Key Steps For Expanding Your Business Into New Markets

As globalization becomes more common in our world, many businesses are choosing to take advantage of the growth opportunities that lie in expanding into new markets. But expansion can be a significant undertaking for small and middle-market businesses, with many moving parts. As a business owner, you need to fully assess and understand the risks and rewards that expansion can present for your company. The following steps outline areas on which you should focus, and which elements of your business you should have ready in order for an effective expansion into new markets.

Impact Assessment

Before expanding your company into new markets, you must have a comprehensive understanding of what the overall impact on your business will be. Conduct market segmentation and product gap analyses to assess whether your product or service will sell in the target market and do a SWOT analysis to see how it stacks up against local competitors. You need to know if there is a need for your company and if anyone will buy what you are selling. You will also need to consider how large the market is and how long it may take to reach your target sales numbers.

Strategy

Every market is different based on cultural, economic and governmental factors. You will need a localized strategy and business plan that makes sense for the region while remaining integrated with your company’s overall corporate objectives. This strategy needs to be based on short, medium and long-term goals that are measurable based on defined metrics and KPIs. You must thoroughly think through important matters such as your sales model, delivery and distribution, branding, a marketing plan, and a pricing model.

Legal and Taxes

Other countries and their governments can have laws that are very different from what you are accustomed to operating within. Some regimes have strict legal requirements. You need to have a full understanding of what you are getting into, and what you will need to do in order to minimize your risk. Know the industry regulations and certifications, customs and immigrations laws. Your business will also need to be in compliance with all tax laws in the region. It might be prudent to outsource your accounting and payroll. You might also need to form local banking relationships and create a risk management plan.

 

 

Product/Service

You will need to look at government and sector-specific regulations in order to be compliant and get any necessary certifications. Also, consider certain details such as the translation of the name of your product and taglines and any cultural sensitivities that may exist. For example, the Ford motor company fell victim to this issue when they used the tagline, “Every car has a high-quality body” in a campaign in Belgium. When translated, the tagline read, “Every car has a high-quality corpse.” You obviously want to avoid this type of misstep. Additionally, conduct a patent and trademark review to protect your intellectual property (you never know what some countries will rip off). And don’t forget about the logistics. How will your product be distributed?

Culture

When expanding into a new market, you must consider the cultural differences. Think about language, regulations, and customs. Understand the culture you are moving into. What cultural aspects will need to be adjusted? Create procedural handbook that represents your overall company policies but complies with local issues and requirements. Compensation, benefits and human resources will need to make sense in the new market if you expect to attract and retain talent. 

Expansion Leadership Team

Establish a leadership team to head up the expansion initiative. The team should be comprised of executives that have deep expertise. It can be more expedient to use existing leadership as they can hit the ground running because they are already embedded in the business operations. But you also must ensure that you have team members that fully understand the target market and its implications for the company. Just because someone is an expert in your business, it doesn’t mean they will know the right steps to take when it operates in an entirely different market. Also, it is helpful to consider expanding into a market that is already similar to your existing market. This will limit the need for more varied expertise.

Ready to Act?

If you are looking for solid strategic solutions for your business, partnering with our M&A advisors at Benchmark International can give you an edge. No matter what stage you are at with your company, it is never too late—or too early—to ask for our expertise.