Your small business is thriving in the domestic market, and you’re even seeing new customers from all over the world! You’ve gone global!
In fact, a 2016 study of small-to-medium sized businesses by USForex found that 58 percent of small businesses already have customers from different parts of the world–which is great news for growth-minded business owners.
Is this the sign that your business should deliberately expand internationally?
I asked four business owners and leaders about what every business owner should know and ask themselves as they consider taking their business global.
Find out what they said:
How Do You Know If Your Business Is Ready to Move Into an International Market?
The first question I asked was: “How does a business owner know whether or not their business is ready to move into a global marketplace?”
Annie Pagano is a marketing coordinator for Interpreters and Translators, Inc., a multicultural communication service that supports businesses of all sizes expand their business across borders and cultures. She suggested two ways of approaching this question.
“First, business owners should assess their domestic success and current market saturation before deciding to move into the international marketplace. When a domestic market has become saturated, looking overseas is an effective way to expand market share and capture new customers.
“Second, they should dig into their digital analytics. Are they already receiving a decent amount of website traffic from particular countries? We advise clients to go by the 5% Rule: If at least 5% of your website traffic is coming from another country, it’s time to start digging into the potential of that new market.”
I also wondered what questions SMB owners should ask themselves before they decide to expand their business internationally.
Troy Hazard, a serial entrepreneur who has owned 12 businesses in the last 25 years and is the author of Future-Proofing Your Business, says everyone should start by asking themselves three basic yet strategic questions.
“For our business, wherever we are going globally we start the journey with a handful of questions: why there, why now, then how,” Hazard says. “This should not be something that you are doing just because you think it sounds sexy. It should be strategic.
“No matter where you are considering touting your talents on the planet, you are about to invest in a big distraction of time, money and resources. So be clear about your real intention of making this move.
“Is it ego, just so you can say that you work globally?
“Is it because you think the grass is greener on the other side?
“Is it because you want to prop up your local domestic business with some international work to carry you through the quiet times?
“Every one of these reasons is the WRONG reason to go global. Your early days exploring a global market are likely to be more for practice than profit. There’s nothing glamorous in that!”
Annie Pagano adds that you should also question how well your business can serve a multicultural and multilingual market.
“What languages will you need to take into consideration if you are going to start doing business with another country? What is their culture like? What type of service will you need to provide to this new market? Will you need to hire bilingual employees? Should you hire employees in the new country you are considering? What are the export laws in the new country? What type of exporting strategy will be the most effective for your business? It’s important to remember that even if you sell a service, it’s still considered an export and you’ll be entering new legal territories.”
Answering these questions may require quite a bit of research, which Nahamani Yisrael–owner of Nahamani.org–recommends.
“Understanding how their product would be utilized in various locations is critical. This will help the business owner draft their marketing message specific to the intended usage and increase the likelihood of their product being successful abroad. They must inquire about the legal restrictions that each destination places upon similar products as well as each country’s regulatory restrictions and taxation requirements for foreign entities.”
Is International Expansion The Best Way To Grow A Business?
The 2016 USForex survey found that 96 percent of SMBs said they are confident in “conducting business abroad and see expanding internationally as a way to access high-quality employees and suppliers, as well as a key stepping strong to continued growth.”
But is expanding globally the best way for an SMB to grow? Pagano thinks it absolutely can be!
“International expansion is a great way to grow your market share when the domestic market has become saturated. It can also help with evening out seasonal sales cycles.”
However, Hazard says “it’s not about it being the ‘best’ way as much as it is about it being the ‘right’ way.
“Research your international market entry as you would your domestic market. How big is the market? Who is your competition in your niche? What does the landscape look like for potential clients? How do you intend to approach them?”
In the same vein, Yisrael notes that while going global can be lucrative for many businesses, business owners should also consider the costs associated with going global.
“Cost analysis should include the cost of shipping the product, distribution cost, regulatory cost, cost associated with returns and servicing of defective products.”
What Are The Advantages and Disadvantages of Successfully Growing Into an International Market?
In my research for this article, most of the studies and articles mainly concentrated on the advantages for businesses going global.
For instance, a 2016 American Express Grow Global Survey of small and mid-sized businesses that sell goods and services internationally, found that 80 percent of business owners say their revenues are greater compared to a year ago, and 26 percent of their revenue growth can be linked solely to international sales.
Pagano also lists a wide variety of advantages that can motivate small-to-medium-sized business owners.
- “Companies that export grow faster than companies that don’t. According to the US Department of Commerce, exporting companies are 17 percent more profitable than those that don’t.
- Exporting firms offer better opportunities for career advancement, expand annual total sales, and are less likely to go out of business
- Manufacturers are able to use production capabilities fully
- It’s a way to defend your domestic market and increase competitiveness
- Increase profits as foreign orders are typically larger than those placed by local buyers
- Enhances potential for corporate expansion
- It’s personally fulfilling to learn about and immerse yourself and company into a foreign culture. Exporters and businesses who work internationally must have an open mind and often tell of the immense personal development experienced from working internationally
- Opportunities to travel to foreign countries”
However, the disadvantages–probably best characterized as challenges–that some business owners noted in these studies were pretty surprising. For instance, in the American Express Grow Global Survey, 75 percent of respondents said the ability to build relationships with foreign partners is a significant concern, and another 73 percent found that complying with local and international law, trade regulations, and transportation and shipping costs to be an issue.
USForex’s study also asked respondents to rank the challenges SMBs may encounter when conducting business internationally. The results were:
- International market conditions
- Lack of understanding of local best practices
- Fees charged to sell overseas
- Exchange rates affecting pay rate for overseas talent
- Customer service/language barriers
Pagano also talked about the challenges that come with doing business internationally.
“These challenges include working across languages and cultures, dealing with multiple government agencies, lots of paperwork and regulations to take into considerations. It can be tricky but the personal and financial rewards are vast for those willing to work through it.”
What Are Some Actionable Steps Small Business Owners Can Follow If They Want to Expand Into an International Market?
Now that we know what to do and consider prior to expanding your business internationally, I also asked these business leaders for actionable steps other SMBs can follow to begin their international expansion.
Hazard says one of the first things you should do is to embed yourself in the culture of the marketing you’d like to target.
“Whatever country you are considering doing business in, nothing is more powerful planning than being present. Travel to the country, explore, meet the locals, feel the energy of the environment, and embed yourself in the culture.”
Yisrael says that another important first step involves finding legal counsel to help you navigate local and international regulations and laws.
“The first actionable step a business owner should take is seeking legal representation with an attorney who is familiar with foreign direct investment. This person can best help the business owner structure a strategy that reduces risk and increases the likelihood of success.”
Cristian Rennella, CEO and Co-Founder of oMelhorTrato.com, has 9 years of experience growing his online business in South America. He shared three crucial steps that made his company’s expansion successful.
- “Form a central team for the international area. [This is] where all the programming work will be done for the rest of the countries.
- Find a local responsible for each country that will carry out the operation locally and set up its own team/equipment according to the demands of each country.
- Try to replicate your business model as accurately as possible. There will always be changes due to local laws and customs, but try to deviate as little as possible.
With these 3 pillars, it was like we grew up and we were successful and I think that while they may seem simple, they are key to achieving your long-term goals.”
Pagano also recommended these actionable steps for businesses looking to expand globally.
- “Analyze the current state of your business. This assessment will enable you to evaluate potential and identify gaps to gain a clear understanding of what is necessary for growing your business into the international marketplace.
- Screen potential markets.
- Research export statistics
- Identify potential markets
- Target the most promising markets
- Assess your target markets
- Examine product trends
- Research the competition
- Research any factors that may affect the marketing and use of your product/service
- Identify export barriers and how to overcome them
- Choose your market accordingly
- Attend industry trade shows in your chosen target market to begin networking and identify potential partners and clients
- 75 percent of consumers prefer to buy a product or service that offers information in their native language so do begin to research and evaluate translation agency partners that can help you with the translation of marketing and sales materials + support you with multilingual communication.”
What Advice Would You Have For Small-to-Medium Sized Businesses Trying To Expand Abroad?
Finally, I wanted to ask these business leaders about how they successfully–or not so successfully expanded into an international market, and what SMBs can learn from their success or failures.
Yisrael says cybercriminals have hindered her company’s expansion into foreign markets, but she has learned that limiting her business to the U.S. “to ensure that any disruption or loss is covered by our insurance carrier and protected by U.S. laws.”
Hazard’s major key to success: planning.
“Nothing beats planning. It’s no surprise that different countries have different cultures that you need to navigate. Before I even thought about stepping offshore, I did a heap of research on the countries I felt that would best fit my business and my offer to the consumer I was targeting. Who would care, why would they care, what difference could I make, and what work did I have to do to reposition my business to each of those local markets. And I do mean local markets – as each of them WILL be different.”
Meet The Experts
A very special thank you to these four business leaders who contributed their knowledge and expertise to this article!
Troy Hazard has founded and nurtured 12 businesses in the recording, real estate, advertising, marketing, restaurant franchise, pool service, and technology industries.
He is the author of the business best-selling book Future-Proofing Your Business, former cable TV talk show host of ‘Gettin’ Down 2 Business’, regular co-host of ‘The Big Biz’ Show on CBS Talk Radio and a former Global President of the Entrepreneurs’ Organization (www.eonetwork.org). Originally from Australia, Troy currently lives in Florida. Follow him on Twitter (@TroyHazard) and visit his website troyhazard.com!
Nahamani Yisrael is the owners of Nahamani.org, a Cincinnati-based management consulting firm. Nahamani.org was created to be a community resource to help meet the needs of the business and non-profit communities. Nahamani Yisrael is a Cincinnati native. Nahamani has worked in several financial institutions and with a wide variety of business and community leaders on various volunteer and community outreach projects. To learn more, visit nahamani.org!
Annie Pagano is the Marketing Coordinator for Interpreters and Translators, Inc., which provides multicultural communication services in over 200 languages across a variety of industries. We support businesses of all sizes in expanding their business across borders and cultures. Interpreters and Translators Inc. also partners with the Department of Commerce to host trainings and workshops to help educate small businesses on how to begin exporting and were awarded the Presidential E-Award for Export Service in 2017. Find her on LinkedIn or visit ititranslates.com.
Cristian Rennella is the CEO and Co-Founder of oMelhorTrato.com, a service that helps millions of consumers in Brazil, Argentina, Peru, Uruguary, Chile, Mexico, and Columbia save money by comparing financial products, like car insurance, loans, credit cards, and investment funds. To learn more, visit oMelhorTrato.com.