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The world is getting smaller every day, especially for owners of small and medium-sized businesses. Based on foreign exchange company OFX’s second annual SMB Confidence Indicator, which surveyed 500 small and medium businesses (SMBs), 57 percent are both positive and confident about conducting business internationally. Around 63 percent report booming growth as they expand into international markets.
International or global expansion is a strategy businesses use to enter new overseas markets. Why do companies expand internationally, and why should you consider taking your company global?
Reasons companies expand internationally
Companies that are already thriving in domestic markets may be asking themselves, “Why expand globally?” If you ask five business owners why they chose to expand overseas, you’ll get 10 different answers. But, in general, the reasons for international expansion are usually similar.
First, there is the potential for increased revenue and cost savings. Expanding your market helps you find new customers, which results in more sales while simultaneously lowering operational costs and saving the company money. These expansions also open up new markets and customer bases, allowing you to explore parts of the world that were previously closed to you.
Other reasons for international expansion include diversification, accessing new talent with more diverse education and language skills, and gaining an advantage over the competition. Even your closest competitors won’t keep up if they’re not working in a global marketplace.
The last reason companies expand globally is their reputation. Going global assists in building brand recognition and credibility that can help attract new customers.
Best practices for expanding your company internationally
If you’re not sure where to start, here are some best practices for expanding your company internationally.
Start by testing the market. Do you have a unique product or service that will help you succeed in the market, or will you find yourself competing with existing companies?
Next, you’ll need to understand and decide on your operational structure. Will you be setting up a fully independent office and sending your existing staff overseas, or will you be hiring employees from the country you wish to expand to who can help you integrate with the local population, market, and culture? Considering how and who to hire is a big part of taking your company global, and there are many steps you’ll need to consider when hiring new employees in your expanded market.
Payroll options and their implications come next. Countries will have different requirements when it comes to things like salary, taxes, and benefits that you have to offer in order to stay compliant.
Finally, take the time to immerse yourself in the culture. Don’t enter a new market and assume you know best, especially if you’re not already familiar with the country, its culture, and its people. Approach each new market with an open mind and seek out the assistance of local companies or employees that can help you immerse yourself entirely in the culture.
Learn how we can help
If you’re planning to take your firm global in the future, contact Globalization Partners today to learn how we can help with your planned international expansion.