About 58 percent of small businesses in the U.S. have international customers. If your business is one of these, thumbs up! Creating a product or service that can generate international demand is no small feat.
However, it’s one thing to have international customers, and it’s a different thing to effectively run an international business. You need to have a good grasp of international business best practices.
In this guide, we are sharing tips that will help you manage your global business successfully.
Choose International Markets Strategically
Expanding your business internationally allows you to grow your market base. While this is an attractive prospect, it’s vital to be strategic about your choice of international markets.
A mistake some small business owners make is opening up their companies to a wide international market all at once. This can bring logistical challenges if the business doesn’t have adequate capacity to ship products to all the countries.
Even language barriers can be a big problem. Imagine a situation where your business starts taking worldwide orders. If you don’t have a multilingual customer service team, communicating with foreign customers is going to be a challenge.
As such, do proper market research before opening your business’s doors to customers in foreign countries. Ideally, you want to start with countries with fewer entry barriers.
If you’re selling physical products, shipping distance matters. It’s cheaper and logistically easier to ship products to cross-border countries. You can then expand to more distant countries gradually.
Know Your Competition
There’s a good chance there are foreign businesses already offering a product or service that competes with yours. Analyzing the competition in international markets will help you decide whether to enter a market or not. You’ll also be in a better position to select the right entry method.
If a market is way too competitive, your business may fail to penetrate. In this case, avoiding the market is the best move. If you have already entered a market but the competition is too fierce, you can abandon it.
Sometimes merging with the local competition is the best way to break into a foreign market. Other times, acquiring a major competitor works fine.
Raise Adequate Working Capital
Did you know expanding too fast is one of the primary reasons many small businesses fail?
Yet, doing business internationally puts your company at risk of unsustainable rapid expansion. When you see that your product is getting demand from customers in several countries, it’s easy to make the product available worldwide. But rapid expansion requires you to have the right resources, chiefly working capital.
When running an international business, you need to hire more staff and set up facilities. Without adequate working capital at your disposal, you can quickly run out of money. This can cause your business’s operations to grind to a halt, or force you into taking out expensive loans to fund the expansion.
Establish the cost of the expansion and ensure you’ve raised the entire amount before proceeding with the expansion.
Understand International Recruitment
Whichever way you slice it, doing international business calls for a bigger workforce. If you’re a U.S.-based business wanting to set up operations in Canada, for example, you’ll need to hire local workers to fill up various positions.
The cost of labor is one of the biggest expenses for any business, so knowing how to go about recruiting workers will make a big difference. There are various recruitment strategies you can use. But, the most effective and cost-efficient is using a Professional Employer Organization.
A PEO is a professional firm that specializes in global recruitment. If you’re setting up in Canada, for example, a PEO that already has a presence in the country can take over all your recruitment needs. Be sure to learn more about what a PEO can do for your business.
Outsource as Many Functions as Possible
Along with outsourcing recruitment and worker management, there are a couple of other services you can outsource. For example, instead of hiring in-house translators, it’s cheaper to outsource the function to a translation service.
Marketing is another function that’s ideal for outsourcing. An international marketing agency will help you run successful, localized marketing campaigns.
If your business manufactures its own products, it makes more sense to outsource manufacturing. Manufacturing goods close to the customer base reduces your production and shipping costs.
Ensure Regulatory Compliance
Countries have their own laws for doing business. You must take actionable steps to ensure compliance in all the countries your business operates.
For example, some ecommerce business owners assume they can ship products to any country without any repercussions. After all, digital businesses don’t need to have physical offices in multiple countries.
Even without having a physical presence, there could be legal requirements your company will need to meet. For instance, you might be required to obtain a business permit for taxation purposes.
Hiring an international business lawyer is an effective way to prevent regulatory violations. This professional will advise you on country-specific legal requirements.
Run a Successful International Business
International business expansion is the key to business growth. But it comes with multiple challenges that can threaten your business if not handled well.
Start by choosing the right international markets. Secure enough capital to fund the expansion, and always ensure you’re complying with local business laws and regulations.
All the best and keep reading our blog for more business advice and insights.
