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How businesses can overcome the challenges of expanding abroad

April 18, 2018

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How businesses can overcome the challenges of expanding abroad

Paresh Raja, CEO of Market Financial Solutions

The goal for many small businesses is to expand, and to support this growth they must consistently be on the lookout for scale-up opportunities. Naturally, once a business establishes itself as a reputable brand in its own local market, ambitious entrepreneurs and CEOs commonly find themselves looking overseas for exciting new expansion ventures. This has become particularly relevant here in the UK, with the onset of Brexit compelling some scaling SMEs to look beyond Europe for the next step in their commercial growth.   

Despite the allure of foreign markets, there are unique challenges for businesses looking to expand internationally. Moreover, there is inherently more risk involved when setting up an office in an international market, and for any company to make international expansion a success, strict attention to detail and forward planning is essential. In short, a strategy is needed which takes into account perceived challenges while also demonstrating the flexibility to adapt and take advantage of opportunities as they arise.

So, for businesses looking to expand overseas, how can they ensure they are ideally positioned to succeed? To answer this question, it is import for executives to consider the following.


Why expand?

First of all, a business need to assess if expanding internationally fits with its mission statement and long-term objectives. Should they expand too early, small companies risk inefficiently allocating resources, which could undermine their operations both at home and overseas. Thus, any company looking to expand internationally must first consider whether they are doing it for the right reasons, and whether the move is viable at that point in time. Overlooking this fundamental question, any business leader will find it inherently difficult formulating an expansion strategy.  


A long-term view

Successful internationalisation strategies require businesses to adapt to new markets, build new relationships and understand the demographics of the market they wish to enter. Skipping these steps, businesses will not be able to cultivate growth, which is crucial to their long-term staying power. Planning for gradual and sustainable growth overseas means businesses will be in a position to take small steps in the right direction, as opposed to a giant leap which is difficult to manage. Quite simply, global expansion is a long-term project, and should not be framed as a short-term opportunity.


A tailored strategy

Linked to assessing the reasons behind expanding abroad, companies need to take the time to create a proper, tailored strategy for international expansion. Rather than rushing to meet a plethora of new opportunities abroad, or in an attempt to outdo competitors, a proper plan is required that identifies a core market ideally suited for the business in question.  

Entering a new market without the proper research and strategy, companies can easily find that they lack the expertise necessary to tackle challenges. For example, not possessing the knowledge of a foreign country's legislation can result in significant penalties, but these can be avoided should the right research be undertaken. This is particularly true when it comes to technical regulations concerning a foreign tax framework – the research underpinning an expansion strategy can address these issues and ensures the business is a position of strength right from the beginning.  

Of course, a business does not need to undertake all this work itself; working with third parties or hiring talented staff that have the expertise of a particular country or region is usually a far more efficient approach.


Making sure that you do not take local culture and preferences for granted

A common pitfall for most businesses opening a new office in a foreign market is overlooking the significance of local cultures and practices. This does not simply mean understanding the language of another country, but the subtle differences in non-verbal and nuanced communication. 

Before launching a subsidiary office of Market Financial Solutions (MFS) in Singapore, the team in London thoroughly researched the cultural differences in business practices. Without doing so, the company would not have understood the importance of different business customs, such as the significance placed on business card etiquette. It may seem like a small consideration, but when seeking to develop an international network of clients, customs like this should not be downplayed.

Again, companies can become accustomed to foreign customs by hiring staff from the region or country they wish to enter. Bringing new staff on board and incorporating them into your business will give you an edge when communicating with local companies and consumers in your foreign market.


Overcoming the challenges

When deciding to launch a business in a new market, companies need to make sure they provide answers to the issues outlined above. Rather than assuming expansion will provide instant success, businesses need to understand from the onset that international expansion is no easy feat. With large companies such as Tesco, eBay and Walmart all having suffered setbacks when seeking international growth, smaller businesses need to understand the challenges typically confronted when expanding overseas. This should not deter them; rather it ensures they are adequately positioned to take full advantage of the opportunities on offer from a foreign expansion. 

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