Why and How to Expand Your Business Internationally
Are you trying to figure out how to expand your business internationally but don’t know where to start?
Now is the perfect time to advance your global business expansion plans. With many competitors holding back, there's a unique opportunity to tap into new markets. Despite the challenges, businesses are at a crossroads. They can either innovate and take risks to transform their operations or remain settled.
In this blog we will be breaking down why you should expand your business internationally and most importantly how to do so.
We will also discuss topics such as:
Political incentives from international governments when expanding your business internationally
How being less reliant on a single market can enhance the opportunity to access a larger target market
Why there is less need to establish a physical entity.
Why Expand Your Business Internationally
Ask yourself this question, are your leads and sales limited to your home country, despite the essential growth opportunities in today's globalized world? Even thriving companies in domestic markets might wonder, “Why expand globally?”
The reasons for international business expansion often share common themes as seen in the graphic below.
Expand Business Internationally to Boost Revenue
Once your business reaches a certain level of success in your home country, it's natural to consider expanding, perhaps even internationally. In today’s global economy, global expansion is not just an option—it’s practically a necessity.
While an increasing number of companies are moving overseas, many are still hesitant to take the leap. However, expanding your business internationally is vital for boosting profits and reaching new customers.
International business expansion may involve opening new physical locations or diversifying your product or service offerings. For instance, diversifying your revenue streams can reduce reliance on a single product or service.
Similarly, if your business initially operated on a smaller scale, expansion may become necessary to accommodate a growing volume of business.
Spread operational costs across multiple markets
If you decide to expand your business internationally, you may experience economies of scale. Spreading operational costs across multiple markets and lowering expenses per customer for example, a UK consumer goods company, consolidated its manufacturing operations across different regions, achieving cost efficiencies and improving profitability through centralized production and distribution networks.
Explore New Markets to Gain a Competitive Edge
Now that your company has found success at home, it’s time to think about spreading your wings internationally. Going global opens exciting new opportunities to reach fresh territories and connect with a whole new customer base, which can enhance your business and increase sales.
Deciding to expand your business internationally isn’t just about escaping crowded markets – it’s about gaining a competitive edge. Breaking into new markets where competitors haven't yet explored gives you a valuable advantage. This sets the stage for strong brand recognition and future successes in negotiations and marketing campaigns.
Decrease Your Reliance on a Single Market
Reach a larger target market
Sticking solely to your home market can limit your growth potential and leave you vulnerable to market swings. However, going international could be a game-changer for your company. It's a chance to branch out, diversify your assets, and strengthen your revenue.
If you’ve decided to expand your business internationally, you provide your business with the opportunity to access a larger target market and spread your risk rather than relying solely on one area. Going global can boost revenue by reaching more people.
Be less venerable to economic changes
A drive for change has been created worldwide. Lockdowns and uncertainty in places like the UK for example, surrounding Brexit trade deals made businesses consider expansion into different markets. When the UK experiences economic challenges, the US isn’t significantly affected, emphasizing the resilience and size of the US economy compared to others.
Global expansion reduces reliance on one economy by spreading operations and revenue across multiple markets. This diversification minimizes the risk of economic downturns in any single location and adds valuation and stability by demonstrating the power in global markets.
Different markets offer various customer preferences, balancing overall performance. Operating in diverse economies exposes businesses to different economic cycles, reducing volatility. Additionally, global expansion provides access to more resources, talent, and technology, lowering costs and boosting innovation. This competitive advantage enhances resilience and reduces dependence on any single economy.
It is worth researching your industry in international markets to evaluate the demand to seize opportunities and be in a greater position for the inevitable bounce back.
Access a Larger Global Talent Pool
Expanding your business internationally isn’t just about reaching new customers – it’s also about tapping into fresh talent pools. Think about advanced language skills, diverse educational backgrounds, and innovative perspectives. Plus, hiring locally means having experts on the ground who can connect with customers in their own language and time zone.
HR Challenges When Hiring Globally
Global expansion offers the chance to tap into new talent pools but can also bring traditional HR challenges navigating local labor laws and tax regulations. Integrating diverse cultural backgrounds into a unified company culture can be tough, and high turnover rates can hinder expansion efforts.
Cultural differences could lead to different approaches to situations and standards of protocols, different leadership styles and expectations.
Time zones are another example which can lead to issues such as complying with local employment laws, schedules, team culture and communication.
How an Employer of Record Can Help You Hire Internationally
The shift from hybrid to fully remote work models has positively impacted the above HR challenges when hiring globally. Remote work improves flexibility, allowing better management of time zones and cultural differences.
It reduces costs by reducing the need for physical office spaces and fosters a healthier work-life balance, which can increase employee satisfaction and reduce turnover. The effect of communication tools and virtual collaboration platforms can enhance team cohesion and productivity across global teams.
Remote work also opens access to a broader talent pool, as location is no longer a constraint. This diversity can lead to innovative ideas and solutions. Investing in technology and creating new protocols. Remote work ensures smooth operations and a positive work environment.
Using a employer of record service can further streamline HR tasks like payroll and managing overseas workers. Engaging local experts can establish your business in new markets while you focus on growth and operations from your home country.
Favorable Economic and Political Incentives From International Governments
Another reason why to expand your business internationally is to make use of lower corporation tax. Corporate income tax rates differ by country, with the global average around 23.64%. Some countries offer rates as low as 0%. Let's explore the countries with the lowest corporate tax rates in 2023.
While no one enjoys paying high taxes, obtaining the right advice is crucial. Corporate income tax rates are the percentages of tax on business income, varying by location and income level. There’s also ongoing discussion about implementing a 15% global minimum tax.
Other reasons why you should expand your business internationally includes Business incentives to consider when looking to attract international investors for example:
Providing tax incentives
Financial assistance
Simplified rules
Access to regional markets
Below are some countries that offer attractive benefits when considering expanding your business internationally.
Make use of Global Tax incentives
Ireland's 12.5% corporate tax rate has made it a top choice for foreign direct investment. Many global companies, especially in electronics and pharmaceuticals, have set up operations there due to the favorable tax conditions.
Financial grants and subsidies
Germany offers various financial incentives and subsidies to foreign investors, especially for research and development (R&D) projects. These incentives are designed to reduce the financial burden, include direct grants, low-interest loans, and loan guarantees.
Infrastructure development
When considering how to expand your business internationally, it’s important to research countries infrastructure development. This is relevant if you have goods to exports and also if you plan to travel frequently for business meetings or to build out the offering.
China, for example has heavily invested in infrastructure, making it attractive to foreign investors. Its extensive transportation systems, including high-speed rail, airports, and seaports, make it easier for businesses to access local and international markets.
How to Expand Your Business Internationally
After looking at reasons to expand your business internationally, now time to explore how to expand your business internationally. Here, we will break down the following:
Market Research and Talent Management
Extensive research is essential when figuring out how to expand your business internationally. For example, the video above explains steps businesses should consider when expanding to the US market.
Understanding the potential of a new market will help you gain a better understanding of the opportunities and challenges in each potential market, including its tax regulations and culture.
By conducting in-depth market research, you can gain a deeper understanding of the opportunities and challenges in each potential market, enabling you to make informed decisions about where to concentrate your efforts.
Accessing top talent is a vital part of laying the foundation when expanding your business internationally. This includes gathering and analyzing data on the economic, political, and cultural environment of the countries you are considering expanding too.
Develop Your Business Plan
Creating a well-developed business plan is essential for succeeding in international markets. It keeps you focused and on track, providing a clear route for your expansion. Additionally, it can be a valuable tool for securing financing and convincing potential partners and investors of your business's viability.
Taking the time to create a solid business plan can significantly increase your chances of success and help you avoid common mistakes.
A successful business plan requires setting specific realistic goals and objectives for your international expansion. This should include:
Detailed market analysis with strategies
Sales plans
Financial plan
Logistics to help you successfully expand your business internationally.
Identify Global Partners and Distributors to Help You Expand Your Business
Partnering involves finding companies or individuals to help you enter and succeed in your target market. For instance, a product-based business might seek distributors to sell products in a new country, while a service-based business may look for local partners with expertise and connections.
Teaming up with local partners or distributors can offer valuable market knowledge and connections, helping navigate the local business environment effectively.
How to choose the right partners for global expansion
It's crucial to identify potential partners carefully, considering their reputation, experience, and alignment with your brand values. Choose partners who can represent your brand well and add value to your business, giving you the best opportunity to increase your chances of success in the new market.
Financial Planning to Expand Your Business Internationally
A strong business plan is crucial for success in global markets and can help secure financing. When seeking funding for international expansion, a detailed business plan outlining goals, strategies, and financial projections is essential. This helps create a clear picture of your business and how funds will drive growth.
Operational expenses
Within this you should consider operational expenses such as:
Infrastructure for offices or warehouse spaces
Supply chain costs which can also include:
Storage and transportation costs of products.
Financial help to expand internationally
Various financing options exist, like loans:
Grants, and investments from venture capital firms or angel investors
Assess term
Interest rates
Repayment schedules carefully to find the best fit. With the right financing in place, you'll have the resources needed for successful international growth
Create a Virtual Presence in the Country you Plan to Expand to
If your business operates online-only, for example via an ecommerce site, you can still enter new markets. You can do this by adapting your website and marketing to the local languages and cultures you are targeting.
Companies operating globally frequently develop marketing strategies that differ significantly from those successful in their home countries. Before you start building your business internationally you should customize the following items to appeal to your new target audience:
Customize your messaging
Branding
Website
Social media presence
Creating a multilingual website makes your business more accessible to customers in different countries and helps build a digital presence in new markets. Establishing yourself in your target market, even digitally, boosts your chances of success and lays a strong foundation for growth.
Hire a Sales Person in Your Country of Choice to Build Your Business
Hire a global salesperson to network and assess demand for your offering before making a move. Alternatively, your UK-based sales and marketing team could work US hours, leveraging digital marketing and participating in online networking events, meetings, and pitches to establish your presence.
Top Tip: Don’t hire your first global employees out of your UK company
It's common for UK companies entering the global market to hire local salespeople first before transferring staff. However, hiring global employees directly through your UK entity can lead to significant challenges such as:
Tax complications
Litigation risks
Legal issues.
Open a Local Presence
To establish your business in a new market, you might:
Set up a physical office
Hire local staff
Register with government agencies.
This presence helps you connect with customers, partners, stakeholders and navigate the local business landscape.
How to Expand Your Business Internationally With an Employer of Record
As PGC Group have merged with Workwell to create a global powerhouse in workforce management solutions, we now join forces to help businesses payroll workers in more than 80 countries.
Partnering with PGC helps manage the risks associated with global expansion and provides you access to our 24 years’ experience of helping businesses expand to North America. We will help you navigate the complex legal employment differences in US and Canadian markets, so you can solely focus on growing your business.
Ready to learn more about how PGC and Workwell international can help you expand in the US and in 80+ countries globally? Get in touch today!
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.