If your business is successful in one geographic area, you may be considering expanding into new markets. While the first step for many local businesses is to go national, you might be at the point where you think you’re ready to expand outside the United States.
International markets present a tremendous business opportunity, but before making that leap, there are a few important questions you need to consider. To find out more, we asked the members of Young Entrepreneur Council (YEC) the following:
Q. What is one thing companies should consider before expanding overseas?
1. What does the local competition look like?
It’s important to look at the market of whichever country or region you’re thinking of expanding to. First, you should look at whether or not there is a need and a demand for your product or service. Second, you should try to identify if there is existing competition. If your would-be competitor in a foreign market has a very strong hold, it might not be worth it to expand at the moment. —Brian David Crane, CallerSmart Inc.
2. Do I understand the cultural differences?
Companies must consider the culture of another country. The cultural differences may determine whether or not the business is successful. If the product or service doesn’t add value, then it won’t be a success. Companies should learn and have an understanding about the people in the community and what they value. —Richard Fong, Bliss Drive
3. Am I currently a domestic market leader?
We are a software development company based in the U.S. with an office in India. A lot of my friends and connections have asked me to serve clients in India, but I always have refused. We still have a lot of potential to grow in the U.S. market and drive profit and value. Once we reach a certain level here, we can probably go overseas. I would rather be a leader in one market than lagging in multiple. —Piyush Jain, Simpalm
4. Am I prepared for the costs of logistics, tariffs and returns?
For product companies, there are a whole bunch of potential issues that arise when going international. There are different tax laws, import tariffs, increased logistics expenses, and more expenses that can potentially erode or even eliminate your profit margins. Returns can also be extremely expensive to process. These costs need to be understood very well up front before you do the expansion. —Andy Karuza, FenSens
5. Can I provide support across time zones?
Depending on where you’re located, time zones may differ drastically from the country you’re targeting. When you’re making deals with clients, promoting products or hiring for tech support, keep the time difference between locations in mind. —Syed Balkhi, WPBeginner
Other Articles From AllBusiness.com:
6. What is the cost and availability of translation services?
Before expanding overseas, you need to consider the cost and availability of translation services. For instance, your marketing materials, website, and the product itself will need to be translated and localized. Also, if you’re attending business meetings in a particular country, you may need a translator to go along with you. —John Turner, SeedProd LLC
7. Do I have enough capital for expansion?
It’s an exciting endeavor to expand globally, but you need to make sure your business has enough capital to do so. It takes a lot of money and resources to move your business to international heights and you don’t want to risk dipping into other funds to support growth. Look over your financial statements and assess if now is the right time to move overseas. —Chris Christoff, MonsterInsights
8. Do I have contacts overseas?
Before expanding overseas, consider if you have contacts in that particular country. If you do, you can turn to those relevant industry leaders to answer questions you have as well as connect you with helpful resources. If you don’t have any contacts in a particular country, consider reaching out to your network to see if you can get an introduction. —Stephanie Wells, Formidable Forms
9. Am I familiar with the rules and regulations?
Different countries vary in their regulations and expectations for companies. European countries tend to have more labor unions, for example, while India and China have fewer. You want to abide by the rules and avoid potential investigations on a global scale or irregular product quality on the other side of the scale. Educate yourself and your employees, and follow legislative updates. —Duran Inci, Optimum7
10. Is there a valid business reason to expand?
Ensure that there is a real business justification for expanding your offerings to an overseas market. Often, business owners select a region that they like or have some personal connection with instead of selecting objectively better locations to expand to. Do a cost-benefit analysis of different expansion areas to select the area with the highest potential return. —Frederik Bussler, AngelStarter
RELATED: How to Maintain Your Brand Voice When Globalizing Your Business