Expanding your business to a different location can help you expand your market and tap into a new demographic. On the other hand, there’s a limit to how far you can go before you reach the borders of your own country. Once you decide to take that extra step and expand internationally, you’ll find that the rules of the game drastically change. Nevertheless, with the right amount of planning and research, this can be an incredibly lucrative move. Here are five key points to consider when expanding your business internationally.

  1. Branch or subsidiary

The first thing you need to decide on is whether this international franchise will act as a branch or a subsidiary. The difference is quite great, due to the fact that a branch functions within the same hierarchal construct. On the other hand, a subsidiary is more or less, an independent company, loosely tied to the mother chapter. The choice you make here will affect your marketing, due to the fact that the company in question will have to start from scratch. You see, a branch benefits from your already existent presence on the global market, nonetheless, being a subsidiary and starting for zero has a particular way of working ever in your favor.

Moreover, there might be some difference, depending on the local law and regulations, when it comes to the issue of the repatriation of profit. You will probably be forced to pay taxes both at the target location and in your home country, which can be quite troublesome for your accountants, who might be oblivious of the local tax laws. Either way, the structure of your international business is a first major decision you have to make.

  1. Find a room in your budget

The next thing you need to understand is that expanding your business internationally may come to cost you quite a bit. Think about it, not only will you have to lease the office space, purchase equipment, hire staff and do a local marketing campaign but you’ll also have to find a middleman to do all of this for you. One of the ways is to send your own representative, which is a cheaper, yet less efficient method. Sure, you save money by only having to pay them a bit extra for all these responsibilities, as well as covering their costs of living in another country but you still have a representative with the viewpoint of a foreigner.

Your other option is to outsource and find reliable local partners. In this way, you can make your business a tad more independent, especially if you’re starting a subsidiary. Whichever you choose, you’ll need a healthy financial base to work with. Moreover, as your business starts off, it won’t be self-sustainable for quite a while. This is why branches often take money from the joint account of the company, while subsidiary managers know that debtor finance keeps cash flowing.

  1. How will you staff this outpost?

Perhaps the most important question of them all is the issue of staffing your new outpost. On the one hand, you can’t just send an entire team abroad. Not many of your employees would be willing to relocate and even if they were, it would be logistically and financially unsustainable solution. Sure, you need someone who’s fluent at the target country’s language and familiar with culture to bridge the gap, however, when it comes to the workforce, going with local is always the right thing to do.

  1. Check cultural discrepancies

Another thing worth keeping in mind is cultural discrepancy that makes your move or expansion irrational and even non-profitable. Think about it, the most common reason why you’re penetrating the new market is because it shows a lack of products that you provide. Nonetheless, you should try asking yourself why this is so. For instance, the lingerie market in Saudi Arabia may be present, but it is definitely a lot smaller (despite the PPP) than in some other regions of the world.

  1. Check for a trademark

Finally, most trademarks work on the basis of a country or even a continent, which means that the name you’re currently using might already be taken at your target destination. The list of companies that work under different names abroad is quite long and may contain some of the greatest brand names out there. For instance, Burger King goes by the name Hungry Jack’s in Australia.

Conclusion

At the very end, taking care of these five steps may not be enough. Even if you have the most in-depth analysis of the target location, you need to understand that things sometimes change on-spot and your ability to react from across the globe will be fairly limited. This is why you can’t pull it off without a proper local support.

Colin Shaw

Colin Shaw

Colin has been in the finance market for over 20 years and specialises in best business practice to make an organisation profitable. The only man for the job when it comes to numbers and accounts with a keen talent for simplifying finance for the wider market.
Colin Shaw

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Written by Colin Shaw

Colin has been in the finance market for over 20 years and specialises in best business practice to make an organisation profitable. The only man for the job when it comes to numbers and accounts with a keen talent for simplifying finance for the wider market.