The advent of the internet meant that it wasn’t just big companies that were now able to expand their offerings overseas. With the ability to ship your physical product virtually anywhere by partnering with giants like Amazon or taking advantage of available local courier services; or offer your professional services via webinar, email, or video conference, the playing field is much higher.
But like any big business strategy decision, conquering new territory – or even just gaining a foothold – comes with its own set of challenges. And while every business is unique, there are some advantages and disadvantages that are common across fields.
Let’s see:
Less competition
The main reason the company considers overseas expansion is a saturated local market compared to the area they want to target. Maybe the product you offer doesn’t exist elsewhere, or consumers in that area more easily fall into your ‘ideal customer’ category.
You need to consider, however, Why there is less competition. Your product may be outside the affordable price range for the average citizen, or the language barrier may be overwhelming. Before you go full throttle, make sure you’ve done very thorough market research, and ideally take the time to actually live in the area.
There’s no better way to experience what doing business there is like.
Countries actively encourage foreign investment
If taxes, fees, rates, or other financial hurdles in your home area make it difficult to run a profitable business, basing your main operations elsewhere may be a potential solution. Take the case of tax havens like Mauritius, for example.
This tiny island nation of just 1.3 million people has an impressive -and growing- economic power for its size – which has been largely achieved through DTI policies that encourage foreign investment and increase the ease of doing business.
Companies that focus specifically on Mauritian company services actively assisting overseas businesses in every step of the way. Focusing your expansion efforts on these kinds of countries will make for a smoother transition, though you may have to face more competition as a result.
Dealing with language barriers and cultural differences
This is another source of potential problems that can only be mitigated through thorough market research. Whether it’s translating your website and marketing materials into a new language that may have subtle nuances and potential stumbling blocks that you weren’t aware of; or consider and identify cultural sensitivities that could conflict with your message, these are activities that are best done in the field.
While you probably don’t have to spend time alone in the country, you will definitely need a local consultant to help you. If you don’t have the resources to do so, it might be better to consider an area a little closer to home, at least culturally. On the other hand, being the only business ready to take the risk of expanding across more challenging borders can reap huge rewards if you do it right!
Hedge your bet
Doing business in more than one country or region can make your overall business more resilient. Trends may change quickly in your home country, but you may have more time to adapt in an area with growing marketuse what you’ve learned at home to get ahead there.
If one end of your business suffers a loss, the other’s profits can be shifted to prop it up if necessary. Market fluctuations also naturally have less impact if you are spread across different markets.
The potential downside to this is that your resources are spread more thinly. Things that you might notice quicker if you only pay attention to one business center can slip through the cracks.
Time zone
In the best case scenario, you can use the different time zones to your advantage. This can go through things like being able to offer 24/7 customer support internally
and make employees in your remote office work and make money for the company even while you sleep. The losses can be just as great. Connecting and communicating with your staff aisles around the world can be tricky, especially if there’s an emergency and they can’t reach you in time. For this reason, highly time-sensitive industries find it more difficult to operate when their sister branches are located on opposite sides of the globe.
Regardless of the size of your industry or business, you will need to spend a great deal of time researching and balancing the pros and cons before making a decision to expand overseas.
