What you'll get from this article
- Key indicators that show whether your brand will do well abroad
- Considerations when choosing to expand globally
- A starting point for your business growth
To Expand, or Not to Expand?
Granted, expanding your business to new markets you know little to nothing about is a scary thought. But trust us; there comes a time when taking the leap and expanding your business beyond your own market is the right move. So, how do you know when that time has come? This is rarely a sudden ‘’eureka’’ realization. Many factors weigh in when deciding whether it’s the right time for your company. Our article explores several key indicators that indicate your brand’s time has come to expand internationally. On a high level, we can divide all ingredients into two cooking pots:
- Internal: Does your company have everything in place for #internationalexpansion to be a success?
- External: Are there definitive indicators that one or more foreign markets are ripe for introducing your product/service?
It may be true that business opportunities come and go, but we’re certain you’ve seen some rare ones pass by that are too good to let go. We are also sure that you, as an experienced business leader, have witnessed how frustrating it can be to discover that your brand simply isn’t ready to turn certain opportunities into lucrative businesses.
To prevent that from happening again, we’ve mapped out 9 key indicators that prove your business is prepared to expand beyond borders. These indicators will help you pinpoint the right moment for your #businessexpansion beyond borders, so that you can seize that golden opportunity that awaits abroad.
Get ready for our non-exhaustive list of indicators that your brand is ready to expand to foreign markets.
1. There is existing demand for your product/service overseas
The rationale is simple: establish business there where your business is demanded. Emerging markets should be closely monitored so that you can expand at the right time with the right approach. Market research is critical, because even though there is potential in a new market, it might not be the case that consumers are looking for your exact products. Don’t treat one inquiry from a foreign customer as a sign of overseas interest. If you witness a consistent stream of international customers purchasing your products, that’s when you should start researching your expansion.
Competitor analyses and consumer feedback serve as the foundation of creating a product that fits a niche market. Typically, businesses that expand internationally follow the 25% rule: If 25% or more of your business comes from abroad, it’s a good indicator that it’s time to expand beyond your borders.
2. Your company has a strong foundation domestically
In order to expand sustainably, you need a solid business model and your key employees. Firstly examine your customer base. A strong #brandrecognition indicates a strong foundation. Do people know who you are? Are you recognized and respected? Secondly, assess strategy, mode of operation, marketing, distribution channels and financial management. If you’re confident that these aspects follow a model that can work in a foreign market, you’re halfway ready for expansion.
You will still need answers to the following questions: Can you count on your managers and key employees to hire and train the right people in the target market? Will your team consist of enough competent people to continue business operations dependably? If you can answer ‘’Yes’’ to these questions- that’s a strong indicator your brand could be ripe for expansion.
3. Your business has been profitable in more than three consecutive years
This doesn’t mean your profits are growing year-on-year, neither need there be a consistent rise of revenue. In fact, stagnation in profits can even be a greater reason to expand. You should make a comfortable level of free cash to be channeled into other productive uses. You need to have positive financial results, because your business should not be struggling when you consider expanding globally. If you have a solid financial foundation, expanding globally could be a smart investment in your company’s future.
4. You witness the domestic market is shrinking/saturated
This indicator is one of the few that relates more to your surrounding than your business performance. Exhaust potentials of local market first before thinking of going abroad. If you see the market shrinking and its increasingly getting harder to gain clients, its time to take your business to new overseas markets.
5. You are prepared to localize
#localization can be the make-or-break of your expansion efforts. Competing with several local businesses similar to yours is unavoidable. Hence, you need a team on the ground that knows the local culture and language inside out. If you can’t understand the language, how are you going to understand your customers?
Localization goes beyond translations of text, and extends to adapting marketing materials, websites and social media accounts to be more suitable for target customers. If you’re not ready to do this, and lack a local team that knows the market inside out, it means you’re not ready to expand to that particular market.
6. You are excited about expanding internationally
Here’s an obvious one. But while the growth potential is enormous, it’s not without its risks. As you weigh all the pros against the cons, ultimately the right decision depends on your appetite for risk and how much of your resources you are willing to spend on your expansion. In order to preserve your initial excitement, it’s critical not to let complexities stand in the way. Involving an experienced global expansion partner can help minimize risks and take the ‘’dirty work’’ out of your hands.
7. You have a clear vision and goals
Consistently hitting targets in your domestic market are a good sign you’re ready to expand, but that doesn’t mean you will succeed with the same strategy abroad. If you’re not succeeding in your domestic market, focus on strengthening sales locally first before deciding to move overseas.
Having a clear vision and goals serve as a guide and help you track progress. Determine whether you intend to build the same brand offering the same products, or whether you want to #glocalize and adapt to the local market’s tastes.
8. Strong supply chain
A strong supply chain is essential to any successful business, and it’s even more important when expanding globally. Make sure your supply chain can handle the added complexity of operating in a new market before taking the leap. If your brand has optimized its operations to maximize efficiency and minimize costs, it’s a good indicator that you’re ready to expand.
9. Technological capabilities for growth
In today’s digital age, solid technological capabilities are essential for any #D2C brand looking to expand. This includes having a robust e-commerce platform, effective digital marketing strategies, and the ability to collect and analyze data to make data-driven decisions. If your brand has invested in technology that has facilitated growth in your domestic market – it’s a good sign that you’re ready to expand.
Some final considerations
Considerations surrounding going global vary depending on where your company is based. Companies situated in smaller countries need to think internationally from an early stage. A company from the Netherlands or Ireland knows early on that their business needs to be international, whereas companies in big countries like the U.S. and China can comfortably become a multi-million dollar business without having to set up shop overseas. While it’s cheaper to expand domestically than internationally, there will come a time when a company reaches a saturation point in its home market.
That’s when expanding beyond borders is the answer. Hence, thinking about the international market at an early stage can avoid the struggle to adapt your business accordingly at a later stage.
But several aspects come into play when your brand decides to expand to a new market: Logistics, warehousing, tech integrations, and compliance with local regulations to name but a few. Inevitably, there’s a lot of time and money that goes into setting everything up if you choose to handle your expansion alone. Fortunately in today’s world, there are fourth-party logistics (#4PL) services that allow you to grow your business internationally through a hands-free approach. You only focus on your product and marketing, while confidently outsourcing the necessary work you know nothing about.
For over 30 years, we have helped companies from various industries confidently set foot in new markets. As an extension of your team, Filuet can help you through every stage of your pursuit of international expansion. We will look after your company as if it’s our own.
Do you still need some clarifications regarding whether it is the right time for your brand to expand globally?