June 22, 2018

So, you're thinking of growing internationally?


Back in the day, it was most commonly enough for your business to spread just enough within the borders of where it was created. Today, things have drastically changed. Businesses are going through radical changes, expanding really fast, and even smaller businesses need to think about growing on international grounds. There is a number of challenges when it comes to doing this, based on what countries you want to expand your operations to, what your business niche is, and how good you are at adapting and coming up with fresh ideas that can help you surpass the new competitors that you are going to face.

There are also things such as understanding the culture of the target country, finding a way to get past language barriers, and coming up with a whole new approach that will fit your new customer base. When it comes to the competition, you will need to do your research and learn from them. After all, this is probably how you started your business in the first place, and now you are treading into a new territory where the rules are no longer the same. It’s also bound to be a big challenge for maintaining your company culture.

Basically, it is all about how you handle yourself in the face of these challenges. This will either make your company an international enterprise, or crack your business and force it to retreat back to its local efforts. In this article, we are going to discuss some of the common troubles that SME businesses come across when they decide to grow beyond their national borders.

International company structure

When moving your business efforts beyond your country’s borders and deciding to compete with other companies on a global level, you must properly organise your company and your teams. For starters, you have to decide about how your company is going to be organised – is it going to be run from a central HQ or will there be offices with their own representatives in every market that you expand to? If it’s the second option, you have to decide how to establish your teams, how much autonomy you are going to give them, and how the entire operation will be coordinated according to the difference in time zones.

A good example of an international company structure that is organized perfectly is Coca-Cola. It is branched into groups on every continent, each being led by a president of its own. You have central presidents whose job is to manage presidents who are responsible for subdivisions in countries and regions. So, what you’ve got is a product and brand which has central control and maintains its consistency on a global scale.

Different government regulations

Expanding your business into new countries automatically means that you have to carefully go over and consider all the legal issues regarding government regulations and rules. This is essential, because, of course, it will have a large impact on your business practices in every country. You need to register your business, get proper certificates and authorisations, which requires both time and money.

You shouldn’t be discouraged, but the fact is that such administrative tasks tend to take some time to be settled. Furthermore, you are going to need the help of an expert. If you are a western company, there is going to be a whole lot of bureaucracy if you decide to move to the Asian market. Therefore, it’s best to have a local consultant who can help you overcome these issues. Furthermore, if you want an employee from your Asian branch to move to your country, you will have to go over immigration laws in order to make sure that his transfer goes without issues. Therefore, it is crucial that you find an immigration lawyer, so that your new employee can move to their new job without too much hassle, and provide your company with their expertise.

If you plan to expand your small business across the European Union, you should know that the regulations these countries have are generally based on performance and safety standards. In fact, these standards have now become global. The idea is that low-quality products from third countries do not enter the market. The EU Parliament is where these regulations are proposed, voted on, and approved. While the idea is basically the same, every country incorporates the regulations in the way that fits their situation. For example, the Working Time Directive isn’t adapted the same way in every EU country.

Currency rates

One of the largest problems for international businesses is the currency rate fluctuation. It is vital for your international business strategy that you always stay up to date with exchange rates. The problem is that the global economy is pretty volatile, so it can often be pretty hard to tell how much profit you are going to gain, as the rates will change at levels you simply cannot foresee.

When big currency rate fluctuations happen, both your expenses and profit can take a serious hit. Let’s say that you are paying your production costs and suppliers in dollars, but your sales are happening in markets that have a much more unstable currency. As a result, you might find yourself in the situation that your margin is significantly smaller, or even lose money.

One solution for this issue is to pay productions costs and suppliers in the same currency of your sales. This will probably mean that you will have to shift to production that is more locally-based, so that you can have better control over expenses and sales.

Looking at the global situation, the EU and the US are growing, which is leading to Asian exporters boosting their volumes. However, one should not overlook the risk of an increase in global inflation. As a result, the interest rates will grow as well.

Today, expanding your business beyond your own borders is most commonly an essential aspect of company growth. However, this comes with its own set of challenges. You have to think about how you are going to structure your company internationally, keep different government regulations in mind, and definitely not forget about the fact that currency rates fluctuate all the time. However, once you surpass the big challenges in your way, you will be able to sell your products worldwide as a global enterprise.

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