A2X Consulting

For many businesses, foreign countries are the final frontier. After your company has saturated the domestic market, its only natural to look towards the horizon for expansion opportunities.

The digital revolution increased the velocity of globalization exponentially. It’s easier today than it ever has been before to have an international business presence. Overseas trade was once the sole province of massive corporations with the capital and personnel to maintain significant infrastructure abroad. Today, applications like Gmail and Skype make it possible for a small mom and pop startup to have a presence on multiple continents.

The developed world isn’t the only place with customers. Your best potential market might be India, China or the Maldives. If you have a product or service to sell overseas, consider these popular tips before you draw up your business plan.

1) Conduct thorough research

Never plunge into a new market without reviewing all the possibilities. There’s a great chance that you’ll burn a sizable chunk of cash trying to expand overseas without all the relevant facts. The best way to begin this research is to conduct a thorough market analysis. Read business statistics. Attend trade shows. Communicate with comparative companies in the area. You can even hire local expert to provide intelligence on competitors. At the end of this process you should have a much better understanding about the market for your product abroad.

2) Take culture into account

If you’re a numbers person it can be pretty easy to ignore cultural differences. This, too, is a huge mistake when you’re taking your business overseas. Even if the language is the same, different countries have vastly different customs and ways of doing business. When in Rome, do as the Romans do. You would be wise to learn the local customs and follow them. If you don’t, you will come across as naïve, rude or even incompetent. That’s not the image that you want to project.

3) Lean on local government resources

Government assistance for businesses exists in many forms around the world. Many countries even offer more favorable terms than the U.S. Foreign governments – especially in the developing world – genuinely want to attract investment and expansion in their economies. Some incentives might be attractive enough for you to consider offshore company incorporation. Find out what a foreign government can do for you at the national, regional or sector level.

4) Raise capital

Without the means to support a sizable expansion overseas, you run the risk of bankrupting your company. It’s important that you secure the necessary capital to support this kind of growth before you begin moving your business abroad. The credit crunch has made it very difficult to secure capital from commercial banks. This doesn’t appear likely to change very soon, so you’ll likely need to pursue alternate means of financing. Venture capital firms are more likely to invest in a successful business trying to expand overseas. Prepare a strong V-cap presentation, and when you ask for a number make sure you take exchange rates and currency fluctuations into account.