International Expansion: Is Your Business Ready?

If your business is booming in your local market and you have surplus money from your profits, then you may consider expanding your business abroad. By taking your business overseas, you stand to make even greater profits but you also face significant risks. Here are a few of the benefits and risks of international expansion as well as the means of minimizing those risks that you might consider before making the decision to take your business abroad.
Benefits and Risks of International ExpansionIn taking your business to another country, you are thus expanding the market for your product or service. In other words, you are giving more people the chance to purchase your value offering and thus you stand to make even greater profits than you did before.
For a business that is making enormous profits and thus has large amounts of surplus cash, it may see the expansion of the business to a foreign country as a good application of such funds. However, as aforementioned, there is significant risk in attempting to take your business overseas. Problems such as cultural differences, language barriers, uncertainties in the economic, political and legal environments of the target country can make international expansion very difficult.
Failure of the business in the target country can mean significant losses to the business and in severe cases can even cause the entire business to go bankrupt. Even if the business doesn’t go bankrupt, failure to successfully expand abroad may have a negative impact on the reputation of the business and may consequently affect your sales in the domestic country.
How to Minimize the Risks of International ExpansionIn order to ensure that you minimize the risk of failure (or maximize the chance of success), you would need to make a careful selection of the country to which you want to expand your business. This would require a thorough research on the country including a PESTEL analysis: in other words, research on the political, economic, social, technological and legal environments of the country. This research will help you in deciding whether a given country is suitable as a target for expansion, you can also check this great office rental.
For example, a country with an unstable political environment, where the ruling political party is frequently changing or where there is a civil war, would not be a suitable candidate for expansion as the risk of failure in such a country would be high. A country with a stable political environment is preferable for maximizing chances of success.
You can also minimize your risk by minimizing your initial investment in the foreign country. For example, instead of immediately purchasing an office building in the foreign country, you could rent a serviced office. In doing so, even if the international expansion turns out to be a failure, you would be able to minimize your losses by having kept your investment to a minimum. On the other hand, if after time passes, the expansion abroad is proving to be a success, you can then go on to purchase permanent office space.
Hiring staff from the foreign country to work for the business is a good way of gaining some insight into how business is conducted in the country; in certain situations, this may also be more cost effective than employing citizens from your own country.