Thinking of taking your business overseas? It’s not as simple as expanding into new markets in your company’s home country. And even large enterprises and big household names might fumble when stretching across continents and oceans. Going global carries unique risks and challenges, from translation errors to products and services that never quite catch on. Make sure you know about the common challenges companies face with international business expansions and how you can overcome them.
Mastering international marketing
Designing an international marketing campaign that resonates is easier when you have a locally-based partner. You can establish this partnership through a joint venture, supply chain vendor, or an employee that lives in the country where you’re planning your expansion. Localized partnerships can provide your business with cultural, language, and lifestyle insights you’d ordinarily miss.
By investing in a virtual address for LLC registration, you’ll also give local prospects an easier way to find and contact your business. You’ll be able to execute digital international marketing campaigns, giving leads a way to reach someone in the same time zone and language.
Dealing with trade tariffs and local competition
Before you decide on an international expansion strategy, you’ll want to research the market thoroughly. This research includes tariffs imposed on imports for any products you intend to sell or raw goods you’ll need to ship to manufacture products locally. You should also look at direct and indirect competitors.
For example, if you want to sell furniture in another country, you’ll likely be at a disadvantage if local companies already sell the same thing. You’ll have to absorb the additional tariff expenses somehow, either by pricing your products higher or finding a way to cut costs. Alternatively, you can choose to compete using a strategy that doesn’t focus on price if there’s a market gap for premium or exclusive versions of the product.
Keep in mind that some markets aren’t as favorable to foreign international business competition. You’ll want to find economies with a good balance between opportunity and favorable political and legal conditions.
Plan for supply chain risks and disruptions
When you operate overseas, distance can create additional supply chain risks and disruptions. Unless you’re exporting to another country that borders yours, you can’t just rely on trains and trucks to transport your products. You’ll usually have to incorporate other shipping methods into the mix, such as cargo ships and airplanes.
However, shipping methods are dependent on global vendors and labor. Products and raw materials also have to make it through customs. Larger distances increase the probability that your company will be dealing with more than one set of government regulations and customs officials.
Threats like the global coronavirus pandemic reveal how vulnerable global supply chains are. A lack of labor increased restrictions, and constrained resources can lead to international business product shortages. The inability to ship products and receive raw materials can compromise a company’s ability to sell and generate profits. Building in contingency plans and budgets can help you hedge against disruptions.
Dealing with more than one set of regulations
Operating in global markets means you’ll be dealing with more than one set of tax regulations, acceptable business practices, and potentially labor laws. You can’t just shove these regulations off or claim ignorance. Your company could receive fines and penalties that might hurt your ability to stay in business.
To prepare for various sets of regulations and international business compliance issues, it’s best to retain legal counsel. You’ll want someone who’s based in the local markets you’re in or a lawyer who’s quite familiar with the regulations in each country.
Sometimes you can enlist the help of global professional employment organizations or employer-of-record services to deal with labor laws. These organizations help you hire international employees and contractors without violating payroll regulations.
Hiring and managing global staff
If you have employees based in several different locations, you already know it’s more difficult to communicate with them. Time zone differences and physical distances can lead to miscommunication and feelings of isolation. When you have international staff, there is international business also cultural differences and language barriers.
Cultural norms can lead to variances in work expectations and styles. You can research cultural differences and work expectations diligently and enlist the help of a local manager familiar with the culture. While a professional employment organization can help with some aspects of communicating with and managing international employees, there are limitations.
Since you’ll still be delegating and evaluating international business work assignments, you may find it easier to expand into countries with similar cultures. For instance, it may be easier for someone from a North American and Western country to manage employees in similar nations.
Before you go
The decision to move forward with international business expansions should be based on detailed research, planning, and the acquisition of adequate resources. Remember to enlist the help of locals whenever possible.