Global expansion occurs when a company’s operations expand from the original market, which is referred to the home market, into a foreign market, which is referred to the target market. We can expand our company one market at a time or regionally. An example of expanding regionally would be if we chose to do business in North America instead of just focusing on Canada, Mexico, and the United States separately.
In this article, we offer a complete guide to global expansion, including why you should expand your business globally, 6 considerations before expansion.
What you’ll learn:
Benefits of global expansion
Why expand your business? There are several advantages of expanding globally:
1. Entering new markets and expanding your business
Companies often expand to other countries in order to seize new markets. The opportunity to sell products or services on a global scale is appealing, especially for businesses that originate from smaller marketplaces.
When a company does well in its home country, it’s logical for the business to look into expanding internationally. There is substantial potential for advancement by tapping into foreign markets. After a company expands into one foreign market, it can then look for other markets that have yet to be exploited.
2. Access to the world’s top talent
One of the benefits to expanding your business internationally is that you have access to new talents and fresher markets. When you expand globally, you’re able to hire individuals with the right skill set for your company from a worldwide talent pool. Furthermore, hiring from the international market will give you an advantage over your local competition. The overseas hires can assist you in manoeuvring through the market and comprehending the intricacies of business in that area.
3. Reduction in product cost
If you’re looking to expand your business internationally, one big benefit is that you’ll often be able to find cheaper manufacturing costs. When firms move their production process to countries with cheaper labor and infrastructure, it’s called outsourcing.
4. Expand your customer base internationally
Once you have the local market cornered, it is difficult to find new customers and expand your customer base. After trying out your products, customers might become curious about what else is on the market. As a result, you need to work hard to keep their business. When you expand globally, you not only have the opportunity to sell to new customers who may be unaware of your product, but you can also repeatedly sell to this larger customer base. To prevent risks associated with expanding your business internationally, evaluate new customers thoroughly and hire international employees who can help avoid the risk of global expansion failures.
5. Getting ahead of the competition
When too many companies are trying to achieve the same thing, expanding worldwide is not a choice but it is a requirement. Outpacing the competition is essential for any business, and international expansion is one of the most effective ways to do it. by expanding into new markets, you open yourself up to new talents, customers, and cost-saving opportunities.
4 considerations when expanding your business globally
1. Cost and time
If you want your international expansion to go smoothly, it is essential that you take the time to estimate its cost and timeline. This way, you can budget accordingly, know what level of investment is required for success, and ensure that the entire process is completed in a timely manner.
2. Human resources
There are many questions to answer when starting a new business, such as who will be responsible for its day-to-day operations and how you will find the right employees. Before expanding internationally, ask yourself these questions: how will you staff the new office in this market? What other factors should be considered? Here are the 4 major elements you should consider:
- Education levels of the employees
- Capabilities of the employees
- Employee salary and benefits
- Cultural norms, HR laws, and benefits etc
3. Tax and legislative compliance
To successfully expand your business internationally, you will need to be knowledgeable about the taxation system, immigration rules, trade systems, and establishment issues in the country of choice. You will also need to ensure that your business complies with all tax laws and regulations.
Hiring professionals like FastLane might be helpful as they are more knowledgeable about the taxes, laws, and financial regulations. Founded in 2013, FastLane has been offering a diverse range of professional services, including accounting, auditing and payroll management and HR advisory assistance to more than 500 clients.
4. Local trends and culture
By expanding your business internationally, you have the incredible opportunity to explore untouched markets. However, it is essential that before venturing into any new country, you learn about the local cultures and what their customs are regarding businesses. This will give you a much better understanding of how potential customers in this area will view and react to your company.
Make sure to do your research about the local customs, traditions, and anything else you may need to adjust to. It will also help you to boost sales and increase your success rate if you know the population’s demographics, such as age group and income.
Working with a PEO
A PEO can take your international expansion to new heights, but it is possible to manage the process in-house. Keep in mind that there are many nuances to expanding globally that you might miss without the right knowledge and experience.
It will aid you in working out your business’s infrastructure and if it can handle growth, set up data collection procedures, investigate financial, legal and cultural dissimilarities as well as their effects, study immigration laws. They’re also able to assist with worldwide payroll duties and employing international talent.
Using PEO allows for a smooth transition when expanding internationally, and it helps to keep everything aligned with your original goals. PEOs can help you with more than just compliance they can also help you strategize for success. Analytics tools allow PEO providers to see patterns and opportunities that you may have missed, such as in the expatriate lifecycle or tax law. This real-time data using cloud-based solutions like Xero is crucial if you want to expand successfully, so in this case a PEO really is a lifesaver.
If you’re looking to expand your company globally, look no further than FastLane! FastLane has team of specialists and professionals to handle all kinds of corporate services, including company formation, accounting, audit and tax filing and peo services.