Going global: Taking your business around the world
The decision to go global is an exciting one for any company. While expanding internationally can be a costly process, it opens up many new opportunities. We’re here to help make your international transition as informed and seamless as possible.
How do I create a plan for international expansion?
A good plan for international expansion will be integral in ensuring that your profits—and your long-run projections of them—outweigh your capital costs.
Consider where there might be a demand for your product in foreign markets. Among this list of potential target countries, consider cultural factors: does your product align with local social customs, tastes and religious practices? You should then consider what your competitive landscape would look like in the potential markets. Who would your competition be, and how much market share do they have? Ideally, you should be able to find a market with both a suitable demand for your product and room for entry.
You also have to plan your marketing efforts: evaluate the current level of awareness your brand and product have in the target market, and outline the marketing measures you can take to make your goals a reality.
Finally, you will have to plan out distribution. This comes with a lot of logistical considerations, including whether or not to outsource distribution, how to ensure that the local infrastructure can support your distribution goals and whether to find a local reseller or set up your own brick-and-mortar locations.
How do I translate my production efforts to the international market?
There are two main options to consider for your production strategy as you look to expand your business globally: domestic production and export, or local production.
If you choose the former option, you will have to look into expanding your domestic production capabilities so as to meet your new international demand. You will then have to negotiate a deal with a foreign distributor who will import your goods or services into its local market. Make sure that this deal, which will normally take the form of a pro-forma invoice, addresses the following terms of sale:
- Payment and finance terms: how and when payments will be made
- Intellectual property rights: how your patents will be protected
- Dispute settlements: which nation’s domestic laws will govern over disputes, etc.
The benefit of choosing domestic production is that exporting has limited start-up costs. While you will have to consider the effect of foreign exchange rates on your business, you can protect yourself from exchange-rate risk with such instruments as Foreign Exchange Forward Contracts, which allow you to buy or sell a fixed amount of currency at a pre-set exchange rate.
If you choose the latter option, research the local suppliers, local production centers and their prices. Then, set up a production process that balances transparency, reliability and affordability. Planning to make and receive payments in the foreign currency will help you avoid the need for conversion and save you valuable time and money.
How do I ensure that my business runs smoothly as I expand?
Going global opens up many new opportunities and potential markets, as well as some potential hurdles.
Set up trustworthy financial channels for payments from overseas. You should be able to track and manage your international finances just as easily as you do your domestic ones.
Expanding your operations across international borders means you also now have to consider the effect of foreign exchange rates on your cash flows. Work with your bank to minimize your exposure to exchange-rate fluctuations.
Because international expansion requires so much additional time and resources, many companies have also found success by setting up an internal team to handle international growth issues. If you choose to go in this direction, this team can help you plan, track and manage your international finances and operations, and ensure that they run seamlessly.