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You started your business with dreams of expanding into as many markets as possible. There comes a point in the growth of a company where you must decide to go from local to statewide, from statewide to national, and from national to international trade. The leap from serving only U.S.-based customers to clients worldwide is a big one requiring insight and careful consideration.
The world is different than it was even 10 years ago. Today’s small businesses don’t wonder if they’ll go international but rather when they might. OFX surveyed 500 small business owners in the United States and discovered that 63% report booming worldwide growth. Social media breaks down barriers, allowing firms to create an online community and test international waters before expanding into a market.
Modern technology changes the way even the smallest businesses reach customers. Anyone can go international. However, there are some things you should keep in mind before deciding whether global expansion is right for your company.
Every country taxes multinational corporations operating on their soil. The United States also applies a tax to companies earning income in countries with low taxation but does credit them for a percentage of the tax paid to the foreign entity. The U.S. tax code changed a bit in 2017, so speak to a tax attorney to see how much you’ll wind up paying and if it’s worth operating in specific locations.
2. Importing and Exporting
It all starts with understanding UN packaging codes and the meaning behind them. You have to know which symbols mean the package went through UN testing certification or indicate other important variables. Know which group your products belong in and how dangerous they are to ship to avoid any issues.
You also need to get a firm grasp on the appropriate packaging based on the materials you’re shipping. If you send cleaning supplies, it’s a different classification than a stuffed toy.
3. Customs and Border Protocols
Laws and regulations in every country impact how you’ll do international business. If you order products from another country, you’ll have to cooperate with customs to accept it into the U.S. If you ship items out, you’ll work more closely with other countries’ governments to ensure you meet their protocols.
Some places are stricter than others. Becoming familiar with the different rules takes time and determination. Government entities are your best source for information.
4. Currency Exchange
Another thing you must consider before selling in a foreign country is the exchange rate. You want to be sure you’re charging enough to cover additional costs. Textbooks often use Walmart as an example of a company impacted by the fluctuations in global exchange rates.
Around half of Walmart’s stores are located outside the United States. By studying the markets and buying when the value of a foreign currency is lower, Walmart makes the U.S. dollar stretch further. They can then offer items much cheaper than competitors while still turning a profit.
5. Marketing Efforts
The promotional strategies thriving in the United States may not work well in other countries. You need to be aware of what social media platforms are available in the locations in which you want to operate and how much the government controls advertising and free speech. Advertising in China is very different than Australia, for example.
Different cultures also respond differently to your advertising methods. What is humorous in one country might be insensitive in another. Get to know the people you plan to market to before planning a promotional campaign.
You also must consider the cost of international advertising. A local business reaches many of the town’s citizens by placing an inexpensive ad on a billboard or in the newspaper. When you expand your reach, the cost of getting the word out increases. Creating strong buyer personas and targeting a specific audience becomes more and more critical as your reach widens. You don’t want to cast a wide net around the world, but do get your brand in front of those most likely to buy from you.
6. Adapting to Local Culture
As an international business, you’ll likely have headquarters in different countries. Think about who you might put in charge of those places. Who is most adept at getting to know the local people? You’ll need someone who can find employees, stretch your resources and connect with influential people in another location.
You also may wind up stretching your primary resources thinner as you choose top executives to send for the new venture. Consider whether you can easily replace your best leaders and their own desires to move to a different location, even for a year or two. Not everyone wants to uproot their family and move away.
Think About the Little Things
There are many little things you must consider about selling internationally. How will you handle customer service? If you plan to hire people in the target location to handle customer calls and complaints, how will you ensure they are trained and abide by your company’s standards? How do your policies align with the established companies in the other country?
Also, think about communication issues. Do you or someone you trust speak the language of the other country? What if you need to negotiate with a supplier? Will there be a language barrier? You may even want to find language tutors.
When meeting with management from another location, how will you handle time differences? If it is noon where you are and 3 a.m. where they are, what time is best to meet and discuss, so it isn’t too tricky for anyone?
The little things can make a big difference as you move to expand globally. Think about all the elements as they come together and choose where you want to sell your products and when it would be best to keep your operation smaller.
Things to Consider When You Run an International Business
About the Author
Lexie is a UX designer and IoT enthusiast. She enjoys hiking her Goldendoodle and creating new fudge recipes. Visit her design blog, Design Roast, and connect with her on Twitter @lexieludesigner.