
It doesn’t matter if your preferred destination for your business’s expansion has superlative talent, infrastructure and business culture. If the economic or political landscapes are volatile, your luck could turn on its head in an instant. This is, unfortunately, an issue that plagues markets with respective governmental instabilities.
Whatever you decide, it’ll be one heck of a ride.
The importance of research and due diligence when deciding how and where to grow your business cannot be underestimated. The location you expand to can make or break your company. It’s that simple.
No business is immune from the obstacles and tribulations of expanding to a location with which they have no prior knowledge or experience. But with a positive attitude, strong leadership and intricate preparation, these challenges are not only surmountable but also will serve to make you a far stronger company in the long run.