Growth is a major goal for any business.
Without growth, a company will have a difficult time maintaining profits and meeting its obligations. It will also be unable to keep up with competitors that are effectively growing their business and expanding into new markets. How much growth is enough, though?
For many companies, growth targets are focused on expanding beyond local markets. Depending on the products or services provided, some may even seek national distribution in hopes of reaching a wider range of potential markets. Given that e-commerce and online services make the global economy a much more achievable target, is it thinking too small to simply hope to sell your company’s products from coast to coast?
Considering International Expansion
With the advent of the internet, more businesses find that international expansion is a much more reasonable prospect than they might have thought.
Depending on their specific products or services, there may even be good incentives to consider expanding the company’s reach internationally.
International expansion offers the following advantages:
- Opens new potential markets that may be untouched by competitors
- Extends the life cycle of current products by finding new territories to sell them
- Reduces dependency on existing markets that may be oversaturated or experiencing periods of instability
- Avoids issues caused by seasonal or periodic changes in demand in existing markets
- Introduces new competitive strategies learned from foreign companies that can then be applied to competitors in local markets
There are several other reasons that you might consider international expansion as well. With that said, it is important not to rush into an expansion if your business is not ready to compete in the global economy.
Is Your Business Ready?
Before pursuing plans for international expansion, it is important to first assess how ready your company is for the possibility of international competition.
Collect data on the international markets you’re considering an expansion into and assess whether there is a sufficient demand for your product or service to justify expanding. Research tax codes, import and export costs, business regulations and any legal issues that you might face with the expansion as well. There is a lot that can go wrong with an international expansion if you are unprepared, so it is your job to make sure you have as much information as possible before moving forward.
While analyzing the product demand and the various hurdles involved with joining the global economy, you must also ensure that your company is financially sound enough to afford the expansion. If necessary, you can take on additional loans or debt to finance the expansion, but you need to make sure that there will be enough income from both local and international sales to cover repayment once everything is complete.
If you can’t afford the cost of expansion, it would be wise to wait until you can.
Developing an Expansion Plan
Provided there is sufficient reason to expand your business and there are no other roadblocks preventing that from happening, the next step is to develop a plan.
You need to make sure that you can establish the necessary infrastructure and move forward with the expansion without running into problems. The more detail you put into your expansion plans, the less likely you are to encounter difficulties with them later.
Expanding your business into new territories in other countries can seem like a daunting prospect. Provided that your company is ready to take that step, though, the benefits can very well outweigh the risks. Do not enter the global economy lightly, but also don’t be afraid to make that move if you’re relatively certain that the time is right.