Many business owners dream of expanding their business internationally. Not only does it open up the door to international travel and new experiences, but it also increases your number of potential customers — and, therefore, your potential revenue. Current events underscore how truly connected our world is.
The fact that international travel is getting easier, thanks to programs like the Visa Waiver Program, makes things more enticing. Global economies are now inextricably tied together, making basics like transportation — and necessities like supply chains — easier to acquire.
Even in the midst of a pandemic, you may be dreaming of an international expansion for your company. … [+]
However, there are several ways that international expansion can compromise your core business model. For example:
- Stretched resources: The biggest problem is typically stretched resources. It costs money and takes time to expand a business, and if you’re not careful, you could tap your resources before you’re able to get a foothold in a new country. This is especially true of ambitious young startups, which often collapse due to aggressive expansion. Spending too much money prematurely or funneling all your efforts into expansion can leave you with too little to work with.
- Cultural changes: Operating in a new country may offer you substantial cultural challenges. You may not be able to sell the same products and services, or you may struggle to find the right fit for your team. If you make too many compromises here, it can completely change the landscape of your corporate operations.
- Brand consistency: Similarly, your brand consistency becomes more difficult to maintain with greater space between bases of operations. Expanding internationally, that physical distance is enormous. You’ll have different leaders and segregated teams all vying for the same goals under the same umbrella, and this can make things incredibly complicated.
You might be itching to expand and capitalize on an opportunity once it’s safe to do so. What steps can you take to expand internationally efficiently without jeopardizing your core business model?
Do Your Due Diligence
First, don’t expand internationally for its own sake. It’s thrilling to think about the potential, but if the potential benefits aren’t grounded in reality, the effort of expansion could actually work against you.
The way to get around this is through exhaustive due diligence. You’ll want to prepare a gap analysis for your target local market, as well as a SWOT analysis (evaluating the strengths, weaknesses, opportunities, and threats) for the new location. You’ll also want to look at the local competition. Is there truly an opportunity in expanding here, or would you be trying to fit a square peg into a round hole?
This isn’t the kind of thing you can do in an afternoon with the help of Wikipedia. Once it’s safe to travel, you’re going to need to get your hands dirty by visiting the country, talking to citizens, and collecting as much data as possible to inform your choice.
Take Your Time (When Possible)
Expanding too quickly can kill whatever potential you had in a new country, so try to take your time. This isn’t always possible; you might be racing to beat a competitor or generate a new stream of revenue. But in many cases, you’ll be able to manage a gradual, controlled expansion. Keep a tight leash on your expenses, and don’t be afraid to cut your losses if the odds begin to look stacked against you.
Bring Interim Leaders
There are two common approaches when creating a team in a new country. In the first, executives try to build a new team entirely from scratch in the new country. In the second, executives try to bring a handful of existing people over permanently. Neither is efficient; in the first, you’ll struggle to communicate the values and expectations of your brand, and in the second, you won’t give team members in the new country a chance to develop on their own.
The solution is to bring an interim team of leaders to the new country. These leaders will be responsible for setting the tone and direction for the new team, as well as training new leaders. This way, you can build a foundation in line with your core brand while giving the new team legs to grow.
Create a Cultural Readiness Plan
No matter what, you’re going to encounter cultural barriers, like language differences or strong value differences with the population in the new country, including your employees. To counteract this, you’ll need to come up with a cultural readiness plan. Research to anticipate the big cultural hurdles that could stand in the way of your company’s expansion, and hire people (like translators and cultural ambassadors) who can help you ease the transition.
Even with these strategies in place, you’re likely going to struggle during the first few months of your company’s expansion — and you’re going to have to make some compromises. However, the more of your core business model you can keep intact, the higher your chances of success will ultimately be.