Expanding to New Markets: The Experience and the Hurdles
Lingering in the same market for an extended period can hinder the growth of the business. For greater sustainability and to generate good revenue, entrepreneurs must cruise beyond the boundaries of the existing marketplace.
Living in the modern world where the consumer demand for customized products and services has increased, it is difficult for businesses to thrive. Maintaining the current sales and captivating the attention of consumers — it’s difficult, and it is important to push past the horizon.
Why?
It helps you to stave off competition. It increases the stability and credibility of your business. Bonus? It gives a boost to your market shares. There is no one way to grow your business, but it requires meticulous planning, execution, and taking into account the collateral pain points that might crop up. Clarifying your goals and conducting market research is an integral part of business expansion.
It is a reality that extending a business to foreign areas is not as easy as it seems. Indeed, it leaves you with unparalleled experiences and a treasure trove of knowledge. But the only way to walk away with an overall positive outcome is to compare the pros and cons of entering a new playing field.
It is highly suggested to keep in mind the hardships and difficulties you might face while expanding your business so that you can simplify this herculean process — or, at the very least, build the muscle to carry its weight.
There is no one way to grow your business, but it requires meticulous planning, execution, and taking into account the collateral pain points that might crop up.
Let Bygones be Bygones
Honestly, a business can just be a triumph if you continue to follow conventional methods. This is especially true when you move into a new business culture, and you need to adapt to it without compromising the basic essence of the idea.
But, in order to get ahead in a new market, you should revisit and update your business strategies according to the changes in market conditions. Just because something works well in one market, doesn’t mean it will work in another —even if it is your go-to methodology.
Writers are often advised to “Kill their darlings” to make for a smoother reading experience. This is true for business strategy, too. To make sure that you are well equipped with the demands of your business, you might renegotiate your contracts and make sure you have the latest technology in your grip. You might even hire more suitable employees and invest in retraining/upskilling the existing ones to stay ahead of the curve.
Setting expectations and communication frameworks from the get-go can make it easier for your global teams to work together.
Mapping an Unknown Vicinity
Even for the most superficial task to be completed perfectly, the instructions must be properly delivered and understood. This is significant because this might affect the vision and goal of the company, and any problem in this would ultimately lead to the crumbling of the business. That is why it’s recommended you consider the scale you want your business to reach over multiple years when considering the vision and mission — because those need to stay relevant and unshaken even as your company evolves.
Additionally, they need to be communicated and endorsed well. One of the reasons why communication may be a hurdle in a new market is the language barrier. You might not immediately follow the verbal and non-verbal cues from people belonging to a different culture. There might even be different negotiation tactics and unspoken partnership etiquette you’re expected to act upon. Equip yourself with in-depth knowledge of the culture, language, and expressions of your target market. Setting expectations and communication frameworks from the get-go can make it easier for your global teams to work together.
Are you an Indian business planning to expand internationally? Check out this Guide to International Business Expansion for Indian Businesses.
Read the Room
You might be well aware of the products and services needed by the customers of a market you have been working with for years. But these are not universal facts, nor expectations.
It is essential to understand that the needs of the customer change based on time, place, culture, and context. When you expand to new markets you are expected to be well aware of the financial, social, and cultural situation in which your customer resides and then provide the best suitable products.
There might be needs your product fulfills in its home base that are not even a need in the new one — or a new need that aligns with your vision that you hadn’t considered before. Perhaps the niche you’re part of operates on different requirements. Keeping this in mind helps you maintain your brand voice and deliver on your promise, and eventually build a trustworthy consumer relationship.
You need to build a reliable team in whose hands you can one day step back and leave the new establishment to run autonomously.
Mustering the Strength
We talked about upskilling and retraining and adopting new technologies, but this is not the whole story. It is one thing to hire a couple of local market experts as advisors. It is a whole other ballgame to recruit a fully functional, autonomous workforce in your new market.
For the proper functioning of your systems, you will recruit new professionals who are competent enough to work in your business environment. This competency might vary from standardized tasks to local compliance, market knowledge and strategy, legal teams, human resources, and so much more.
This itself is a mammoth task — to find individuals who understand the goals of a company that hasn’t stepped foot in that region before (side note: focusing on your global brand awareness comes in handy here!). Training new staff does not happen in the blink of an eye — it requires time and resources. This also means that there needs to be an appropriate hierarchy and sufficient departments to manage the various tasks of the company. Most importantly, you need to build a reliable team in whose hands you can one day step back and leave the new establishment to run autonomously.
Even if you’re spending more than you’re used to, then you need to remember that you have the potential to earn more than you’re used to.
The Trembling Roots of Capital
One of the major issues faced by growing businesses is that of finance and currency. Looming threats of recessions, the rise and fall of governments, and a pulsing cross-cultural economy have created extremely diversified currency strengths and purchase powers. The current currency and purchase parity can become a roadblock when trying to enter a new market.
In order to avoid running into losses, you need to fully understand what the cost of the exchange is. Not just the pure cash exchange and the costs of remittance, but also the costs of business. The manufacturing, the sales, transportation, the legal work — even the cost of living in order to pay fair wages to your newly recruited employees.
It’s also crucial not to just purely rely on exchange rates. You need to acknowledge the rate of inflation, as well as the potential of the spends. Even if you’re spending more than you’re used to, then you need to remember that you have the potential to earn more than you’re used to. Consider your company’s risk appetite, and how best to mediate it.
You need to continuously embrace new ways of business tactics so that your company remains relevant, or else you may encounter business expansion problems.
Being on the Trend
Businesses depend on the trends and practices involved. Whether the vision is to keep up with them or to actively subvert them, your business is impacted by the constant changes around it. This is especially true in a rapidly transforming, almost ephemeral economy where trends are rising and falling quicker than any historic rate.
Your business is continuously impacted by the changing patterns of consumer behavior, marketing trends, and strategies. The classic approaches and techniques are inadequate to grow your business in the current scenario. For instance, currently, Influencer Marketing, Progressive Web Pages, and Artificial Intelligence are some of the top market trends in India. Conversely, Influencer Marketing is starting to lose its steam in some pockets of the Global North.
As your business grows, new technologies and consumer preferences necessitate a change of tact. You need to continuously embrace new ways of business tactics so that your company remains relevant, or else you may encounter business expansion problems.
The tools and methods that you used at the initial stage of your development may not be useful in the later stages.
Stop Signs and Zero Roadmaps
You can’t travel to another region without a map — not as a traveler, and certainly not as a business. A proper business planning chart gives you the exact idea of the way you would like your firm to expand. Any loophole in your planning might lead to disastrous consequences.
For example, you are running your business via an online portal. But you do not have a safe database of your customer data; or have created one using an unreliable third party. This causes your data to be prone to risk all the time, which directly or indirectly will affect your company. Moreover, if the local compliance laws require your consumer data to be encrypted and protected, then you risk your business being shut down by authorities.
Ineffective tracking of business functions or facing budget problems can contribute to a larger problem. Another major problem you might face is outgrown tools. The tools and methods that you used at the initial stage of your development may not be useful in the later stages. You need to be mindful regarding your planning to prevent any damage to your operations.
It is easier to manage professionals when they are together working in the same corporate environment.
A Never-Ending Race
Keep in mind that other businesses are competing with you all the time. You have global competitors attempting to enter the same market as you, and you’re competing with already established local brands that work within the same industry.
You need to think ahead of them since business competition decreases an individual company’s market share and shrinks the available customer base. This is especially true if demand is limited. Additionally, you need to carve your space without oversaturating the market (or, at the very least, without letting your consumer feel like it is oversaturated). Even if your product is a commonly available one, you need to consider what sets you apart and how to ensure your customers know it.
You need to understand the competition in the foreign market, clarify your vision and message, and highlight the differences from other businesses. You may also want to explore partnership opportunities — all of this without neglecting the standard of service you provide to existing customers, or alienating their brand loyalty.
The Business Mayhem
It is easier to manage professionals when they are together working in the same corporate environment. It becomes easier to address the concerns and find solutions to them. The larger the business, the more managers you need to engage.
At times it can be nerve-wracking to manage people that are spread across the globe. In addition to this, you might also come across physical spatial problems in setting up a proper infrastructure and providing proper working conditions. Give this a thought when you try to place your new market entry into the bigger picture of your company’s growth.
It is indeed remarkable to expand your business overseas, no doubt. But an increased output and profit mean increased pressure on resources. This increases significantly when you consider overseas expansion. Investigate the functioning of the market you want to expand your business to and wisely make any decision.
And lastly…
no matter which roadblock you hit — remember to map your resources, use your goals as guideposts, identify the risks, and tackle them with finesse.
Did you know: Volopay can streamline your expense management and help create business accounts for international expansion? Book a demo to see how we can help you raise your business to new heights.
