The Internet has opened up a world of opportunities to entrepreneurs wanting to start a business selling products or services. And for businesses who have achieved stateside success, the allure of expanding internationally can be tempting.
But before you take your business global, you’ll want to consider the following pros and cons:
Advantages of Taking Your Business Global
Expanding into global markets provides new sources of revenue. When your business has saturated local markets and exhausted growth opportunities at home, going global can help you grow your business. “Successful navigation in multiple national markets,” says Chron, “provides a much broader customer base from which you can generate business.”
In addition to acquiring new income streams, if your company is global, you can take advantage of capital raised in other countries to boost your marketing and expansion efforts. Taking your company global will also provide access to new materials and resources, as well as the means to form strategic partnerships and alliances around the world.
Going global offers the added benefit of protecting your business from a lackluster performance in one country or region because, as Chron points out, global diversity will spread your business risks across a broader customer base. If one or more of your products doesn’t do well in one foreign market, there will be other international markets where they will be in high demand. This could also reduce the chance that you’ll have to dump unsold inventory for a loss.
“Domestic companies are often overwhelmed by economic shifts in the local market,” says Chron. But when your company is global, issues such as a slumping economy or unaccommodating government regulations that hinder your efforts in one market won’t stop you from succeeding in other countries.
Furthermore, while trends differ around the world, you are not vulnerable to any one trend when you market to several global markets. If your product isn’t welcomed in one country, it will very likely be popular in another. Plus, natural disasters that occur in one country won’t completely derail your business, because you’re also selling to other countries.
Expanding globally will necessitate the learning and implementing of new business methods, but there are experienced international lawyers who can help you adapt and pave the way for your success in foreign markets.
Disadvantages of Taking Your Business Global
Since laws differ in other countries, you’ll need to gain a knowledge of legal and regulatory aspects such as labor and employment laws, duties and treaties, trademark requirements, and import / export laws (for a full list, click here). If you don’t have a clear understanding of the legal environment in the global markets you wish to expand to, it can result in a lot of headaches and costly mistakes.
Another disadvantage to conducting global business involves cultural barriers. According to The Business Journals, cultural differences can determine whether your business will be successful or not. You’ll need to get to know and understand the community you want to market to so you’ll know which products or services will add value to their society, meet their needs, and satisfy their desires. For a helpful list of things you’ll need to know before pursuing an overseas venture, click here.
In addition to cultural differences, language barriers can affect your global business potential. When you consider that a single word (like the word “contract”) can have different cultural interpretations, it’s not hard to see how misunderstandings can occur. And, even if English is the global language of business, cultures still maintain their own style of communicating, according to Inter Cultural Commnication.
Because emails can easily be misunderstood, working with your business partners face to face will help you iron out any communication problems. If you can, visit the country where you plan to do business and stay for as long as your time and budget will allow. Spending time with potential partners will not only help you build a rapport with them, it will also help you find reliable people you can work with and ensure that you avoid less reputable partnerships.
Achieving Success in Foreign Markets
“Conducting business in foreign markets is achievable,” says The Business Journals, “if the business is flexible enough to work within the local laws and regulation guidelines.”
Because government solidity will determine the success of so many details of conducting business in global markets (including currency exchange rates, contract integrity, and intellectual property), it’s advisable that you seek “local” expertise over the political and business factors before moving ahead with international expansion. “Don’t skimp on the cost of using overseas expert legal counsel, it can save you in the long run,” advises The Business Journals.
You might also want to consider performing a market study in the area you wish to expand to in order to better understand the community’s personality, economical climate, market trends / forecasts, and financial patterns, to determine if your move overseas makes sense for your business.
While taking your business global can be a profitable venture, it is not without risks. But if you’ve done your homework and have found knowledgeable legal experts to help you navigate international laws and regulations, as well as some reliable overseas partnerships, you’ll have a good foundation on which to build your foreign market success.
Here’s to your global business success!