By Mike Ryan, Chief Executive, PACK & SEND
According to recent statistics, the number of UK businesses trading abroad is on the rise, increasing 6.6 percent in the last year. More companies are looking to reap the rewards in less saturated markets and reduced manufacturing costs.
However, it’s not without its complications, with complex marketing and legal issues to navigate as you trade in new regions. With this in mind, Mike Ryan, Chief Executive at PACK & SEND, outlines how to give your business the greatest chance of success when taking your business international.
Keep it local
Before entering international markets, it’s important to carry out relevant consumer research, including identifying local demand and understanding culture and existing attitudes towards your niche or service.
Both primary and secondary market research is recommended to give you an accurate understanding of the market. Begin with first-hand methods like focus groups, phone interviews and online surveys from those living in the region, then validate your findings against public data records and business reports.
Speak with regional experts about the situation in your proposed region. Native economists or business experts will help you get an idea of the market landscape, so you get an accurate estimate of your chances of success.
Thorough consumer research can help you achieve the 80/20 customer split – maximising return from the 20 percent of customers that drive 80 percent of your revenue.
Understanding regional culture and way of life is key, too. Local values can make or break your success. Communities may welcome or reject brands based on their business model or ethics, so invest time in understanding the culture and read case studies on other businesses that have entered the market.
You’re always going to face competition. However, researching current market prices, existing services and consumer engagement gives you an idea of where your business can stand out.
Find out who the current big players are and where you can differentiate your service and compete. While some competition is healthy, if an existing business historically dominates your industry in the area, it’s better to shift your focus to new opportunities than risk time and money on trying to make it work.
Agility is key when entering new markets – if you spot a gap in the market you need to move before the competition. Outsourcing tasks to specialist companies or freelancers can help you enter the market quickly.
This may include time-consuming and region-specific tasks like accounting and payroll which require local knowledge and can be sped up by working with experts.
One option when seeking international expansion is franchising. Establishing your business in a new area through franchising is quicker and lower-risk than managing each new location yourself.
Plus, franchising is proven to deliver success and stability for businesses, with 90 percent of franchises deemed profitable after 2 years.
Franchising speeds up growth and simplifies management. Franchisees take ownership for the operation of their franchise, without the need for your key stakeholders to oversee development.
Relocating key employees is a common roadblock for businesses looking to expand overseas. However, franchising with qualified regional franchisees means you don’t have to worry about negotiating relocation bonuses or losing senior team members to new locations.
When looking for qualified franchisees in your new territory, consider local paid advertising and targeted online adverts. Local directories and direct mail are also an effective way of identifying leads in the area.
Once plans are in place to establish an overseas franchise, you need to check the legal regulations in your new region. Each territory has its own rules on tax, products and marketing and compliance is key.
Failing to adhere to your region’s laws could result in significant fines, so it’s important to be informed and compliant form the start.
Initial research should include information on tax rates, payroll and any employment laws. Consider hiring a legal advisor or accountant with local knowledge who can provide expert advice.
It can also help to outsource complex tasks – like human resources – to local companies who can help get you up and running quickly and keep you compliant after go-live.
Outsourcing in the early stages of your venture helps you stay agile as you look to move into new markets and covers you against costly employee lay-offs if the worst happens. Then, as you settle into the market and start to grow, you can begin putting together a dedicated in-house team.