Things You Must Consider Before Entering New Markets
It is always good to see when entrepreneurial spirit is running high especially when this spirit is trying to reach out to the world of business. There are several examples in the history that have shown us the benefits of making your business global by leveraging your core strengths while expanding into new markets. Surely, international trade will lend you a helping hand to increase your sales and profits and also to bring in more value to yourself as well as the business, but doing that is not as easy as it may sound.
Before you even think about which market to explore, there are several factors that you must consider before you step onto making it global. It is a methodical process of assessing every potential opportunity, and investing sufficient time, resources and effort in market analysis, choosing a market, and finally, the entry method to ensure success in the new markets. Consider these important factors before you take the plunge because you want to have a smooth dive to reach the shore and not hit the rock bottom.
Be Strong in Home Market First
It is always very tempting to expand your business as soon as possible and to oblige clients, but you must remember that this is the market which will give you support and will make sure your business continues if for some reason your expansion fails. Emphasize on becoming mature in your home markets and be stable so that you are hardly affected by most external factors. Turn your business into a firm operation before the decision makers think about entering new markets. Build a strong reputation, a steady client base, and an efficient team that understands the home industry very well.
Analyze and Choose the Right Market
When you are planning to enter a new market, you must find out where in the world your product will be great. You will need to take into consideration the demographics, location and what understanding what does the new market need. This will require intense market research and in-depth understanding of demand, supply, who the competitors are, are there any substitutes, market growth rate and if at all there are any barriers to entry. This task would be little easier for the markets which have already been explored by other businesses, but if you plan to venture into untested waters then you must be thorough with your research. Once you have information in your hands, it should put you in a better position to identify your prime target market.
Chalk out your Business Model
You surely have your business model from the time you started your business, but that won’t do much good when you trying to expand especially into new markets. Of course, it will be of some guidance, but it will need a lot of rework to fit in with the target market. It is deceptively easy to assume that since your product or service was well-accepted and is doing great in your home country, it will be equally successful in other parts of the world. However, that is not necessarily true. Take an example of McDonalds or even Subway who sell vegetarian burgers and sandwiches only in their Indian outlets unlike the ones in the rest of the world. So be a good judge of whether you want to localize. Another aspect that you may want to consider is whether you can need to set up your business from scratch in new market altogether, or would it be beneficial to find a reliable local partner who can help you with the success of your product in the new market.
Considering Environmental Factors
While analyzing the market will give you a general perspective of how the market is and whether it will accept your product or not, you must also look out for the environmental factors such as the economy, political, legal, social and cultural factors. Not every city and country will be altogether attractive to the companies. Understanding the economy of the country, and the spending power that the people possess will be different for different cities as well as countries. It is also important to understand how welcoming is the government and the political powers that rule over these places. Are there bureaucratic hurdles or is the process streamlined, are the citizens more receiving towards the foreign goods or are they wary of them? You must also make sure that you are compliant with all local laws. Sometimes, the political and legal factors might fall in place but the product might fail because it could not connect with the culture of the host country. All these factors have a great influence on the success of the business.
Build on Your Vision
Even though you might have done all of your study and research, don’t assume to gain quick success. Have a long-term strategy of how you can capture this market and also further newer markets. Just as you spent enough time in strengthening your brand and product in the home market, you must give sufficient time before you start reaping benefits from your investment. Have realistic goals for your business to make sure your business walks hand in hand with the market.
These factors are surely high-level strategy aspects that will help you make the best decisions for your business. All you need to do is your homework and good considerations that would involve budget, risk, and benefits. While you might be able to have control on certain things, there are several factors which will be out of your control and learning about those is the only way you can mitigate risk.