Does your business need to see growth and increased revenues? Of course it does. But for many, the lure of seeing 50-60% increases within 3-4 years is too great and they head down this road without really knowing the marketplace.
If executed properly, many businesses have successfully increased their revenues because the potential for growth is high and the vision is simple. Conversely, the landscape is littered with the carnage of otherwise great companies who’ve made international business mistakes.
Some of the reasons to expand globally are:
1) faster growth, 2) access to cheaper materials and labor, 3) a broader customer base, and 4) diversification—less vulnerability to changes or events in specific regions when the company is dealing with a number of regions of the world.
There are many ways to determine if your business is ripe for this type of expansion. The first, and most obvious, is to sufficiently do your homework. Learn how the culture that you are embracing will view what has worked up to this point and what might need to change. Determine how the growth you are seeking maps to your existing business plan.
Understand the costs associated with global expansion. Will you have the capital to properly market yourself in another country? Are you properly allocating your budget and understanding the hidden costs of going international?
Speak with representatives in those countries to learn about manufacturing differences, tax consequences, etc. and see if they might make the transition easier as they are already in country and know the landscape better than you will. You might not need to localize your product or services right away, but be able to take advantage of local expertise while you learn how to maximize efficiencies.
What are the risks?
1) Increased costs, 2) the need to meet Foreign regulations and standards, 3) cash flow problems due to delayed methods of payment and 4) operational complexity, and 5) failure to understand local business norms and customs, to name just a few.
Be aware of your international brand. The use of color, slogan and even logo design may allow for consistency – which is very important – but might also alienate your business from those in the region. The little things do matter.
Not all companies are ready for growth while some are not set up to deal with the complexities of safely expanding overseas. Test your theories and strategies before making a commitment. Truly unearth all of the costs that will arise once you make this decision.
Corporate development, without the proper depth of understanding, can be a recipe for disaster. Do your homework to determine if you’re leveraging growth opportunities while sacrificing financial stability within the organization. It’s a big decision. Make sure it’s the right one before exploring growth in other parts of the world.
This piece was written from content featured in the following article: Forbes Entrepreneurs, August 14, 2012