Every ambitious enterprise will reach a stage in their growth journey when they consider international expansion. One survey found that 87% of U.S. firms consider international expansion to be necessary to secure long-term growth. Here we look at the key reasons why you should consider expanding your business globally, and set out five steps you should take before making the leap.
What are the advantages of global expansion?
Serving your domestic market feels comfortable: You have prospered in that business environment, and likely know it very well. Expanding internationally, by comparison, feels risky — particularly where target countries have an unfamiliar linguistic and cultural environment. That said, there are compelling reasons why you need to start thinking about this. Potential advantages of growing internationally include:
Whatever your reason for expanding globally, there are several steps that you should take before making your decision:
We look at each of these steps in turn.
Explore the business case for expansion
You may have a particular target market in mind. Or, you may be interested in global expansion, but not sure which particular location to target. In either case, you need to establish a robust business case for the expansion decision itself, and for the actual method that will be used for expansion.
In some cases of failed global expansion, it seems implausible that there was a robust business case in place before the expansion decision was made. Consider the case of Starbucks lackluster expansion into Australia. Starbucks opened its first stores into Australia in 2000, growing to 90 stores by 2008. By that point, it needed to close 90 percent of its stores.
The demise of Starbucks in Australia was not entirely surprising to locals who have had a robust espresso culture since the 1950s. The relatively higher-calorie, and more expensive, Starbucks drinks, simply did not appeal in the same way that they did to North American and Asian customers. Starbucks’ fortunes in Australia only began to improve, it seems, when its focus shifted to a more targeted tourist market already familiar with its products.
So, what do enterprises need to do to avoid this kind of situation? In forming the business case for global expansion into a particular locale, enterprises need to consider the following elements:
Consider the financial impact on your existing business
If all goes according to plan, global expansion will significantly benefit the enterprise as a whole. But at the same time, it can pose risks to the existing business that need to be mitigated.
Businesses need to evaluate:
A key part of minimizing any negative impact of the expansion on the broader business will be ensuring that the right financial and legal arrangements are in place to support the expansion.
Assess possible legal and compliance issues
You are likely familiar with the legal and compliance environment for your business domestically. However, moving into another country requires you to be familiar with the rules as they apply in that new location. Matters to consider here include:
Collaborate with a strategic staffing partner
By the time you have made the expansion decision, it is likely that your enterprise has already built a significant product or service, and possesses a formidable reputation. It is important, where possible, to leverage this position and surpass your competitors by being ‘first to market’ in the chosen region. In order to do this, the enterprise needs to be able to deploy staff quickly and compliantly.
This is where a global staffing partner comes in. Through Professional Employer Organization (PEO) or Employer of Record (EOR) solutions, you can onboard staff at speed, often within a matter of days.
Global staffing solutions mean reducing or eliminating administrative and compliance headaches, so you can focus on growing your actual business. If all goes to plan, you will also gain the ability to compete with larger businesses, at the same time as scaling your business in a quick and compliant manner.
Using a PEO means your company can:
Refine your recruitment strategy
The final step in working out your international expansion strategy is recruitment. By partnering with an international recruitment company, you gain access to a worldwide pool of candidates. It is through assessing both local candidates and foreign candidates that companies can find the most suitable candidates who will support growth in the new market.
Indeed, tapping into an international team can provide your company with significant advantages, including:
Your recruits can fill important roles within your company, such as:
Any good recruitment provider will customize a recruitment project to match your company needs, enabling you to target candidates that have the right education, experience, and background to advance company goals and integrate well into your existing staff.
At a certain point, expanding overseas is likely to make sense for any enterprise of a substantial size. But before doing so you need to consider: