Businesses are booming in the US despite the recent pandemic and the energy crisis. This massive growth has allowed many companies (especially online businesses) to reach out to a global market.
Businesses are booming in the US despite the recent pandemic and the energy crisis. This massive growth has allowed many companies (especially online businesses) to reach out to a global market.
As of 2022, the “United States is the leading country by the number of startups (71,153)”. If you’re one of the many CEOs considering jumping into a new audience, remember that you need your armbands before you leap. These metaphorical armbands are, of course, a knowledge of the global economy, laws, and cultures that you will be mingling with.
You cannot simply open up your doors to a new audience and expect them to instantly love you. Instead, research is required to take your company global.
Before you do anything, you need to ask yourself some important questions about your business and goals, and then create a plan if this new venture fails. Preparing for failure will not drive you towards it. Instead, you can quickly identify that things aren’t, can close down aspects of the transition and save your existing business.
Ideally, you should take this moment to consider the most relevant questions for you and your business. To help you get started, we have a couple of pre-made suggestions to ask yourself. The more questions you can think of, the more understanding you will have of your future global business.
This question should be an easy one. First, consider which country you want to target. If your answer is “the world”, then you need to be more realistic. Knowing your business and your experience, consider which countries would receive your company well.
Perhaps you want to expand slowly; in which case you could pick a country that is geographically close to your own.
If you are a very hands-on CEO and you want to handle as much of the business as possible, but don’t know more than your native language. This restriction means you should pick a country that speaks the same language as you.
If you know there is a bigger market for your product or service in a specific country, then maybe that one should be your first target.
Make a note of these concepts, to help you narrow down your first country to expand to.
Now that you’ve narrowed down your list of expandable countries, you need to research the business sector in these areas.
Look specifically at businesses similar to your own. They don’t have to be exactly the same, but the more accurate they are to your own business can help you compare possible success rates. We suggest running a credit check to compare how well they are performing. Check out to our “Using Credit Reports To Protect Your Business” section further into the article to learn how.
You may think that “no one is doing what I’m doing”, but in reality, there will always be a connection somewhere. Look for the similarities and draw the data from there.
This stage can take a lot of time and money as you investigate the businesses' wants, desires, and spending habits. The more accurate you are, the more likely you will understand your new demographic.
To start your chain in a new country, you will have to spend some time there, and possibly live in the area for years. To manage this move you need to be comfortable in the country.
Each country has its own culture, which includes a different business etiquette. For example, in China, it is customary to provide a gift to someone you are conducting business with, while in the US that can be seen as bribery. While in France, punctuality is considered a casual concept, and staying late is more common than starting “on time”.
Before committing to a country, understand their cultural opinions and how that will affect your ability to work comfortably in a new social dynamic.
Depending on what type of business you have, you may need to send in a lot of products through lorries, trains, or planes. In this case, you need to consider the country's road systems and navigation expectations to understand how the cost and type of transport will affect your business.
More time might be needed to get the product from A to B, especially if the transport has to travel through many different countries. The cost of travel may create a financial barrier you were unaware of. On top of this, you will likely deal with customs in the transition. Make sure you research how each country deals with imported goods, including finances, time scales and restrictions.
Consider your route, the safety of that route, and the time it takes to complete this route too. At this point, we are just sketching ideas, so the finer details don’t need to be exact. However, if you don’t consider this problem, you may end up spending more money or time than expected.
While you are creating your expansion, your current business may need to prop up any loans or agreements.
If this plan of globalization fails, then your original business will take a hit too. Remember that “roughly 20% of new businesses worldwide fail within their first year”, so take this likelihood seriously.
Small businesses are the most likely to fall into this trap, expecting the transition to continue smoothly forgetting the risk to their own business.
Your contingency plan should contain an “It’s not working” red line, which tells you that you’re losing too much money in the transition. Understanding how much risk you are willing to take, and stopping continuation before it harms your business too much, can help you stay afloat should the worst happen.
Now that you are sure of the country you’re picking, and you have a safety net to protect you should your expansion fail, you can begin your journey of going global.
Generally speaking, there are 3 types of global strategies. There are “Standardization”, “International” and “Multinational”.
Standardization is when you sell the same product, as it is, in every location. This means you don’t change the labeling, the selling technique, or anything else. This can make creation and transportation easier, as countries can share products when supply is low.
International is when you sell and buy products from other countries. Your country of origin continues to be the main area in which your products or business resides, but you make contacts with businesses around the world. This can give you more control should a country's financial market collapse.
Multinational strategies are when you re-shape your business to sell better in each country.
For example, in Western countries, individualism creates a culture of unique identities. Adverts match this idea suggesting their products will make you more interesting and special. While in Eastern Asia, concepts of collectivism and community are strong, so branding your products to reflect heritage would be more profitable.
Understanding how you want to market your product or service means creating a detailed strategy based on one of these three ideas.
When you create this second head to your business, you need to ensure a structure is in place to allow the two heads to speak.
A solution that works in one country may not be helpful in another. Allowing each area to make its own decisions, but still communicate openly with the HQ office will allow each sector to edit and adjust to the new cultures without delay.
Ensuring open communication will also allow each location of your business to see how they are coping with changes, and learn if their adjustments can be used elsewhere. They can understand how different directions may be needed to overcome obstacles.
Every country will have its own legal system which you need to navigate through. Ideally, you should hire a business lawyer in the country you are planning to expand to. They can teach you about the laws of the country, what taxes you will need to pay and what is considered a legal product.
If you have a large business, it is wise to invest in some legal representation to help with any legal considerations or instances that may occur. If you have a small business, then you should hire a lawyer every time a new product or service is introduced.
Just as you should be aware of the legal system inside the business you have chosen, you need to be aware of the government laws too. This includes how much you should pay your employees, the taxes you should be paying, the code of conduct you need to follow, and the country's employee rights.
The best people to talk to, when it comes to business, are the successful business owners in the country you are joining. Talk to these businesses, especially ones that are in your sector, and ask them; how they target their audience, how the months or seasons change their demographic, how pricing matches public opinion, and what to be aware of.
These local champions will have all the experience needed to be successful in their own country, so make sure to talk to them and use their knowledge wisely.
We have already mentioned doing your market research, but this aspect cannot be said enough. Just because your systems and choices work well in your original country, that doesn’t mean they will be successful somewhere new.
The best place to start your research is by looking at your home country's trading department. In the US that is the Department of Commerce. Creditsafe can also be a great place to look for business data on international companies.
You should look at the guidance given by governments, local successful entrepreneurs, and your own research.
Knowing that the country you are about to embark on will have different attitudes, interests, and views from your current country, you should evaluate your product to see how it would function without change.
With minimal change, you can expect your product or service to falter at the first hurdle.
For example, we all know that color can be used to create subtext for gender, personality, location, and emotion. However, these concepts are connected to your culture, not to human nature.
In western cultures, red suggests urgency, danger, and love. Whereas in China, red symbolizes luck and happiness.
Knowing that even the colors of your brand could be giving off the wrong message, could impact the success of your product or service.
Just as you should develop relationships with the experts and successful businesses in your sector, you should be connecting with the suppliers and sellers that are sought after in the country too. “Businesses that cultivate partner relations with lead generation and coaching are 63% more likely to accomplish their revenue goals.”
Creating these relationships will give you better insight into how businesses run in these countries. You may even develop reduced rates with the suppliers and sellers as a beginner’s favor. This, of course, isn’t guaranteed, but building up relationships can help you develop more lucrative deals as you grow.
If you already speak the language of the country, then hiring an interpreter may not be needed. That being said, you may still need a cultural interpreter to help you bridge the gap in social knowledge.
Countries like the US, Canada, Australia, the UK and so on all speak English, but they all have their own lexicon and cultural connections which means context, and subtext can become mistranslated.
Hiring an interpreter for a culture barrier rather than a language barrier can also help you create targeted adverts that play with the country's sense of humor. Despite sharing the same language, the cultural differences could create insulting or humorous undertones that you wouldn’t have considered in your own country.
Secondly, if you don’t know the language at all, you should be hiring a translator. Period. It doesn’t matter if you are learning the language, or if your native tongue is spoken as a secondary language, being unable to communicate to the masses will hamper your success.
Although this section could arguably be higher up on the list, your choice of country is often safest when you consider who imports from your home. Countries that already import and take goods from your home location are more likely to approve of your products. This could be done with little change to the product or labeling.
Talk to other companies within your country who successfully export their products and how this process has affected their business.
Each country will have a foreign trade fair for you to explore. Find one which suits your niche, whether that's food, mechanics, music, agriculture, or anything else.
In these foreign trade fairs, you can talk to other creators and businesses which are expanding their companies to new locations and are “dipping their toes” into the collective pool to see how their concepts would translate.
You can use these fairs to network and learn about successful pathways and avoidable mistakes, while also seeing the competition and how to diversify your brand.
Finding and securing a global partner is often the hardest part of the transition. Once you have a foreign distributor for your product, you can tell them your product and let them figure out who to sell it to and where the best location in the country is.
They will buy a large quantity of your product, so they can distribute it to their stores or network. This means you just need to be in communication with one company, and yet you will still have your product in locations.
To find a foreign distributor, locate a business in your area which originated in a different country (specifically the one you are opening your expanded business into).
This business will have a representative for your country. They will also have connections in trade groups and possibly other countries too.
Networking with businesses like this can help you find a foreign distributor and develop a working relationship with them.
We have mentioned this a couple of times, but cultural issues need to be addressed in their own right. Each culture, even your own, will have customs and expectations to perform. Just because something is normal in your own culture doesn’t mean it is acceptable in another.
Working with the locals, your translator, and the country's media, learn about how people interact with each other and see the world around them.
One of the best ways to create successful sales is by allowing the public to emotionally connect to your product. However, doing that means understanding how they will see your item, and what they consider an emotional cause.
When you are making connections, finding viable storage facilities, evaluating the competition, and everything else, you should be doing this in the country you are expanding to. Being there to talk to staff, connect with locals and interact with vendors will give your business more connectivity.
Building up these personal relationships will create a level of trust needed to stabilize your new business venture.
One of the main reasons why small businesses refuse to go global is due to the complex nature of currency exchange. However, there are many avenues that business owners can go down to reduce the work that comes with currency exchange.
For example, you can set up international billing systems, which can deliver invoices online in multiple different languages and currencies. These SWIFT (Society for Worldwide Interbank Financial Telecommunication) systems can include the needed tax changes and fee guides for the country you are working in.
Finding the one which is best for your company means weighing up your current bank loans and deals, the exchange rates you are working with, and the laws of the country you are entering into.
Use your financial advisor to help you navigate through these waters.
Look at the products and services being sold around the country you are expanding to. What type of language do people use when they discuss this product, what images are normally associated with the product, and what other connections have you noticed between the companies.
Using this knowledge you can make your product seem more local to the area. You can use the same language techniques, colorations, imagery, and overall atmosphere to create a sense of locality.
Using a focus group, you should compare your idea with the people of the area. See if you have hit the mark or missed the essence of the community vibe.
Getting the balance right, you should be able to create a product that feels natural in the country you are expanding to but doesn’t feel like a copy or cheap version of something already existing.
Once you have made a business model, you want to stick to it as much as possible. It is your guide in the sea of uncertainty. However, as you continue active learning and building your business in a new country, you will notice when some aspects of your model aren't working.
Do not ignore this issue. When you find that something isn’t working for you, learn from this mistake or slow progression and adapt. Don’t think that you have to stick to your business model, as theories don’t always become solid practice.
As we have said time and time again - what works in one location will not work in another. Edit your methods as you go, while keeping your goals in mind.
This is going to be a learning curve as you embrace new cultures, new identities, and new perspectives for your product or service. It will be a challenge, but one you won’t be able to recreate ever again.
Enjoy your moment of expansion and trust in your experts to guide you through this next stage in your company's journey.
There are three main ways to protect your business when starting your global expansion. These are by using credit reports, creating a paper trail, and talking to the locals.
Whilst we recommend always credit checking all suppliers and customers no matter their location it becomes even more important when dealing with businesses abroad. In the US, you may be able to visit, pick up the phone or employ cash collection processes you are used to. In foreign countries this may not be as easy so by checking any potential business partners in advance will give you the peace of mind that you are working for companies that can afford to pay you and will be in business in the next 12 months. Checking shouldn’t just stop at extending credit to other companies. Using our international business credit report puts every business onto a standardized system, making it easy to find safe companies and reducing the risk of connecting to unstable businesses.
Along with credit checks you also need to run compliance checks on any business or people you are going to be working with so that you are not exposing your business to any government or reputational risks. If you end up working with Politically Exposed Persons, companies that have been sanctioned unknowingly, you could find your business being fined which could halt any further international expansion. You also need to consider reputational risk, many countries around the world have different working conditions and methods, some of which are frowned upon within the US. Would working companies that employ such tactics affect your brand reputation at home if your customers were to discover this?
When you make a deal with businesses, money will be exchanged. If a business is indebted to you, then they should pay you back within the agreed time frame. However, it can be easy to lose this agreement if you don’t create a paper trail.
To make sure that any debts you are waiting for will be paid back in full, create a paper trail of every deal you have created. This way, you can demand action from the country's financial schemes and protection, if the business doesn’t pay up.
If you use our international credit report, you will have access to our Days Beyond Terms feature. This gives businesses the opportunity to assess how companies pay their bills which in turn can help you plan your own cashflow.
One of the most important ways to protect yourself is to know what everyone else is doing. What is common practice to someone else will be new information to you, and scammers will see you as an easy target. Ask the locals how they deal with common and basic threats, so you can prepare against risks you may be unaware of.
So now you know what to be aware of, and the beginning steps you need to take. But, you might be wondering why you should be expanding your business at all. Here are some benefits to showcase why going global can boost your business.
The first benefit is the most obvious. With a larger demographic for your business, you will receive more sales and an increase in revenue. Even if you just expand by one country at a time, you will still be showcasing your product or service to more potential customers, and thereby expanding your reach.
Now we are touching on more subtle reasons to expand your business globally. If you are expanding to a poorer country than your own, you will be offered more job opportunities to the people in the surrounding area. With more job opportunities comes more wealth in the community, and more wealth means more access to necessities or activities.
This could mean more schools, more entertainment, and a healthier lifestyle.
There are other ways you can help people without thinking about money. For example, if your business has a great Green program, and plans to add solar panels to the roofs of your buildings, then adding to the Green movement can help the local businesses do the same.
They can see how you have achieved this feat, and discuss how to do the same.
As you move into new territories you can diversify your workforce, bringing in new talent that can enhance your business with fresh perspectives and ideas that you may not have considered previously.
Because you will be choosing from a new pool of people, you may also find that the cultural differences allow for skills you wouldn’t normally find. The new skills can then be taught to your business as a whole, creating a better business overall.
Learning about a new culture can give your company a more rounded perspective on business. It can show you how the business affects the community in a new manner. For example, in the country you are expanding to, you may find that mid-day breaks are common practice or that child care has stronger respect.
It can also add a new spark to your business's creative process. Seeing a new way of life can help you see your product or service in a new way too, allowing you to advertise differently, find a new demographic, or change your typical business's expectations.
Because expanding to a new country is a difficult process, doing this successfully will give you a stronger reputation in your own country and the new one.
This is because most businesses need to have background information on the culture, they need money to start them up, and they need a fallback if something goes wrong. They also need to have a product that is marketed strongly to their target audience.
Even though you will be starting with a strong business in your home country, you will have cultural and legal barriers which force a lot of businesses to fail.
Pushing past these obstacles will tell anyone watching that your business is strong, stable, and wanted.
Apart from earning more money, this is the most important reason to expand globally. Should your current economic situation fail, due to a drop in the stock market, a natural disaster, or any other unpredictable circumstance, then your global business can hold the broken one until you can repair it.
Diversification allows your business to survive when unexpected events shake your plans.
Some of the biggest takeaways from this article are to hire a financial advisor to help you in the new country, to hire a translator or interpreter even if you know the language, and to develop a connection with the buyers and sellers in the new area.
However, the best way to protect your business as you grow is to understand the companies you plan on working with. Using Creditsafe’s international business credit reports can help you understand the stability and risk of an international business, as it has data on over 365 million companies worldwide.
Having this information will make you feel secure in your expansion, knowing you are communicating with safe businesses.