It can take over ten years for many businesses to reach a profit in an International Business Expansion. This goes to show that it can be a hard slog and that you might need to work hard to ensure that it gives you the ROI you need. So why do it and what are the main benefits of such expansions?
To answer this, we lay out some of the reasons you might want to expand into a foreign market. With our five points, you will understand what you need to know to convince others that it might be worth the risk for your organization. So, what are you waiting for?
What Is Global Expansion?
As you continue to succeed in your area of business, you will eventually want to expand your operation to include more areas. This might include:
- merging with another company
- expanding your area of service
- transferring some of your operations to a dedicated new area
This might include other areas of the country you are in or might mean working in many countries at the same time. When you are international, this means you are globally expanding.
How Can This Benefit Me?
There are many reasons why global expansion might help you. The following are the biggest five reasons you can find for doing such a thing.
1. Foreign Talent
When you are working in one area, you will face limits to the talent you can either find in the local pool or attract to your area. If instead, you open up a business in other areas then more locations will open up to you as potential talent pools.
Also, your new international workforce might have different expectations about compensation. You might be able to find people who will do the same kind of job for much less money. This means you get the same quality of work for less.
On top of this, with a more diverse workforce, you can find yourself with more viewpoints to use. This can help you with working out areas where your solutions are lacking, which allows you to solve issues better in the long run.
Diverse workforces are even statistically an improvement over homogenous ones. They are even 1.7 times more likely to be leaders in their area. You have nothing to lose by bringing in new faces.
2. Reduced Overheads
By expanding, you may find that you can find locations that offer you a better price to run your business while still maintaining profits.
This does not mean you must move your entire operation to a new location, but instead a small part of your process. For example, you can create a foreign customer service element for your operation. With this, you can reduce costs of labour far below what you were paying before.
Or, you may find that relocating your manufacturing process closer to the source of your materials will knock a large part off of your costs.
HR, payroll, finance, or any other part of your operation might also improve and be made cheaper by moving it elsewhere too.
3. Reduced Risk
If all your business is in one area of the world, it is at high risk of harm. Business can dry up in that area of the world, or supply problems can crop up and harm your ability to provide products or services. On top of this, local politics or natural disasters can have a strong impact that is hard to predict or react to.
Instead, if you spread out to many locations you can have assurances that you always have “backups”. You can avoid the problems that might come from a downturn in sales from one area by pivoting that area. At the same time, you can enjoy increases in revenue from others.
4. New Markets
By expanding your business, you can always find new growth opportunities. It might be that a new area has specific benefits that you would never find at home, and you can exploit these to help you grow faster than before.
On top of that, it might be that these new markets are virgin territory for the kind of service or product that you offer. As such, you can get in before your competition and corner the market before they even get a hint that you are expanding.
To ensure that this happens without a hitch, make sure to do the appropriate market research. You should try to find somewhere that has an interest or need in what you are offering. If you do not, you might find that the new location was only a waste of money.
5. Tax Arrangements and Compliance
Another boon to expanding globally is the tax and compliance benefits you may encounter when opening offices in other areas of the world. For example, some areas of the world may have fewer corporate taxes or less-complex taxation rules.
By making use of these areas of the world, you may be able to prevent large amounts of spending as you pay tax at a much lower rate.
You should ensure that you are abiding by all local laws on tax in all areas that you work in. It may be that by earning or spending in a foreign country, your business’ country of origin might tax you more than one time. Work with your accountant or lawyer to get the details on what you need to do in this instance.
More On International Business Expansion
After reading the above, you should have a stronger idea of how to get the most out of an international business expansion. When you do, you will most likely need to expand your workforce to match the new location. This is what we are here for.
We can help you find people out in the world who match your needs and can help secure you a victory in your business moving forward. All you need to do is get in contact and we will answer any questions you have about our process. So give us a call and we can get started.