If you are in a position where you are considering expanding your business on an international level, that’s great news! However, there are many different essential things that you need to consider before you internationalize your business. There are a significant amount of financial, cultural, and legal implications that need to be addressed, some by yourself, others with professional help.
From being prepared to adapt and working closely with experienced international accountants to tax regulations, supply chain, insurance, and website changes, internationalizing your business shouldn’t be rushed.
So, let’s find out some essential things to consider before internationalizing your business.
Be Ready To Adapt
The first thing you need to know when it comes to internationalizing is that you must be ready to adapt. A business cannot always remain the same and be able to trade internationally, as every culture has very specific nuances that mean a product might not just be accepted as it is. Preparing to adapt your product, marketing, and general outlook on the business is vital.
Regarding trade, you also need to be mindful of potential misunderstandings. Every country has different etiquette rules, so be patient and polite. Do your research in advance and speak to contacts in those countries to learn more about the most appropriate ways to behave professionally and personally. If there are misunderstandings, it is essential to approach them with respect and understand cultural differences.
If you are not positioned to think outside of the norms of your culture when it comes to your business, then you are probably not in a position to internationalize just yet.
Work With Someone Experienced in Internationalisation
When internationalizing, you should also work with a consultant who is experienced in the process and has been through it many times. This way, you will constantly have someone by your side to guide the business through each stage of the internationalization, provide essential insights where necessary, and use their contacts to make the process as smooth as possible.
It is vital to work with someone who is well recommended, so you know that they can be trusted entirely. This could positively impact the process, and internationalization shouldn’t begin until you have an experienced consultant by your side.
Involve Your Finance Team From The Very Beginning
As well as to have an experienced consultant, it is vital to involve your finance team from the beginning of the process. Being realistic about the financial situation of the business and whether you are in a position to expand without finances holding you back in any way is essential.
There are so many unexpected costs that come with internationalization and all of the ones you already know about, so having a significant amount of wriggle room financially to cover these unexpected costs is a must.
If your business is positioned to expand internationally, you will likely have an internal finance team. If this isn’t the case, work with trusted international accountants who will be able to support you and provide realistic information about whether or not internationalizing is a good idea concerning the current financial position of the company.
Consider Demand For Your Product or Service In International Markets
Now that you know what you are doing legally and financially, it’s time to find out whether there is demand for your product or service in international markets. Just because your business has done well in one place or country doesn’t mean it is needed or wanted in others.
So, thorough market research on an international scale, with a firm focus on a few particular markets, is essential. This will involve pinpointing target customers, completing competitor research, completing surveys, investigating how your marketing approach might differ, describing the current state of the industry, and making predictions for where it might be in the future. All of this will help to inform firstly whether the market is right for your business and also see whether it is sustainable for the future.
As well as considering the demand, you also need to make sure that you consider the economy in the countries you are wanting to trade in. You might currently have a particular price point, but that could be wholly unreasonable and unrealistic in different countries. So, looking at your product or service and seeing whether it is profitable in other countries is vital. Internationalising could potentially lose you a significant amount of money, so you must consider this carefully.
Registering Your Business Abroad
When you start to trade internationally, you must be careful when registering your business. Usually, companies can operate and sell in foreign jurisdictions, although it depends entirely on local laws. For this reason, working with a legal team throughout is vital. Experienced corporate solicitors will provide everything you need to ensure you are trading safely and legally.
Everything from employment laws and tax regulations to intellectual property must be considered, so there are no ifs and buts when it comes to whether you should work with solicitors. It’s a must!
Carefully Analyse Your Supply Chain
The next stage is to very carefully analyze your supply chain. Making sure you have the facilities to supply your product internationally is one of the most important things you need to do. While you may not struggle to receive an influx of orders, internationalization would be pointless if you can’t fulfill them.
Every single stage, from the order and production to the fulfillment, must carefully be analyzed, you must look at what is necessary for the predicted growth and what needs to be changed to prepare the business to trade internationally.
The main steps to do this are:
- Look at your inventory and manufacturing process to make sure there is an alignment between supply and demand
- Analyze whether there are sufficient materials to create the final product and fulfill the additional business
- Complete test runs of the entire supply chain, including the mass assembly of parts and product testing
- Mass packaging for shipment
- Transport and delivery systems
- A thorough analysis of customer service support for international markets
Investing in Credit Insurance
Once you have established whether internationalization is viable for your business and know it will be profitable, you must ensure that you protect your business when trading internationally. To do this, you need to invest in credit insurance.
Trade credit insurance covers businesses if customers owe them money and do not pay their debts. There are so many different types of credit insurance, so working with credit insurance brokers is always advised. There are very small differences between different types of credit insurance that could make a significant difference when it comes to making claims, so expert advice from a trustworthy broker will go a long way. This way, you will work directly with an experienced broker who knows how to get you the right cover for the best price. If you do ever need to claim in the future (which, of course, we hope that you don’t), then you will be able to call your broker, and they will deal with the claim for you, rather than needing to try and chase the claim with lots of different customer service people.
To keep your business safe through foreign trade, investing in credit insurance is a must!
Build Relationships To Take Your Business International
Last but not least, you must build relationships with people internationally to make your business as successful as possible. These might be interpreters, potential customers, marketing professionals, or consultants who can give you valuable advice. This ties in with ensuring that you fully understand society’s culture and demands, rather than blindly expecting your business to be a success. Networking internationally before your business goes global is key to success!
One great way to do this is to help businesses wanting to trade in your country, provide advice and guidance, and have a cultural understanding. When you help people to navigate, they will become a good contact more often than not that you can utilize in the future. Even if internationalizing isn’t something you are planning on for 2-3 years (often, this is how long the process can take to do it properly and to conduct thorough research), try to start building your connections now! You will reap the benefits later down the line.
Internationalising can make or break a business, so it is essential to ensure you get it right from the very beginning. The worst thing you can do is rush into internationalization and waste significant time and money. Invest the right amount of time and money into this, and you will reap the benefits in the future.