Planning for International Expansion is Critical for Success
The distinction between going global and international expansion is a matter of perspective, but you should understand where you stand. If your goals and objectives are viewed in terms of global potential, then, you’re going global. If your plan is to develop certain identified markets within a given time frame, then international expansion better describes your intent.
Not every business is ready or right for international expansion, but research and planning add clarity to the picture of how your business is positioned and if it’s ready to cross boarders. It’s true that with the proliferation of websites selling to and from countries all over the world, it might seem easy. Don’t be fooled. It takes planning and a strategy for success.
There are obvious advantages to international expansion, like a new revenue stream, but that stream can dry up quickly without proper planning.
First things first. You can’t get financing without a business plan, and you’re probably going to need financing.
You can try to finance the expansion through the business itself by cutting costs, reinvesting profits, finding new markets or selling advertising on your website. Even if these measures don’t raise the amount of capital you need, they will lower your debt obligations, making it easier to obtain additional financing.
Other financing options are drawing on your personal funds or asking for a personal loan from family or friends. Commercial loans, Private Equity loans and Venture Capital are other resources you may need to explore.
Taxes, labour laws and banking in other countries present issues that most small businesses find intimidating and perhaps overwhelming. If you’re thinking of international expansion, be prepared to pay for professional advice. Unless you have an MBA from the Harvard Business School, you don’t want to navigate those waters alone. Even then, it’s risky to go solo on this voyage.
You did your homework when you started your business. Now you’re thinking of going to graduate school, metaphorically, so get ready for more homework and more research.
Success stories and lessons learned
It’s good to learn from your mistakes, but far less painful to learn from other’s mistakes.
In an article from Fox Business Small Business Center, David Greenberg, a successful entrepreneur who recently went international with his in-home tutoring business related two lessons learned. He acknowledged it would have been better to have made a website for each country rather than using one international website, and to have focused on fewer locations, using bilingual sites customized to the culture of each country.
In the mid-1990’s, Intuit launched its global tax preparation software, but it didn’t take off. They had merely translated the words without considering the culture and native languages of the countries to which they were trying to sell. Years later, they saw the value in hiring local people to help them understand the new market, resulting in a successful international expansion.
Ticketbis, founded only four years ago in Spain, is now present in over 15 countries. They raised funding capital through stages of investments, but it’s significant to note that they chose private investor input in order to maintain their independence and management nimbleness. They also hired local professionals in each country for a better understanding of the culture and needs of each country where they operate. Ticketbis is a platform for buying and selling tickets to events worldwide.
When Subway, the sandwich chain, decided to go global, they first identified only 10 major international markets. They have since moved well beyond those original 10, but with each expansion they closely examine the economics of the potential markets. No one can deny their success.
With proper planning, a well-defined strategy, financing, and professional advice in the inevitably murky waters of other countries’ laws and customs, success is possible.