It is not uncommon for businesses and enterprises who are doing well in their local sector to look to the global market for ways to expand and grow. In today’s digital age, this type of expansion is easier than it has ever been, but, these types of endeavors do come with their fair share of challenges and there is always a chance of failure, even for big enterprises. So, before making that leap, businesses must understand what is needed for them to succeed internationally so that an educated and informed decision can be made that will result in the best chances of success.
There are several things businesses should explore before making the final decision to expand into the global marketplace. This guide will break down just some of the questions business owners should ask to decide if their enterprise is ready for global expansion.
Where Will Your Business Expand To
The first important factor that needs to be explored before a business even considers expanding into the global market is where their new expansion would be based and why. A lot of research is required during this step. Luckily, thanks to the internet, this kind of research is fairly easy to perform thanks to the work of organizations such as The World Bank who, through their Doing Business initiative, put the time and effort into researching and measuring how viable it is to set up a business in various countries around the world. By exploring what factors The World Bank considers for their Ease of Doing Business ranking, business owners can get some idea of some of the considerations that need to be explored during the expansion process.
Can and Will the Target Market Support More Trade
Once a business has decided on where in the world they want to expand, further research needs to be done to determine if the target market can support the business’ plans. Studying the competition in the area will give businesses some idea of how much success they can expect. Business owners also need to investigate the culture of the country they are looking to expand into for more insight into the potential pitfalls of trading there. For example, if a business moves to a country that is not friendly to foreigners, locals may well prefer to pay more to support their local businesses.
Another question to be asked is whether or not the expansion offer opportunities for innovation. Innovations are key in giving companies the edge they need to succeed in competitive markets. If an expansion hurts a company’s ability to innovate, whether this is due to the expansion taking up financial and intellectual resources from the main company or for other reasons, then the expansion could prove detrimental to the enterprise in the long run. This brings us to the next question that businesses should be asking before they expand; is the enterprise equipped for the expansion in terms of staff.
Is Your Staff Equipped to Manage an Expansion?
Any expansion, even a local one, requires the efforts of not only business leaders but also their staff to be successful. An international expansion comes with a host of considerations as employers would also need to research the local regulations surrounding the hiring of workers, as well as the implications regarding sending international workers to the new expansion.
Many countries around the world have strict policies regarding the hiring of international personnel over local talent and ensuring compliance with local laws can be tough. It is for this reason that companies should consider looking at an employer of record to assist them, even if it is just for research. For expanding businesses, organizations such as New Horizons, who offer PEO and employer of record services in a host of countries including Thailand, employer of record experts can ensure that the expansion is compliant in terms of labor laws and best practices and can even assist with the hiring of new staff without the need for the expanding business to establish a local entity.
Do the Benefits Outweigh the Risks?
Finally, and most importantly, businesses need to ask if the benefits of expanding into the global market outweigh the risks of such an endeavor. International expansions involve huge financial risk and there is never a guarantee that, after a business has spent time and resources on setting up an expansion, it will succeed. Businesses should expect their expansion to lose money for a while before it can support itself so a long-term financial plan to deal with the impact this will have on the main business needs to be well researched. Businesses need to understand that if they are planning an expansion, they need to be in it for the long haul or not in it at all.
While there are pros to expanding into a foreign country, business owners should always do their due diligence before embarking on such a massive undertaking to ensure that they are equipped to deal with the challenges associated with such a move.