After you’ve built a loyal national customer base, expanding internationally might be the next step to keep your business growing. Becoming a global company is an impressive accomplishment, but not every business is cut out for the challenge.
There are many things to think about before you sell and market your products or services in another country. For instance, do you have a potential customer base in the foreign markets you want to enter? A product that sells well in your home country may not necessarily have the same appeal elsewhere.
“First, make sure your customers exist,” said Joseph Paris, Jr., chairman of business consulting firm XONITEK and founder of the Operational Excellence Society. “Is there a need for your offering? Are they inclined to purchase? Don’t think that they might – know that they will.”
For this reason, Michael Lee, head of international marketing and business development for ecommerce platform Alibaba.com, recommended looking for markets that are similar to yours. While the business environment won’t be identical to your home country, you should be familiar enough with the market for smooth business discussions.
“Take into consideration trade barriers, proximity, currency and culture,” Lee said. “Seek out homogeneity – the fewer differences between your country and the one you export to, the easier it will be to do business with [that country].”
The challenges of international business
No major business decision is without its hurdles, but expanding internationally comes with its own unique set of obstacles. Here are some challenges you should prepare for before going global.
Language and cultural barriers
Taki Skouras, co-founder and CEO of international wireless accessories retailer Cellairis, suggested hiring bilingual staff members who can translate for your company. “If you don’t have the budget for full-time translators, outsource tasks like overseas customer service,” Skouras said.
Differing cultural norms is another obstacle. Lee suggests researching cultural practices in the countries you plan to expand into. Foreign customers’ and business partners’ needs are probably different than those of domestic stakeholders, he said.
“You will have to understand the different ways people communicate,” said Paris. “For instance, in northern Europe, there is far less ‘chit-chat,’ and you might feel that the party is being blunt to the point of rudeness – this is not the case. In southern Europe, there is a lot of personal conversation and activity before business issues are addressed, and cutting to the chase is seen as being impatient.”
Tax codes and compliance issues
Learning the different tax codes, business regulations and packaging standards in different countries can be challenging. Paris reminded entrepreneurs that the United States taxes worldwide income, and the IRS imposes special reporting requirements on this income.
Foreign banks may also be hesitant to deal with a U.S.-based account due to the administrative burden, so you may have to set up a separate foreign business entity and back account to make handling transactions worthwhile for the banks.
Further, packaging standards are different from country to country. In the states, companies only need to include directions that are in English and maybe Spanish, said Paris. “But in Europe, your instructions, even for the simplest product, will be in multiple languages, sometimes up to 24 languages. If your product is sold more regionally, you will have to consider the increase in packaging cost associated with labeling. In addition, your product will have to be certified as safe [by those countries’ standards],” he wrote.
Read more: http://www.businessnewsdaily.com/8211-expand-business-internationally.html