5 Ways to Expand Your Small Business Internationally 

Every business, no matter the industry, size, or target audience, constantly strives for growth. After all, the more your company grows, the more customers you reach, revenue you make, and opportunities you have for future development. One of the best ways to facilitate growth is to expand your small business internationally. 

The digital revolution, evolving logistics solutions, and efficient worldwide transportation has led to a significant increase in “globalization” in recent years. In fact, world trade volume today is 45 times greater than the level recorded in the early days of the General Agreement on Tariffs and Trade (GATT). 

Business owners are no longer limited to selling goods and services to a specific local audience. With the right strategy, you can reach consumers all over the world, and hire teams anywhere. 

Of course, there’s more than one way to expand your small business internationally. Today, we’re looking at several options entrepreneurs can consider to aid in their international expansion, and their distinct pros and cons.

Option 1: Exporting with Digital Freight Forwarders

Exporting is perhaps the most common and popular method of international expansion in the modern world. Importing and exporting activity worldwide has a direct impact on the global economy and ensures consumers around the world can access a wide range of goods and services. 

According to the World Trade Organization, the value of world merchandise trade (powered by exporting) rose to $25.3 trillion in 2022. Exporting requires companies to work with a number of partners to ensure goods and services can be delivered to stores and customers worldwide.

One of the most valuable types of partners businesses can work with for exporting are digital freight forwarders. Digital freight forwarding can help your business access a wide range of digital tools, from real-time tracking for orders, to financing solutions, online checkouts, and instant quotes and bookings for international sales.

With the right freight forwarder, businesses can also keep their exporting costs low by choosing the optimal delivery and logistics parties to work with, ensuring they can capture a larger share of the market with minimal initial expense. You can reduce your transportation costs, minimize shipping risks, and deliver excellent experiences to every customer.  

This is why it’s so important for business owners, especially SMBs, to work with exporting partners who understand the unique trade requirements of each location, customs costs, and other factors.

Option 2: Licensing and Franchising

Another popular method of international expansion involves “licensing” a brand and its products to other would-be business owners, in the franchise model. With this strategy, companies give “licensees” rights to use their intellectual property, in exchange for a royalty fee. 

For instance, if you owned a restaurant in the United States, you could give other store owners in Europe access to your recipes, brand assets, and other intellectual property, so they can sell your goods to consumers elsewhere. The “franchisees” then follow your methodologies to run their business and pay you a fee to access your intellectual property. 

This mode of international expansion is relatively straightforward and allows companies to build their presence rapidly. The cost of entry and risk is usually quite low, provided you already have an established brand. However, there’s always a risk that a franchisee or licensee may become a competitor to your business. 

Option 3: Strategic Alliances and Partnerships

Strategic alliances and partnerships offer a mutually beneficial way for two entities to work together, increase sales, and boost brand presence. With this methodology, companies form alliances with local firms or organizations in the market they want to reach. 

For instance, a technology company looking to sell its computer parts in various regions worldwide might work with pre-established vendors in regions to increase market presence. The partner sells the products on behalf of the technology company and shares a portion of the profits. 

This method of international expansion can increase sales and opportunities for both businesses involved in the alliance. The company looking to expand gets an easy “go to market” strategy in another country, alongside market data and expertise. The firm selling your product also benefits from access to your resources, and opportunities to grow their product portfolio. 

The biggest issue with this strategy is finding the right partner to work with. Business owners need to do extensive research and create comprehensive contracts to ensure intellectual property is protected. 

Option 4: Mergers and Acquisitions to Expand Your Small Business Internationally

Potentially one of the more expensive methods for international expansion – mergers and acquisitions – involves a business purchasing a company, or joining forces with them in another region. 

Merging with, or buying a pre-established company makes it easy for entrepreneurs to enter new markets quickly. You’ll be able to access the existing resources, supply chains, and distribution channels the company has already established, reducing the work required for growth. 

What’s more, some mergers and acquisitions allow organizations to leverage additional benefits from the company they buy. For instance, you might get access to new products and services, intellectual property, or partnership agreements. However, this strategy does require high investment, as purchasing a brand, or buying a large share in a company, can cost millions.

Option 5: Greenfield Ventures

Greenfield ventures aren’t as popular today as they once were, due to their high startup costs. In 2021, the value of Foreign Direct Investment (FDI), or Greenfield projects, was around $659.43 billion. Though this is an increase from the previous year, the market has still dwindled over the last decade.

Greenfield ventures are complex, as they involve establishing a wholly-owned, new subsidiary in a foreign market. Establishing this kind of venture is time-consuming and expensive, as companies need to research a new audience, find a new team, create products specific to the market, and so on.

However, Greenfield ventures still have their benefits. They provide companies with direct ownership of their new subsidiary and a higher degree of control. Integrating your business into another market also gives you an opportunity to collect first-hand data about a new target audience.

Summing Up

Growing your small business internationally is an excellent way to increase sales and boost your market presence. In today’s world, there are numerous ways companies can branch out into new landscapes. However, each strategy comes with its own distinct benefits and risks.

In most cases, the success of your venture will revolve around a few things: market research, the right partnerships with specialists, and strategic planning. If you can invest fully in the right international expansion method, you can transform even the smallest business into a worldwide brand.