When you’re scaling your company, it’s imperative to anticipate your future markets and resources. If your business is gaining traction outside your immediate location, international expansion might be an option to explore.
Unfortunately, not all businesses and endeavors that achieve success in the United States fulfill the same potential overseas. Depending on what product or service your enterprise provides, you may encounter hurdles you don’t have to worry about stateside. To determine whether your company can find success in international markets, there are a number of things to analyze.
Consider Differences In Culture
Figuring out whether your product will be valued in another country is just one component of a potential cultural divide. Another aspect to consider is whether or not your current management style and employment expectations will translate elsewhere. Differences in workplace etiquette, ranking hierarchies, and even break schedules can create significant stress in employer/employee relationships. Sometimes that disconnect is severe enough to hinder international business success.
When choosing countries for expansion, it’s generally easiest to select those with similar workplace environments to the one you’re accustomed to. If you do end up setting up a location in a country with very different standard practices, help is available. To smooth your way with international hiring, you can use employer of record services.
An employer of record (EOR) operates by establishing a legal presence in various countries and then hiring employees on the behalf of other companies. Not only that, but they also provide administrative services and file all required reports to stay in compliance with local labor laws. Contracting with an EOR is required in order to hire employees in a country where your business does not have a legal entity. The service is especially helpful if you want to employ international remote employees without any other plans for overseas expansion.
It’s also beneficial to use an EOR if you are just starting out with a new international location as a bridge between your current situation and your future overseas branch. A competent EOR should be very knowledgeable about local requirements and standard employee expectations.
You can use an EOR while first establishing yourself internationally to build a solid foundation with local officials and employees. After things are operating smoothly, you have the option to transfer the employment of those workers to your business. Even after the transfer is complete, you can still hire a third party to handle payroll administration.
Determine Your Purpose
Obviously it’s important to establish whether international expansion is even possible for your business. More to the point, however, is making sure you’re clear on what goal it will advance or what problem it will solve. It’s difficult to determine whether you’ll be successful internationally if you haven’t decided what success looks like.
If you’re considering hiring international remote workers, focus on what you want the end result to be. Are you hoping to acquire employees with highly specialized skills not commonly possessed by those in your local area? If so, do you gain anything by searching overseas rather than opening up your search to the entire United States?
If an additional benefit you’re looking for is cost savings, include that in your goal. It will help you focus on what countries to consider and calculate how much of an advantage the end result will provide.
The same concept applies to creating a physical location in another country. You should have clear target outcomes in mind in order to create your plan of action. You might concentrate on the revenue marks you want to achieve or new products you intend to add to your line. Without this goal-setting mentality, it’s harder to decide whether success is possible or how to achieve it.
Plan for Hidden Costs
The thing about operating in different countries is that they’re, well, different from what you’re used to. This might seem like a childish and obvious statement, but it’s important to remember when creating a comprehensive cost estimate.
For example, if you decide to open a location that manufactures the product you’re selling, there are numerous expense categories. The first category that likely comes to mind is payroll. Moving operations to countries with much lower labor rates has been a cost-cutting strategy for decades. However, you will also need to factor in local taxes, business licensing fees, and the need for increased legal services.
International shipping is another huge cost component if your business deals in manufactured goods. It might be far cheaper to manufacture your products in China, but getting them to other countries can rack up expenses.
There is also the matter of time. Worldwide shipping times have increased due to labor shortages and pandemic complications. If you need your product to be accessible to the U.S. market, delivery delays can cost more than keeping manufacturing stateside. The bottom line is that inexpensive products you can’t place in the hands of consumers create no revenue for your business.
That’s not to say you should be worried about taking steps toward international expansion. You just need to be sure you’re prepared for the true cost of the endeavor. To help ensure this, get a detailed cost analysis report from seasoned professionals in the field. By viewing the hard data, you can anticipate comprehensive costs and make adjustments to your plan before diving in.
Know Your Own Situation
International business expansion holds great potential for tapping into new resources and markets. At the end of the day, though, it’s not the best move for every company. With clear goals and data analysis, you can determine whether it’s a viable step for taking your business to the next level.
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