Scaling The Walls Of International Expansion
In today’s economy, businesses are obsessed with growing at a rapid pace and everyone is part of the global marketplace. One thing many organisations are doing in this race to grow is expanding internationally. International expansion, however, comes with its own set of challenges. International expansion is about more than just investing money in foreign lands.
It is about operating your business in accordance with international standards in a manner that drives long-term growth. You see, it is important for growing businesses to embrace the opportunity of international expansion. It offers you a chance to diversify operations, enter new markets and increase foreign investment opportunities.
Before expanding a business globally, every entrepreneur must ask themselves an important question - ‘Is my company ready for international expansion?’. Scaling your business internationally requires investment, human resources, a go-to-market strategy, tax codes and a lot more. So, before taking your business to a global level, you must know about some basic things you will need to solve for. Here are some of the challenges that require an entrepreneur’s attention when planning international expansion:
Language & Cultural Obstructions
As a rule of thumb, one of the most important growth factors for any business is effective communication. If you speak the same language as your target audience, it helps understand your customers’ needs and develop a better marketing strategy. This is why you must hire some employees in your team who can speak the native language & overcome the challenge of language barriers.
We also need to understand that different countries work at a different pace. A country may not permit citizens to work beyond a certain period of time; for instance, in the UK a night worker is not allowed to work more than 8 hours in a day. Such things may hamper some key offerings of your business like, same day delivery or a 24x7 customer support. So, you must be prepared for these challenges and adapt smartly if you wish to increase your customer base internationally.
Foreign Laws, Tax Codes and Compliance
Your eligibility to trade in a particular country can help steer your business towards success. So, you must be extra cautious about local laws, rules and regulations. Indulging in unethical practices can halt your expansion plans and lead to reputational repercussions. For example: In the year 2014, Airbnb ran into trouble for breach of local tourism laws in Barcelona. The company had to pay 30,000 Euros for not following compliance. The key to successful international expansion is abiding by foreign laws and regulations. That is why it is important for businesses to study foreign laws, tax implications and other compliance-related issues about the foreign markets they are aiming at.
Supply Chain Complexity
I have always believed that every business must have a solid plan for stock management before rushing into expansion. Imports, exports, logistics and shipping are just some of the factors that may affect your day to day activities. This can eventually lead to overstocking or understocking of products. For instance, if your goods get delayed for a week or get impounded by customs, your product deliveries will consequently get delayed. This could possibly happen because of the enormous geographical distance between your home country and the international business location. Therefore, you must have a secondary plan of action in case there is a roadblock in the delivery of products. That is why businesses must work with due diligence and proper planning to avoid unexpected problems.
Payment Methods
The rapid increase of international e-commerce industries has made shopping easier and more affordable for all. However, sometimes international sellers may not accept payment methods that are acceptable in the country of operation. Businesses aiming to expand globally must accept payment methods preferred by their target countries. Many companies like Apple, Etsy, and WordPress are even accepting Bitcoin regardless of its fluctuating value. We can now see Indian businesses moving towards cashless transactions with the help of apps like BHIM UPI, Paytm, PhonePe and more. For instance, if a business wants to expand its operations in the UK, then they will have to accept other payment methods like PayPal, Stripe, SagePay and more. Accepting well known global payment methods can consequently attract more customers to your business.
Hiring The Right Talent
Hiring staff internationally is one of the biggest challenges for any business expanding globally. With diversified operations comes increased pressure on your business. Hence hiring more staff is always a risk as it can increase overheads. However, if you hire a team that helps you churn out good revenue, then you can easily pay for extra time or staff. There can, of course, be roadblocks when hiring employees internationally. A business expanding its operations in a new country is always considered a newbie. That is why natives may be a bit hesitant to work with an unfamiliar brand name. So, it is always recommended to take a team of your current employees from your home country to establish the initial team when expanding globally.
Besides what we’ve covered so far, we must also remember that businesses are constantly changing. Your business must be dynamic and keep up with new ideas and opportunities. Global businesses must connect with their customers, clients, and employees to create new market strategies. The uncertainties and challenges will always prevail, but the businesses must implement new ideas and discard the ones that don’t fit into your business goals. If you overcome these challenges effectively, you successfully expand and improve your business.
