Every healthy business has one eye on its future and the opportunities it holds. Expanding a business is always a big undertaking, but expanding overseas is even more complicated.
If your business is considering an overseas expansion, here are four things you need to know beforehand.
Is This the Right Time for an Expansion?
Before you commit to a potentially difficult and expensive international expansion, you should make sure that it is definitely the right option for you. Any business considering an expansion should be in overall good shape. If you have any doubts about your business’s health and its ability to weather unexpected shocks, this is not the right time for an expansion. Even a domestic expansion can be fatal for a company that undertakes it at the wrong moment. Expanding is an expensive and precarious process. Even if everything goes smoothly, which is often not the case, all it takes is one poor decision, and you could find yourself in serious trouble.
It’s a good idea to stress test your business and simulate a worst-case scenario. For example, do you have a plan in place should your local partners back out of the deal? If their companies are hit by unexpected shocks or bankruptcies, it could leave you holding the fort and having to scramble for a solution. Planning for every eventuality beforehand will help you to confirm that your business is ready to undertake a significant international expansion.
What Are Your Long-Term Goals?
Just because your business is in good shape and continuing to grow, doesn’t automatically mean that you should seek overseas expansion. Every significant move that you make in business should be made for a reason. It’s easy to assume that any business with the resources to expand overseas can benefit from doing so. After all, an overseas expansion means access to more consumers and more opportunities to make money.
But there are a million and one things that can go wrong during an overseas expansion. As always in business, having a clear and firm plan to work from will reduce the chances of things going wrong. Before you embark on your expansion, define the long-term goals of the move, and produce a realistic plan for achieving them. This plan should include a roadmap so you have some idea of how long it will take to get your overseas operations up to speed.
Who Will You Partner with to Make It a Success?
If you are planning an international expansion, you will need to have the right people backing you up. Unless you are at the helm of a large corporation and you already have experience spearheading international expansions, you are inevitably going to need someone to help you. Having someone on the inside that you trust and can vouch for you will help speed things along as quickly as possible for many markets.
It is hard to overstate just how dramatically business cultures can differ from country to country. Regardless of where you are expanding to, you will want to have a local knowledge team that can help you navigate your new market. Sometimes just having someone who speaks the local language can make an enormous difference to your expansion speed and ease. This is why having a third party involved, such as an employer of record (EOR), can be a life-saver. However, knowing what exactly EORs do for businesses is the first step towards your business’s growth.
For example, New Horizons Global Partners offer China Business Services, including local recruitment. Not only this, but New Horizons can also act as a PEO & Employer of Record for businesses looking to gain a foothold in China.
A reliable partner can radically alter the dynamics of overseas expansion. The right connections and local knowledge can grease wheels and help you to avoid the usual pitfalls that affect businesses looking to expand into the market.
What Compliance and Regulatory Issues Do You Need to Be Aware of?
Laws and regulations vary from country to country. As part of the preparation process for an overseas expansion, you need to consult with a lawyer who is familiar with the legal system of the market you are expanding into. Falling afoul of local laws and regulations can cause serious problems for your business. Not only will it slow down your operations, but you also risk financial and legal penalties.
In some cases, it can take months to complete the necessary paperwork to ensure compliance when setting up a corporation overseas. You also need to assess the local banking landscape. Some foreign banks don’t want to deal with the hassle of a US-based account. You might be required to set up a new bank account for your business in your new market.
Before you embark on a major initiative like an overseas expansion, you need to be sure of what you are doing. Proper preparation is essential if your business is going to land smoothly in its new market. If you want to get up and running as quickly as possible, having as much as possible in place beforehand will speed things up.
