There is no doubt that International Business Expansion should be part of every entrepreneur’s strategy. Mistakenly, many see it as something possible only for larger companies. However, in reality, foreign expansion is for everybody: multinational corporations, SMEs and even start-ups, if approached correctly.
Below are 5 common mistakes made by companies when expanding to new markets:
1. Not doing a proper research
Each country is different and has a different culture, legislation and rules. Therefore, you cannot expect the same results when moving your business to a new environment. You should not base your choice of expansion destination solely on general economic and industry trends. It is crucial to do thorough research into potential markets to be sure that your product/services will be in demand, the competition is reasonable, the profit you can expect is worth the hassle, as well as whether you have the right resources to establish yourself compliantly in the new country.
Important areas to research: local labour and tax legislation, local talent pool, potential customers, competitors, and logistics.
2. Going after quick money
It is no secret that the main objective of every business is to make money. International expansion is one of the best strategies allowing companies to maximise their profit. Offering a new client base, cheaper labour and manufacturing costs.
However, some business owners take it a step further by trying to cut corners in order to make a quick buck. Eventually, this path leads to poor deliverability, product quality and legal charges. As a result, not only the new division of business fails. Not to mention that your company’s reputation gets damaged, affecting primary operations too.
Areas to never compromise: compliance with local and international legislation, workforce, the quality of your production/services.
Every successful enterprise realises that human capital is its driving force. These are people who help companies reach goals and build market dominance at every step of the process.
The worst mistake you can make is to go for quantity over quality. Regrettably, some business owners choose to hire cheaper staff, which invariably means less experience and skills. On the contrary, it is in your own interest to get the leading experts on your team to ensure the foremost performance.
4. Long distance Micromanagement
Establishing your business in a new market is only half of the job. It is equally important to stay on top of your company operations. One of the worst decisions you can make is to micromanage your foreign branch from afar. Needless to say, it is inferior for your team. But, most importantly, it will slow down the decision-making process and the quality of your services.
The only way around this would be to assign a decision-maker for the new locale. The executive can be hired permanently or on a consultant basis, locally or brought from abroad.
Using Workforce Management services, such as Employer of Record, International PEO, International Payroll, Recruitment Process Outsourcing and Talent Acquisition, will allow you compliantly employ the best talent for your venture, depending on your personal circumstances.
5. Going Solo
Although international business expansion is a complicated and time-consuming process, many burdens can be easily relieved. Some firms attempt to expand on their own trying to save money or simply not knowing that there are services that can help them with the transition into new markets. Business expansion and workforce management consultancies can take care of your foreign company formation, handle all legal and tax matters, source and onboard your new employees, as well as run payroll for you.
Are you thinking of testing new markets? Reach out now for the best solution for your company.