As a global company, you are likely always on the look-out for new opportunities to expand the reach of your business. This could mean looking for new markets or it could mean finding new ways to serve your existing markets.
In order to identify new opportunities, you first need to know where to look.
One place you might not have fully considered is growing your business internationally.
There are many countries around the world with untapped potential. How can you tell if that potential suits your specific business?
There are various factors to consider before you take the leap into a new international market. These include the size of the market, the growth potential, and the languages spoken.
Here's a guide to how you can identify if moving into a new international market is right for you…
Why your business may be missing lucrative international markets
It's a bit of a cliche, but the world really is getting smaller. With advances in almost every technology associated with running a business, we are now able to easily connect with customers all over the globe.
Many businesses don't realize the huge potential they might be missing in international markets. A huge 60% of online shoppers rarely or never buy from English-only websites.
There are several reasons that businesses miss out on lucrative markets.
These reasons can include:
- The business is just unaware of the potential customers in other countries.
- There is hesitancy about international shipping and payment options.
- The challenges associated with localizing content into other languages.
- The legal, financial and compliance challenges can seem overwhelming (such as taxes, tariffs, trade rules).
Whatever your reasons, if you're not exploring new markets internationally, you could miss out on opportunities to grow the business. When you apply the right international growth in the right way, you could take your business from local to global.
What are the benefits and risks of expanding internationally?
There are some powerful benefits to growing your business internationally.
These benefits include:
- More customers. Expanding into a new market means you reach people who wouldn't have known about you otherwise.
- Improves your company's resilience. International presence helps increase your brand awareness and visibility. At the same time, it diversifies your customer base, helping to protect you from fluctuations in your home economy.
- Improves customer understanding. Expanding into new markets can also help you learn more about all your customers and their needs. This then helps you improve the quality of your products and services.
However, there are also some risks to growing into a new international market.
Potential risks include:
- Differences in compliance. Different countries have different legal requirements and dealing with non-compliance is more expensive than getting compliance right from the start.
- Cultural barriers. In any new market (whatever language is spoken), you will probably come up against cultural differences that will affect how you do business. This can affect both your localized content and your business operating practices.
- Translation costs. If the market speaks a different language, you will probably need to localize your content. This is an added cost.
These risks are often interrelated and not always obvious.
For example, let's say that translating a new product manual was to cost $5,000 for one language (this is an example number and may not be indicative of actual costs). If it costs you $20,000 to engage with your legal department in the case of a non-compliance caused by an untranslated manual… which option makes the most sense?
You will have to assess the different risks depending on your specific situation.
7 useful factors to evaluate potential international markets
While expanding internationally can be very lucrative, it's important to be realistic.
It's difficult to grow into new markets. Only 40% of companies achieve a modest Return on Assets (ROA) of 3% within 10 years of expanding globally. Within the first 5 years, the average ROA is -1%.
Here are 7 factors to consider when you are evaluating potential international markets:
- Population — The larger the population in a new market, the more potential customers you are likely to find. But, you also need to consider factors like population density and distribution of income levels.
- Infrastructure —Is the new market well-developed with reliable services? Or is it a developing market with limited infrastructure? The level of development will affect how much time and money you'll need to invest to do business there.
- Economy — What are the economic indicators of the new market? Indicators like GDP, inflation rate, and growth rate can give you a good sense of how stable and prosperous the economy is.
- Political stability — With some markets, it's important to consider the political risks of entering the market. Civil unrest, terrorist activity, and other such situations will probably affect your business.
- Language and translation — Do you need to communicate with potential and existing customers in their own language? This is a vital question for markets where English is not the primary language of some or all of the population.
- Competitive landscape — How many competing companies are already operating in the new market? What's their market share and competitive advantage? Some markets are harder to break into than others.
- Legal and regulatory environment — What different laws and regulations govern businesses like yours in the market? The legal aspects will go hand in hand with language and translation, especially in regulated industries.
When you have identified how such factors play out in your specific market, you can better assess that market for your business.
Is it time to expand into new markets?
Expanding into a new market internationally can be an exciting and lucrative move for your business.
You just need to make sure you are doing it in the right way.
It's a good idea to start by researching your chosen market and learning as much as you can about the local culture. Identify the key differences between your home market and the international market. Remember that different markets speaking the same language often need to be treated differently.
If you need to translate your content, it's a good idea to start with a global content strategy.