How to know when it is time to expand globally? Find out.
When to expand business globally? If you are thinking of expanding your business globally, your business is doing well in the domestic market. But is it doing enough to cover up the risk of expanding business globally? How to know when the right time to expand globally is? What parameters allow you to expand your business in the international market successfully?
Signs: How to Know When It Is Time To Expand Globally
Well, multiple clearer signs let businesses know when it’s time to expand globally. Most of these signs are easy to identify. Some of these signs to look out for include:
Stagnation in Profits
Your financial statement can help you decide if it’s the right time to expand your business globally. However, you don’t need a deep analysis of your financial statement. All you need is to check the amount of profits in the financial year.
The amount of profits doesn’t need to be too high. They should be stagnant and depict that the business is not struggling to stay afloat in the market. That’s the only output you require to make your decision.
Your business doesn’t necessarily need to reap unbelievably high profits to expand globally. It should just have a decent amount of free cash available that can be channeled into either opening new outlets in the domestic market or, in this case, being sufficient enough to kickstart the business expansion in the international market.
Your Overseas Sales Have Picked Up Already
Have you already launched your eCommerce store that ships products internationally? If yes, and if you are already receiving a good response and many orders from across the borders, it’s an obvious sign that you should expand business globally.
The demand from international consumers should be stable if you can predict the probable increase in sales in the near future. Also, it is worth taking the risk if you are receiving several emails and messages inquiring if your business makes overseas deliveries of products.
If so, you can try shipping goods internationally without establishing a physical presence initially. The one thing to take due care of is the signs should be consistent and not just a sudden wave that shows an increase in demand once in a few months. The growing demand and interest should be consistent for weeks and months to determine business expansion.
Made Use of the Domestic Market to the Fullest
Has your business made use of its domestic market to the fullest? How will you know that? Well, for this, you need to be able to provide answers to a few questions like:
- Are your products being sold at every corner of your domestic country?
- Is there any state/region left where your products are unavailable or delivered?
- Is there any potential market in the domestic area you have missed?
- Have you saturated the domestic market and gained as many customers as possible?
If the answers to all these questions depict there are no more chances of growth in the domestic market, you can choose to outgrow your domestic market. If you have used your domestic market to the fullest, there is no harm in seeking new customers outside the domestic market.
Expanding internationally can help your business create a brand name and grow organically. It is rather easy to expand globally through eCommerce in the digital era. However, growing globally comes with its challenges. You need to make sure that your business niche is suitable enough for the western culture. Firstly, you will have to choose the target market, be aware of the risk associated, and everything else that goes into expanding business globally.
Finally, when you are done with your research, you can make up time to launch a business globally.
Apple is one of the companies that entered the international market when the American market was fully saturated. Apple, under Steve Jobs, made its first international expansion in 2003 and chose Tokyo as its target market. It continued to deliver innovative products like software, electronics, online services, and supplies, though it initially started as a mobile brand.
Have Connections in the Overseas Market
Do you have the upper hand in expanding globally? This could be healthy relationships with overseas customers, suppliers, retailers, and distributors. Ask these relationships solid enough to smoothen your journey of market expansion? Do you see a possibility of creating such connections in the near future?
If either of the above is possible, provide a decent period in building such relationships. Research your target market and build a stable foundation. If, in the end, things are working out in your favor, this could be the right time to expand your business intentionally.
For instance, McDonald’s expanded business from its domestic market, California, to America due to its connections. Ray Croc bought in suppliers and franchisees to open restaurants across the United States. It worked with the same model and now has over 38000 outlets in 120 countries. It started as a drive-through barbecue restaurant in 1948. Further, it took him 30 years to expand to the international market. Another 30 to 40 years to gain full access to the international market.
Thought of Expanding Business Makes You Excited
Are you fully engrossed in trying to expand your business globally? Do you trust your sources and instincts? Do you think your product has a viable demand in the international market?
We are sure the thoughts of expanding business came after due consideration. Are you finding reasons to convert your thoughts into a final decision? You need to base the decision on various basics. These include where will you likely be expanding? How will you ship the products? Is your business capable enough to bear the packaging and marketing expenses? Will you be able to stay attuned to the government regulations, taxes, and accounting practices? Are you going to get the brand logo first? Will your business adjust to the financial, legal, internal, regulatory, and other risks?
Having an immediate answer to these questions is not necessary? Figure it out slowly and gradually? Also, if your product can enjoy being listed in one of the online marketplaces like Amazon, Linio, Rakuten, or others. Such marketplaces eliminate the troubles of shipping, payments, distribution, marketing, and so much more. Also, these online marketplaces provide better visibility to your brand. This can also act as a preliminary step in expanding your business. Depending on the response, you can choose to open physical outlets.
Ability to Scale Up for Overseas Demand
Expanding business globally means expecting an increase in the demand for your product. This means the production level has to go up. The business has to know the product is double the number of products in the same amount of time. This could be done with the help of establishing new production plants, hiring new staff, buying an excessive amount of raw material, and so on.
This also means hiring new staff in the domestic market to speed up the production and in the target market overseas to take care of the operations in the new market.
Among the various trade barriers in different regions, it becomes difficult to hire employees in foreign markets. Some use hiring agencies in foreign countries while big companies transfer employees working in the domestic market to overseas.
Thus, if you think your business can scale up its operations to match up with the overseas demand, this is when expanding business globally should not be the problem.
When Your Product Has Demand in the International Market
This is one of the obvious signs that you can expand business globally. However, this comes with a disclaimer as well. Before anything else, ask your questions like:
- Does the product have a customer base in the market you are entering?
- Is it easy to make space for your product in the target market?
- Does your product have any strengths over similar products in the target market?
- There are how many direct competitors of your product in the market?
Just having an overseas demand isn’t enough. Just don’t jump to a conclusion without doing deep market research. There may be high demand in overseas markets for the product your business deals in. This doesn’t mean the people will start preferring your product over the existing ones.
Even when the product is similar to the existing product, your product can still go unnoticed. This is when product market research helps. This is where identifying a product market provides an extra edge. Product market research should be carried out in specific markets where your product is high. After that, do proper research on consumer behavior through market surveys and feedback forms. To penetrate deeper into the market, you should know the art of competitive pricing.
When the routes are clear, this can be when it is viable to launch your product in the overseas market.
Know the Art of Competitive Pricing
Pricing policies play a great deal in penetrating a new market with direct competition to your business product/service.
- Do you excel in developing pricing policies?
- Do you know how to price your product in front of your competition?
- What about the complexities of pricing products in foreign markets?
Lowering the price of your product in a foreign market is quite difficult with the dominant forces like trade barriers, quotas, and tariffs. Even if you do so, there are greater chances as your product would be treated as cheap.
If you place your product in the market at a higher price than the competitors, there will be no reason for customers to shift from a trusted product to a new product? How will you enter the market then?
If you have figured out your pricing policies and know the art of competitor’s pricing, it is one of the signs of expanding globally.
Provides Alternative Payment Support
This sign is feasible if you are looking to expand your business digitally. Do you have an eCommerce website serving the domestic market currently? Do you wish to ship your products internationally as well?
This would mean changing the language preferences, pricing in different currencies, and providing alternative payment support to your overseas customers. Your website should cater to such additional needs. Your business website should be equipped with customer support in multiple languages if need be.
The more the payment checkout options, the better it is. The payment methods like e-wallets, credit and debit cards, and bank transfers are some common payment methods used for making transactions online. However, each country has its e-wallets, debit and credit, and banks. For instance, e-wallets like Skrill, PayPal, and Neteller are popular ones used in New Zealand, America while in a country like India, users use Paytm as e-wallets.
Thus, when expanding globally, these checkout preferences should be taken care of not to experience an increase in cart abandonment rate, and you are left wondering why it is happening.
You Have the Right Place in Mind
This has to be one of the first signs of knowing when it’s the right time to expand globally. Do you have your target market set? Do you wish you expand operations in Australia, the UK, the USA, or Arabian countries? Have you also had a particular state in the country you would be expanding your business?
Are there competitors of your product in such a market? Are there strict laws and government regulations on the entry of foreign companies? Is there a need for your product in the market? Is your product better than existing products in the market? Have you taken into consideration the cultural differences in the market?
If you have figured out the answers to these questions regarding your target market, you are one step closer to the goal of expanding your business globally.
Dependable Foundation to Make for Overseas Losses
Well, it’s good to have a backup plan ready in worst-case scenarios. There are a variety of risks prevailing in the international market. When the time is not right, the possibility of expanding business internationally can backfire on you. In such a case, it is good to have a dependable foundation back in the domestic market that can cover up the losses.
You need to take every step to survive your product in the overseas market. However, it becomes easier to sustain the losses when you have a strong foundation back in the domestic market.
How to know if your business has a strong foundation back at home? A strong business foundation owns a huge customer base in the domestic market, robust distribution channels, a strong marketing team, and responsible financial management. This all makes up for a deep-rooted business model.
You should be sure that the team back in the domestic area can provide the right push to carry on the operations in hard times. Your business should have a team of capable managers and employees that can work ahead in a difficult time. When the need arises, the business should also be able to train and hire new staff to operate the business overseas.
If your business in the domestic market has such an aura, it is a good time to think of expanding business globally.
For instance, Financial Times, a British daily newspaper, failed to enter the international market in India. Though the public was comfortable with an English newspaper, it had government support. However, it still failed to deepen its roots due to local journalism. It got into many legal knots and was pushed to courts by local newspaper industrialists, which led to his downfall.
No Competitors for Your Product
This is another sign for how to know when it is time to expand business globally. Does your business have a new product/service with minimal to no competitors? Have you already found a target market with no competition for your product? This can be your ace card.
If your product is unique and an overseas market is unaware of such a product, this can be a great time to expand business globally. The placement of the product in such a case is easy.
However, in such circumstances, there is also a risk of launching the product before the news is out. On the contrary, there is another risk of launching a premature product quickly. In such a case, there are greater chances of new competitors entering the market with the same better product than yours.
Therefore, due care should be given when entering a target market with a new product. You should not be too late to miss the opportunity or too quick to lose the market share to the competitors.
The new start-ups are facing the game of entry into new markets. Amongst the most famous ones include the Tesla that came with the electric cars, the first ones to do so. Similarly, Uber did a good job being a cab riding company when no such service was present.
Have a New Unexplored Market in Mind
The very existing successful businesses never stop exploring the market. The well-established companies develop new products in their segment to get even better reach in the market.
They do not expand business in their current market but in the adjacent market. For instance, Airbnb, a home rental start-up, further expanded its business by exploring its adjacent market, i.e., flight booking. Airbnb has joined hands with Flights to provide a new holistic travel booking experience. Similarly, Red Bull, an energy drink company, has entered a new market, i.e., media. It is now also a content provider producing movies, books, music, magazines, etc.
So, these were some of the signs that would have told you how to know when it is time to expand globally.
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