The ultimate objective of every business is to grow and expand. At one time or the other, a majority of entrepreneurs visualize global expansion as their long-term target. However, the process is fraught with challenges related to resource planning, competitive obstacles, compliance requirements, and more.
At the same time, there are some mistakes that entrepreneurs make and end up with their dreams shattered. Even though these mistakes are quite common, they can still be avoided if you are aware about them. Here are the mistakes that businesses expanding overseas need to steer clear of.
Expanding for the wrong reasons
Establishing a setup overseas is an attractive opportunity for businesses but the option may not just be right for everyone. When you do plan to extend your outreach, be clear about the reasons and objectives that drive your decision. Also, understand that it is a long-term investment rather than just a quick-money scheme. Additionally, it is essential to assess your commitment and readiness to embark on this challenging and uncertain journey.
For instance, evaluate the financial and structural stability of your business to understand whether it will be able to sustain the challenges of international growth. Further, consider the resources that you have and verify if they would be adequate for global expansion without disrupting the local presence of the business. Another factor that you need to consider is whether the management team is willing and ready to face global challenges.
Starting without a plan in place
International expansion definitely seems like an exciting opportunity but rushing it without a plan in place can be a blunder. Planning an overseas setup is a complex step as there is a lot to be done. In-depth market research is the first step as you need to know the potential of the target market first. Factors like resource procurement and fulfillment of regulatory compliances also require extensive planning and preparation.
Also, it is to be noted that you cannot take a one-size-fits all approach to global expansion strategy. This is because every market is different and so are the legal and regulatory requirements in different countries. You cannot expect Singapore country setup requirements to be same as those in any other part of the world. Therefore, it is worth having a local business consultant who can assist you with a strategic plan that guarantees success for the international venture.
Ignoring local preferences and culture
Another major mistake that you can make while taking your business to another country is ignoring the local preferences and culture. Most entrepreneurs fail to focus on consumer behavior, cultural parameters and product preferences as a part of the market research. Rather than paying attention to these human prospects, they tend to be bothered about facts and figures. But these will hardly be of use unless you catch the pulse of the market.
The best approach would be to perform a segmentation-focused research that is more inclined towards building a buyer persona instead of gathering numbers. Try to understand the local business etiquette and suitability of your product for local standards and market requirements. Make sure that the product has the ability to adapt to the needs and expectations of the local audience.
Settling for cheap talent to save money
When you start up in a new country, you would definitely want to squeeze your budget and save money. However, saving up by settling for cheap talent is the worst thing that you can do. Avoid hiring unskilled and inexperienced people as you may end up losing rather than saving money. Hire people who have the right skills and are experienced enough to understand the local market and deliver to the expectations.
When it comes to hiring talent for your overseas venture, local is the go word. These professionals are in a better position to understand and respond to the needs of the target customers. Further, they are well aware about the challenges and opportunities presented by the market and can take lucrative decisions for your business.
Going for it alone
Overseas expansion is always risky as there are chances that you may land into trouble for not abiding by the legal norms. Also, you may be ignoring key matters like tax laws, export-import regulations and custom duties. Even if you may not be ignoring them intentionally, these mistakes can cost you dearly. Lack of awareness is one possible reason while not partnering with key local players is the other.
It is practically not viable to break into a new market alone. The best approach is to look for a local partner that knows the landscape well enough. Having someone who is capable of investing time and money is even a better idea. You may even explore the idea of acquiring a local business that already has a solid client base and good reputation to serve as a great launch pad for your business.
Expecting too much too soon
Global markets can prove to be a lucrative source of revenues and growth but it is wrong to expect too much too soon. Remember that you would need a long term strategy to break into an overseas market, beat the competition and build a reputation for your brand. It may take years of hard work and perseverance to sustain and grow in a new market.
Having a realistic approach is extremely important when you move into a new territory. The key lies in analyzing and comprehending the expectations of the buyers as well as the dynamics of the market. Additionally, when you take your business on a global expansion spree, you need to have sufficient funds to sustain through the break even period. Being prepared for unexpected costs is equally important.
Now that you know the common global expansion mistakes well enough, you can use this awareness to avoid them. Proper preparation and planning are the most crucial aspects of international expansion. Consider it only when you are established enough in the local market so that you have the potential to survive the challenges that pave way to huge growth opportunities.