In the first part of a series on taking your small business international, I’d like to discuss why it might make sense to expand your business to a foreign country. Here are three reasons that inspire most businesses to develop a global strategy.
The first and most foremost reason for taking your business to another country is the opportunity for increased sales volume. There are literally billions of consumers abroad and surely not everyone who wants or needs your product/service has access to it. How much profit your business can generate in a foreign economy will depend on a number of factors but to think that you can realistically increase sales by adopting a global strategy is as good as guaranteed.
The second reason to engage a foreign market is the opportunity for substantial cost savings. If your business is heavily manufacturing based, then you’re almost certainly aware of the cost savings potential available to businesses that manufacture in countries where real estate and labor are cheap, such as China. Setting up a cheap production facility could also enable you to test selling your product in a foreign country prior to initiating a full blown global strategy.
In the same way that individuals prefer to diversify their investment portfolio, businesses should appreciate the chance to diversify their customer base. There may be a slight decline in the demand for your product in the US while your business in Brazil experiences a rapid growth. By tracking consumer demand and trends on a global level, you will be able to best identify which markets are most attractive for your business to enter.
Developing your business internationally might seem risky, but the benefits typically outweigh the costs to your business of being bold and moving abroad. Don’t feel pressured to pursue a global strategy right away as a startup. It’s perfectly fine and oftentimes preferable to focus on establishing a domestic market presence prior to considering your options as an international business. In the next article of the series, I’ll discuss more precisely how you should go about selecting which foreign markets to enter.
Have you ever thought about taking your business international? Tell us your story!