Taking your business beyond your own shores is an appealing opportunity. However, as an entrepreneur, you need to be well prepared for the expansion in order to effectively endure the treacherous path of going global. Your brand is bound to face several challenges, including time differences, new foreign laws and customs, and language barriers. Here are tips on how to navigate the journey and succeed in building a global brand.
Do Your Due Diligence
The concept of globalization has been in existence for several decades. However, don’t blindly assume that your business should succeed by expanding into foreign markets just like all the other multinational brands have done. You need to analyze the expected impact of your brand in the international markets beforehand.
Conduct a target market segmentation analysis to know whether your product will be relevant on the global markets. Perform a detailed product gap analysis of your brand against major local businesses to determine whether your product offering will indeed supersede your closest competitors in the new market. Analyze the competition to know more about the size of the market and the duration it should take you to realize the targeted sales.
Many multinational businesses across the globe face complex commercial risks with various local governments. You’ll be surprised to realize how litigious some countries can be when it comes to foreign businesses. In order to minimize risks, hire a local legal team that is responsible for advising you about the strict requirements of various government agencies.
Renowned Indonesian executive, Sjamsul Nursalim, was compelled by the government to pay up to Rp. 4.7 trillion in the Bank Indonesia Liquidity Assistance (BLBI) scandal even when his lawyers claimed there were no irregularities committed. It’s because Sjamsul had a credible team of legal experts that he managed to resolve the issue agreeably. So, without having a local team helping you navigate the local judicial system and comply with various laws/regulations, your globalization efforts may be thwarted.
Being proactive is more affordable because it eliminates the costly risks and potential liabilities that may come your way down the road. Let your local team of legal experts handle the regional commercial agreements as you sign and review the industry-specific policies. The legal experts can also handle other business concerns such as shipping, immigration, and dispute resolution.
Create a Localized Strategy
Due to varying market dynamics, governmental interference, cultural and economic setups, each market has its unique nuances. So, apart from having a business plan, create a localized strategy to help you gain leverage over your local competitors. Make sure your strategy aligns with your corporate strategy and goals.
Ensure the short- and long-term goals you set are realistic enough to measure progress. You should also define your success metrics more clearly to avoid losing track.
The business structure or model you decide to set up can either be an offshore branch, separate entity, or sales office. Your tactical project plan and expansion budget should have specific commit dates to guide your strategy.
Establish an Offshore Team
Instead of wasting valuable resources from the parent company, establish an offshore team that is capable of running things on the ground. For instance, don’t launch the new business with a group from your current company. Consider committing a few provisional executives to help the offshore business start building a new local team to get operations running quickly. This approach can help you reduce risks, save time, and get to market fast.
If your company can’t sacrifice its senior members of your executive team to run the new business as interim managers, you can outsource acting leadership to a local service provider. In addition, sensitive structures such as the financial infrastructure should be handled by a local company. This should help you find a feasible workaround of the new laws, regulations, and customs of conducting business in the new environment.
Tackle Cultural and Language Differences
Your offshore business could be faced with language barriers and cultural differences. Consider hiring bilingual employees to help bring some level of balance at the workplace in terms of offsetting language and cultural differences. You can even outsource an overseas customer service agency to streamline the transition.
Furthermore, within the same region or country, you might be dealing with numerous cultural differences that will slow your growth potential. Therefore, apart from hiring a local legal team or lawyer, a local person’s perspective can help steer the understanding of local cultures in the right direction.
Tax and Corporate Policies Readiness
Ensure proper tax procedures and financial infrastructures have been put in place and that your new business adheres to the local business policies. Tasks such as tax, payroll, and accounting should be outsourced to a local service provider. Make sure VAT taxes and sales are prepared and reported accordingly.
Build a robust risk management plan and establish long-term relationships with local banks. You should also come up with a workable cash repatriation strategy.
It might be challenging to navigate the road to building a global business. Although the global markets may offer you more profitable opportunities, they’re not for the fainthearted. Before you jump on the opportunity to go international, you need to find the right business partners, build a stable infrastructure, consider new ideas, and do your due diligence.