This article has been contributed by Deborah Sweeney of MyCorporation.com.
If you’re planning to expand your business internationally, get ready. The U.S. Chamber of Commerce reported a few years ago that the world’s purchasing power is actually outside our borders, with 95% of the world’s consumers residing outside of the United States. With numbers like these (which have likely grown a bit or stayed the course since then), it’s hardly a surprise to see so many businesses seeking to expand internationally to capture new customers.
Before you start envisioning how your business will take over the world, you’ll need to care of a few strategic areas to ensure that your debut is well-received within its region. This goes beyond reading global etiquette guides that offer body language and communication tips. From seeking out a partnership to determining the type of currency you’ll use, here’s how to make the leap across the pond a smooth one for your business.
1. Research the market
Much as you may want to do business in a glamorous city, like London or Paris, if your market isn’t there your services will fall flat with the locals. Even big brands like Starbucks can’t always depend on their names to get new customers and do business. The best approach is to research the market in the desired region you want to conduct business in and determine whether or not there’s a demand for your offerings both in the market and the country itself.
Not sure where to start in the research process? Here’s a quick primer to get you on the right track.
- Conduct in-depth studies on the region’s local demographics. See how your business will fit in there. How do the needs of your international customers vary from your domestic ones in the marketplace? What’s the size of the market? Which types of businesses do well there and which ones don’t? What are the primary distribution channels?
- Take your competition into consideration. Are they already there and if so, what are they doing?
- Identify and analyze demand via Google Trends, Amazon, Google Adwords, and eBay to collect data points.
- Book a flight and visit the country. Hire a local interpreter to assist you in translation and better understanding the culture’s customs. You may find you’ll need to fly there several times in order to scout out potential distributors, build rapports with partners, and meet with possible new hires, but you can also use video chatting devices like Skype to keep your travel costs down.
- Read about the region’s local laws to have a better understanding about their expectations and regulations. You may want to have an attorney that is well-versed in the rules of that particular country advise you and review any contracts drafted up, too.
2. Figure out currency preferences
Dollars and cents don’t always make sense when it comes to establishing your preferred currency overseas. If you don’t know which currency would be best to use, Wells Fargo Bank advises doing research first to better determine if it will ultimately be more beneficial for your business to use U.S. dollars or the local currency for setting prices on products and services. This can also make a huge difference when negotiating invoices to ensure one party is not overpaid or underpaid by accident.
If you do pay overseas suppliers in U.S. dollars, there can sometimes be hidden costs. International payments company WorldFirst outlines some common risks of paying in USD abroad and how to identify them. When paying in local currency, using an international payments service can help reduce fees and give businesses more visibility to the exchange rates for the currencies of the countries where they operate.
3. Look into establishing partnerships
If you have been successful at partnering with like-minded companies in the United States, you may find it’s a good idea to establish partnerships with international locals. The key ingredients for any successful partnership include engagement by partners, customer engagement, and mutual benefit for the parties. An overseas partner will have valuable insight into markets that are foreign to your business. One of the best examples of this are macrotrends. These are shifts in the direction of global phenomenon, such as change in demographics or urbanization, and are increasingly necessary for businesses expanding internationally to have a keen awareness of in order to better conduct business.
2. Seeking extra help from the U.S. Department of Commerce
Expanding business to another country is a huge undertaking. It’s easy to be intimidated by the process and at a loss for where to go for assistance. However, you shouldn’t feel as though you have to go it alone. One of the best sources of information to turn to is the U.S. Department of Commerce. As a resource, they offer assistance in making introductions to commercial experts and providing entrepreneurs with the necessary information they need without any fees included.
Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation and Deborah at @deborahsweeney.