Follow these three essential steps to international expansion success.
Step 1—Take a hard look in the Mirror
Begin by taking a look at your business. How prepared are you for this next phase of your growth?
- Your finances—Does your business have the financial capacity to make a long-term commitment to your exporting or other foreign expansion project?
- Your leadership—Are the owners and senior managers all on board? Are you ready to get the outside expertise you need to support management?
Your team—Do you have adequate marketing, sales and other human resources? What additional personnel will you need?
- Your products or services—What will make your offerings stand out against the competition in a foreign market? Are you ready and able to adapt them to the needs and desires of customers in your target markets?
Step Two—Find the best markets for your business
Now it’s time to research potential markets. Screen them objectively both for opportunities and risk factors.
How easy is it to do business in a given foreign market? Investigate the regulatory environment and red tape. Look at risks including those to your intellectual property. Investigate whether there is a clear and growing demand for the type of products or services you offer, and a base of potential clients with the interest and money to buy.
And don’t forget about local culture and customs. This may influence how you will have to package and market your products. It could also impact your business dealings—you don’t want to harm an otherwise rewarding business relationship by making a cultural faux pas.
Once you have distilled your options to a shortlist of potential markets, the last step is to make final selections in line with your company’s situation. This may require getting on an airplane and meeting with key contacts to learn about the competition, local rules and distribution channels.
Attending trade shows and events specific to your industry in the country can also be helpful. Another option is to participate in a government trade mission.
Step Three—Plan and execute
By this stage, you have arrived at your final decision. Now it’s time to develop your plan of attack—your market entry strategy.
In your market entry strategy, you should define your objectives clearly so that you can use the right tactics to reach your goals and give yourself more credibility with lenders or investors, should you require external funding.
The plan should spell out the following information.
- A budget outlining how much money you’ll need to finance your project.
- The countries (or regions within a country) you are targeting.
- Opportunities and risks you foresee in the market.
- Who your competitors will be.
- How you will market and distribute your products.
- Ways in which you may have to adapt or customize your offering, including packaging, labeling and promotion, in keeping with regulatory requirements, consumer tastes and cultural preferences.
- A method for determining pricing, taking into account the costs of exporting, product adaptation and exchange rate.
- Goals and a time frame in which to achieve them in.
In addition, detail the staffing levels required to implement this international growth initiative. Decide how you will reach your market—will it be through local distributors, sales agents, a joint venture partnership or with your own on-site sales team?
With your plan, you can now go to a lender for an expansion loan to make up the difference between your internal resources and what you need to finance your project. Keep in mind it’s often better to borrow for growth projects than to put undue pressure on your cash flow.
Now you’re ready to start selling.
Be sure to focus on long-term relationship building in your new market—and again, be patient. It often takes up to three years for an international expansion to take root.
The Canadian Trade Commissioner Service, Export Development Canada and the Canada Border Services Agency also have excellent resources for entrepreneurs interested in exporting and international expansion.