Most business owners are mainly focused on growing domestically. However, they may be missing out on some major growth opportunities. According to SalesForce, over 90% of the business population represents small and medium-sized businesses. SMEs plays a huge factor in global economic growth by providing jobs, encouraging sustainable industrialization, and cultivating innovation.
Take the Herschel Supply Co. as an example. The Vancouver-based Herschel Supply Co. is an accessory brand that was founded in 2009 by two brothers Jamie and Lyndon Cormack. In less than a decade, the family company went from selling a few thousand backpacks to selling millions of hats, wallets, backpacks and other accessories in more than 70 countries around the world. Those who are brave enough to take the risk have the potential to make a lasting impact on the global economy.
Keep reading for 5 tips for SMEs on expanding globally.
The beauty of the global economy is that every country and culture is different than the next. What may have worked for one country is not going to translate well in another. Since the global economy is so diverse, it is a given that you must research the market you intend to enter. What are the people in your market like? What cultural influences affect the way they purchase goods and services? What is your intended audience or demographic in your market? Make sure there is an actual demand for the service or product you intend to provide.
Also, consider what the local competition is like. Is there already a leading local business offering similar services? What are they doing to reach their consumers? Let’s look at Starbucks for example. Starbucks is an immensely popular coffee chain in the United States, even more so around the world. There is one on almost every block. Despite being an international coffee powerhouse, it did not do very well in Australia, where there already is a competitive coffee culture. Starbucks could not compete with “local stores’ homespun hospitality and boutique qualities”. The lack of market research gave locals the impression that Starbucks lacked originality and, in the end, Starbucks failed to make a lasting impression down under. Studying your market will help your entry roll out smoothly and leave you with satisfied customers who trust your business.
If you are planning to take your small business overseas, the first thing you want to consider is your global business plan. Before settling on the when, where, and the how, take a moment to figure out the why. Dig deep to define exactly what the purpose is behind your overseas expansion. Is it to generate revenue from a new region and new customers? Is it offering more services and product options in a new country? You may want to revise your current domestic business plan in order for it to work overseas. Be sure to leave room in your plan in case your company needs to make a pivot.
Then, set your goals for growth. Decide which markets you want to enter. Check to see if your business has the financial flexibility to fund an overseas venture. Then tailor your marketing plan to align with your values and goals. The more proactive you are with your global business plan, the more likely the chances are that your business will succeed.
An expanding globally is no easy feat. Only 78.5% of small business survive their first year. A lot can go wrong when making your way across the globe. There is inevitably going to be a language barrier when entering a foreign market. Consider learning the native language or hire a foreign employee in the native country through employment solutions, such as NNRoad.
Not only will these individuals speak the language needed but they will also have a profound understanding of the culture and the way people interact with one another. Entering a new market also comes with learning the laws and regulations required to do business abroad. Be prepared to do some extensive research on what the business practices are like in your new market to avoid legal complications.
Finding the right people to partner with before your business hits the ground can make a significant difference in your global success. About 8% of start-ups failed because they neglected to network or get their investors involved. Building business relationships with other local businesses in the region can turn into a win-win situation.
Overseas companies provide local knowledge, but they can also provide you with resources that you may not have, such as shipping, storage, or local talent. A business partner that can help you serve your customers while your business helps serve their own can help build your own company’s reputation in your new market. This can also lead local investors to potentially fund your growing business. The possibilities are endless when you form trustworthy and genuine connections with the people you work with. You do not have to run your business alone.
Expanding globally will require you to expand your workforce. For smaller businesses, growth with limited resources means that hiring decisions are crucial and have no room for errors. Some countries will prefer that you hire from within their pool of local talent, while others prefer to bring your skilled workers to them. Does hiring through referrals and word of mouth work better in your new market? Or are candidates more accessible through social networks and the internet? Understanding the best way to find qualified candidates in your market will yield better results in the long run.
If you want to test the waters before breaking ground for a new office space overseas, you might want to consider using employment solutions through a PEO (Professional Employment Organization), like NNRoad. A PEO allows companies outside of the country to hire quality employees without setting up a new legal entity. This makes entering a new market very cost-efficient and all liabilities are taken off your hands by the PEO.
Global expansion can be a natural evolution for any business.