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Expanding overseas
10 min read

Expanding overseas: tips for growing a business internationally

You’ve made a success of your business on home soil – but you can’t shake the feeling that you could do even more, go further, grow bigger… go global. Whether it’s the passionate and energetic entrepreneur in you, or the newfound confidence that a successful business brings, suddenly expanding overseas can feel like a mountain that must be climbed.

But with adventure comes risk. This article maps out some essential areas you need to explore fully before deciding whether an international arm of your business is worth the time, effort and resources. From customer demand to cultural understanding, legal and regulatory requirements to tax implications – consider this your first ‘recce’ into the reality behind expanding overseas.

You might just find your dream could be more of a reality than you think.

What is a foreign expansion?

It’s the process of extending operations, products or services into international markets to reach new customers and drive growth beyond domestic boundaries.

This process can vary significantly depending on the nature of your business. For instance, service-oriented businesses may focus on establishing branches or partnerships abroad to offer their expertise or solutions to a global clientele. On the other hand, product-based businesses may navigate challenges related to manufacturing, distribution, and compliance when entering foreign markets, requiring strategic planning and adaptation to local regulations and consumer preferences. Despite these differences, the overarching goal remains the same: to capitalise on new opportunities and diversify revenue streams by tapping into markets beyond the confines of one’s home country.

Overseas expansion: Key factors to consider

Is your business set up to succeed internationally, before you make the leap? It’s a risky decision for all business types and sizes, especially if you’ve never done it before.

Our advice? Consult with a variety of experts to assess the viability. For example:

  • An experienced accountant will help you navigate complex tax laws, optimise tax strategies to minimise liabilities, ensure compliance with international regulations, provide financial guidance and offer strategic advice on funding, currency management and risk mitigation.
  • A tax advisor can also advise and assist with the tax implications of expanding overseas.
  • A legal professional will advise on compliance with international regulations, navigating complex legal frameworks, structuring contracts, protecting intellectual property, managing risks and resolving legal disputes (to name a few!).
  • International business consultants can offer insight into market trends and entry strategies.
  • Your business investors can provide financial backing and strategic guidance once they’ve assessed the expansion feasibility and potential returns.
  • Trade associations and chambers of commerce provide resources and networking opportunities.
  • Government agencies such as the Department for Business and Trade offer support and services.
  • Banking professionals can assist in foreign currency management and trade finance.
  • Peers, networking groups and industry partners offer valuable insights and collaboration opportunities.
  • Market research firms provide data-driven insights into target markets.
  • Local advisors and partners can offer on-the-ground expertise and networks for successful global expansion.
  • And don’t forget to get thoughts from your team. What do they think? Leveraging diverse perspectives and skill sets can enhance decision-making and the implementation processes.

Seeking advice and getting involvement from the right people before expansion can ensure your business cultivates a supportive ecosystem behind your international expansion efforts.

Some key questions to discuss with your advisors well in advance of the departure lounge:

  • What are your objectives for this endeavour? Defining your goals will shape your approach and provide benchmarks for assessing your progress.
  • Is this expansion a short-term initiative or a long-term investment for your business?
  • Is your intention to enhance the competitiveness of your business through this expansion effort?
  • Are you considering the acquisition of a new company?
  • Are you exploring the possibility of entering into a joint venture?
  • What does the future hold for your enterprise?
  • How will stakeholders derive value from this expansion?
  • Does your business have the resources and capability to commit the necessary time and capital to international expansion?
  • What impact will international expansion have on your core business operations?
  • Do you have the full support of your team for this expansion endeavour?
  • Does this expansion align with your current business structure?
  • Have you thoroughly considered all aspects of this new venture?
  • How many employees will be needed to manage operations, and where will you source them from?
  • Where will the intellectual property rights be held for this expansion?
  • How will you finance this expansion, and what is the sustainability of your funding until it becomes profitable?
  • What level of projected profits or growth would define success for this expansion?
Expanding overseas

What steps should I take in planning international expansion?

Currently less than 10% of UK businesses export (Source: CBI). Whilst there are multitude of reasons why this is the case, it’s clear that overseas expansion is something many businesses do not feel confident or equipped to do. We’ve put together some key steps you’ll need to undertake when planning your overseas expansion.

  • 1. Conducting comprehensive market research

    Analyse target markets thoroughly to gauge demand, competition and consumer behaviour. Get to grips with market size, growth potential and entry barriers.

    Look at the Total Addressable Market (TAM) and the Serviceable Addressable Market (SAM) – what’s the market potential? Evaluating the TAM provides an understanding of the overall market size and potential demand for products or services in your target market. Meanwhile, analysing the SAM narrows down the portion of the TAM that your business can realistically serve based on factors such as geographical reach, distribution channels and target customer segments. By assessing both TAM and SAM, you can gauge market potential accurately and make informed decisions about international expansion strategies.

    Break down the regions, countries and/or communities of greatest alignment to your service or product being offered. How will your offering fit a unique need in that locale? Will it connect with its culture? From there, your international business strategy can be stepped and piloted with intent.

    During your research, also consider whether there’s a real benefit to your business in branching out and if so, is there a good time to do this?

    Don’t rush this stage – it’s responsible for confirming whether you have the green light to go global – or not.

  • 2. Formulate your international business strategy

    This is where you’ll define your objectives, target markets, entry modes and marketing approaches. You’ll need to tailor strategies to fit the market characteristics and your business goals. Are there language or cultural aspects to take into consideration? Do purchasing habits differ from country to country? Customise your offer to each market. (Working with a local partner can help avoid pitfalls – see Step 10.)

  • 3. Ensure you have a good cultural understanding

    Appreciate cultural nuances and adapt products, services, business plans and marketing strategies accordingly. How well will your product / service travel across international borders? Every aspect of how you go to market will need reviewing to ensure your brand comes across as an insider, rather than an intruder.

    It’s also crucial to consider the need for your offering in each location. How will your presence positively impact the culture, and the country? What do you bring to the table? Spend time understanding the customs, culture and desires of people. Understand the uniqueness of each location before expanding.

  • 4. Understand legal and regulatory requirements

    Comply with international laws, regulations and trade policies to avoid legal pitfalls. Here are some examples how different countries and regions differ:

    • Middle East: Cultural sensitivities and adherence to Sharia law principles, particularly in sectors such as finance, where Islamic banking practices differ from conventional banking regulations. 
    • Australia: Stringent consumer protection laws administered by the Australian Competition and Consumer Commission (ACCC), which mandate clear disclosures, fair pricing, and product safety standards. 
    • China: Complex intellectual property regulations and trade tariffs. 
    • United States: Food products in the United States require compliance with the Food and Drug Administration (FDA) regulations, including labelling and safety standards.
  • 5. Get a firm grasp of tax implications.=

    Businesses must navigate local tax laws, such as corporate tax rates, VAT and customs duties. Exporting goods may incur export taxes in the UK, while importing goods into new markets may trigger import duties and tariffs. Double taxation agreements can mitigate tax burdens, and transfer pricing regulations must be followed for intra-group transactions. Understanding these complexities is crucial for tax planning and compliance. Always seek advice from tax advisors or specialists to ensure compliance.

  • 6. Look at logistical challenges:

    Address logistical complexities such as transportation, supply chain management and distribution channels.

  • 7. Prepare for currency fluctuations

    Reduce the risks associated with currency exchange rates through hedging strategies or local currency transactions.

  • 8. Consider various entry modes

    How are you planning to enter international markets? There are different entry modes such as exporting, licensing, franchising, joint ventures or direct investment based on market conditions and business goals.

  • 9. Allocate resources effectively

    Allocate resources effectively by striking a balance between investing in market entry initiatives abroad and sustaining operations in existing domestic markets. While expanding internationally presents promising opportunities for growth, it’s crucial not to lose sight of the foundation built at home. This can provide a stable revenue stream that allows you to invest and test the waters globally. 

  • 10. Build strong local partnerships

    Navigate cultural and operational challenges and leverage local expertise. This – in our opinion – is one of the most important elements to international success. Think less short-term sales transactions and look to build solid partner relationships that are built for long-term success.

  • 11. Adapt your marketing strategies

    You need to align with local preferences and market dynamics such as product offerings and business practices. Don’t assume one successful marketing strategy will transfer overseas – this isn’t the case. Brand guidelines can still be shared and adhered to, but how your offering is marketed will entirely depend on your market.

Challenges of expanding business internationally

Expanding overseas isn’t plain sailing – you and your business need to be prepared to adapt to challenges. Careful planning, strategic decision-making and a pro-active approach to risk management will certainly make for calmer waters.

Here are some examples of common challenges:

  • Navigating cultural and language barriers: Adapting to diverse cultural norms, communication styles and languages can pose challenges in building relationships, marketing effectively and understanding consumer preferences.
  • Managing overseas operations: Overseeing remote teams, supply chains, logistics and regulatory compliance in unfamiliar markets requires effective coordination, infrastructure and local expertise to ensure operational efficiency and legal adherence.
  • Legal and regulatory compliance: Understanding and adhering to complex foreign laws, regulations, tax codes and trade policies can be daunting, requiring thorough research and potentially necessitating legal counsel to avoid legal pitfalls.
  • Market entry barriers: Overcoming barriers to entry such as high tariffs, trade restrictions, licensing requirements and competition from established local players can hinder market penetration and increase costs.
  • Currency fluctuations and financial risks: Exposure to exchange rate volatility can impact pricing, profits and cash flow. Hedging strategies and financial planning are essential to mitigate currency risks and ensure financial stability.
  • Political and economic instability: Operating in regions prone to political unrest, economic downturns or government instability introduces risks of disruption to business operations, supply chains and investment security.
  • Intellectual property protection: Safeguarding intellectual property rights, trademarks, patents and proprietary technology from infringement or theft in foreign markets can be challenging due to differing legal systems and enforcement mechanisms.
  • Local competition and market saturation: Competing with entrenched local competitors who have established brand loyalty, distribution networks and market dominance presents challenges in gaining market share and building brand recognition.
  • Cultural adaptation and marketing localisation: Tailoring products, services and marketing strategies to align with local preferences, values and consumer behaviours requires cultural sensitivity and market research to resonate with target audiences effectively.
  • Human resource management: Recruiting, training and retaining skilled employees in foreign markets, while also navigating cultural differences, labour laws and talent shortages, can be a significant challenge in building a capable workforce.
  • Supply chain complexity: Managing global supply chains involves coordinating suppliers, logistics providers, customs clearance and inventory management across borders, necessitating efficient processes and risk mitigation strategies.
  • Technology and infrastructure: Accessing reliable technology infrastructure, internet connectivity and utilities in developing or remote markets can be limited, impacting operations, communications and digital marketing capabilities
  • Being available across time zones: Especially if customer service plays a big part in your business, you need to have a plan in place for being available across time zones. For example, you might need to consider setting up a remote office with local speakers to ensure that none of your clients have any issues that can’t be assisted with in real time.

Hiring and managing talent in foreign markets

This requires careful planning, cultural sensitivity and a commitment to compliance and inclusivity. By addressing these considerations, you can effectively build and manage a global workforce while building a culture of diversity and inclusion.

Do you need to have a physical base/workforce in overseas countries?

This varies based on business nature, target market and regulatory requirements. Some industries may require local presence for production, distribution or customer relationships. Compliance with local laws and regulations often mandates establishing legal entities. However, service-based businesses or digital platforms may function without physical presence.

Consideration of market access, customer relationships, legal compliance and expansion strategy will guide your decision.

Flexibility is vital, as business needs and market conditions evolve. A thorough assessment of benefits versus costs determines whether establishing a presence abroad is essential for achieving your business objectives.

Understanding international employment laws

Get professional advice and familiarise yourself with employment laws, regulations and labour standards in foreign markets to ensure compliance with legal requirements regarding hiring, contracts, wages, benefits, working hours and termination procedures. Seek legal counsel and HR expertise to navigate complex legal landscapes.

Building a diverse and inclusive team and suppliers

Embrace diversity and inclusion in hiring practices to create a multicultural workforce that reflects the diversity of your target markets. Consider cultural diversity, language proficiency and local expertise when recruiting talent. Additionally, prioritise diversity and inclusion in supplier selection to promote innovation, creativity and market responsiveness.

expanding overseas

How do I evaluate the success of my overseas expansion?

Monitor specific metrics that are relevant to your international expansion efforts (KPIs), which could include:

  1. Revenue growth: Monitor revenue generated from the overseas market to gauge the financial success of your expansion efforts. This can include overall revenue, revenue per customer and revenue growth rates over time.
  2. Market share: Measure your market share in the target overseas market compared to competitors. Increasing market share indicates that your products or services are gaining acceptance and traction among customers.
  3. Customer Acquisition Cost (CAC): Calculate the cost of acquiring customers in the overseas market. Lower CAC indicates more efficient marketing and sales strategies, leading to higher profitability.
  4. Customer Lifetime Value (CLV): Assess the long-term value of customers acquired in the overseas market. A high CLV demonstrates that your business is effectively retaining customers and generating recurring revenue.
  5. Customer satisfaction and retention: Track customer satisfaction metrics such as Net Promoter Score (NPS), customer reviews and repeat purchase rates. Satisfied customers are more likely to become loyal advocates for your brand and contribute to long-term success.
  6. Brand awareness and recognition: Measure brand awareness and recognition in the overseas market through metrics such as brand mentions, social media engagement and website traffic. Increased brand visibility indicates successful marketing and branding efforts.
  7. Operational efficiency: Evaluate operational KPIs such as supply chain efficiency, inventory turnover and fulfilment times. Improvements in operational efficiency can lead to cost savings and better customer service.
  8. Profitability and Return on Investment (ROI): Monitor profitability metrics such as gross profit margin, net profit margin and ROI on overseas expansion investments. Ensure that your efforts are generating a positive ROI over the long term.
  9. Compliance and risk management: Assess compliance with local regulations, adherence to international trade laws and risk mitigation efforts. Compliance failures or operational risks can have a negative impact on your expansion.
  10. Employee satisfaction and performance: Measure employee satisfaction, retention rates and productivity in overseas operations. Engaged and motivated employees are essential for delivering high-quality products and services and maintaining customer satisfaction.

By tracking these KPIs and adjusting your strategies accordingly, you can effectively assess the success of your overseas expansion and make informed decisions to optimise performance and drive growth in international markets.

Overseas expansion: final thoughts

International expansion provides an entirely new market of customers that your business can serve – helping inject some serious rocket fuel to the growth of your business. But tread carefully – what works in one market, might not in another. There are different opportunities to identify in each market, and there are different cultures, laws and regulations to respect and adhere to.

Spend time researching and getting advice as to the viability of expanding overseas. You might find that there are opportunities abroad, but they’re best left explored in the future. Or you might unearth a massive business opportunity that you can’t ignore.

Whichever outcome – make informed decisions. The more you know, the more you can resonate with different markets and expand overseas successfully.

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