For small businesses, the internet now makes it possible to expand into new territories and markets with ease. That’s because online commerce is borderless. That doesn’t mean, however, that there’s nothing you need to know when expanding your small business into a foreign market.
In fact, there’s plenty that can go wrong for a small business that sees to operate internationally. Making a smooth entry into a foreign market requires some serious forethought and careful planning. To help small businesses considering such an expansion, here are five steps to prepare for the process.
1. Conduct Local Market Research
As you would when expanding a small business into a larger local territory, the first step in an international expansion plan is to conduct thorough local market research. That will help to make sure the market will support the business’s plans, and that there’s sufficient demand to make it worth the effort.
A great place to start is to go over the available tips and best practices provided by the US Department of Commerce’s Export.gov page on the subject. It has everything a small business needs to know about collecting market data in unfamiliar territories.
2. Consider Regulatory Requirements
Depending on the nation or region the business seeks to expand into, there will be differing local laws and regulations to govern how to conduct business. Some countries will require specific business licensure, while others could have industry-specific oversight and reporting guidelines.
For businesses operating over the internet, there are also local data governance and privacy regulations like the GDPR that apply as well. They’re the kind of things that can come back to haunt a business if not seen upfront.
3. Plan for Shipping and Fulfillment
Unless the primary products to be sold are digital in nature, it will be necessary to create a plan for shipping and fulfillment operations in the country the business is expanding into. This could be as simple as finding local suppliers for the products that you sell, or as complicated as setting up regional distribution capabilities within the new market itself.
It’s critical to assess all of the costs of fulfilling orders for new customers, including what local shipping companies will charge for last-mile delivery services. In smaller markets, those costs often prove prohibitive for small businesses.
4. Determine Local Payment Options
To sell products overseas, it is necessary to have ways to accept payment for those products in the local currency in the market. Online businesses can accomplish this by accepting international payments via PayPal, but that’s not the best option in every case.
For larger purchases, it’s sometimes desirable to use options like wire transfers and international money orders. In some regions, it may even be necessary to accept cash-on-delivery for products, which then requires a deeper understanding of foreign exchange markets and a means of moving hard currencies across international borders.
5. Be Careful with Marketing Localization
When preparing to go live with sales and a corresponding marketing push in another country, it’s important to go over all of the details with a fine-tooth comb before a single prospective foreign customer has their first encounter with the small business.
It’s common for cultural misunderstandings, translation errors, and other localization issues to turn an otherwise solid product launch into a major marketing disaster. Even large corporations struggle with this aspect of moving into foreign markets, so go slowly and double-check everything.
Ready to Launch
Once every step in a small business’s foreign expansion plans is executed to perfection, all that’s left to do is work like crazy to make it a long-term success. That will mean keeping up to date on the changing conditions in that market and making corresponding changes to keep pace.
The good news is that that kind of market agility is a strong point of most small businesses, so it should be the easiest part of the whole process. That said, operating successfully in multiple locales is no simple feat, so keep your eye on the ball at all times or risk having a long-planned expansion turn into an unexpected retreat.