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5 Things to Know Before Expanding Clientele Overseas

Dixie Somers

June 08, 2017

A wider market reach has many perks such as increased sales, higher profit margins, and international prestige for your small business. It’s also a smart way to cushion your business from seasonal market fluctuations. If international expansion is an option you’re pondering with, consider these 5 factors before taking the plunge.

1. Research Your Target Market

If you feel you’re almost reaching capacity in your home market, it might be the perfect time to expand. One of the first things you should do is find out if there’s any worthwhile demand for your product in the market you intend to penetrate. What solutions will your target product or service be offering to cater for the needs of your customers? The complexities of carrying out a market research of this magnitude go beyond the usual supply and demand.

Expert opinion suggests that a thorough research can protect your business from risky and unforeseen eventualities. Find out what the competition in the niche you want to penetrate is doing and how they’re doing it. Not understanding the business framework overseas can lead to costly surprises in future.

2. Do You Have a Realistic Budget?

Budgeting in the context of overseas business expansion is more complicated as it requires you to factor in a long list of unknown variables. Most companies grossly under-state the resources needed for setting up shop but these figures can still act as a good guideline.

Ask yourself how overrunning your budget by 50%, or even 100% will affect your business. If the numbers don’t add up and you feel that this would put a strain on your business, try to redefine your objectives and tweak your plan accordingly to cut costs.

3. Know Your Options

When considering a business move in a new country, you can choose to either have a subsidiary company or a branch office. A subsidiary company is a legal entity that is partly or fully owned by your parent company. On the flip side, a branch office is not a legal entity and is part of your head office. It’s therefore governed by the laws that govern the head branch.

Whichever option you choose to go with, we advise understanding the tax implications fully and the scope of activities the law allows you to carry out.

4. Understand the Local Culture

Every culture is unique in its own way. Open your mind to the possibility of having to embrace a whole different culture from what you’re used to when expanding your business overseas. Pay attention to the following:

• Is there any language barrier and do you have a plan to overcome it?
• What are their local payment services?
• What do they consider to be normal working hours?
• What religious and lifestyle affiliations do the people have that can directly affect your business?

It’s advisable to schedule a trip to the location to get a firsthand experience of the culture there. For example, if the UK seems like the best place to expand to, plan a business trip there for a few weeks. You’ll find a handful of suitable London business apartment rentals to choose from for the duration of your stay.

5. Legal Barriers

Seek experienced counsel to identify hazards that may disrupt the normal flow of business. It might seem costly to do so, but you can’t afford to do without a legal team. Your business will stand a better chance of success if you’re flexible enough to operate within the confines of the local jurisdiction.

Many business owners have, at one point in time, received a call or email from interested parties seeking out franchising deals in their country. Such an approach is not the best foundation to start your targeted reach for clients overseas. However, it might be the trigger you need to start thinking about it and planning for it. If done right, expanding your business reach to the unchartered overseas market is lucrative and a stabilizing block for your business.

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