If you are running a successful business, then it’s inevitable that at some point you are going to start thinking about expanding into overseas markets; it may be the attraction of lower running costs, expanding into new markets, or avoiding seasonal fluctuations in demand. Perhaps your business has been approached by a foreign business and you are responding to an opportunity, or perhaps you have looked strategically at world markets and spotted an opportunity. Whatever reasons have brought you to the decision to take your business remotely overseas, this is a significant development and though there is much to be gained there are also attendant risks, so here are some areas you need to be thinking about.
Is this opportunity right for your business?
It’s easy to become intoxicated by the prospect of a new market but is it right for your product? There’s no point in trying to sell Ferraris if what the market wants is school buses.
Create an export plan
This is a key document that you’ll need to share with banks, investors, and business partners; it should be an extension of your business plan which outlines your core business, export objectives, competitor analysis, target markets, and resource requirements. As your expansion into foreign markets develops, this document will need constant updating.
Research, research, research
Who is your customer and what do they want? Can you deliver? Can you cover the upfront costs, and can you afford a margin for delays and unforeseen expenses? Is the local political/economic situation stable? Most importantly, are there any nasty surprises lurking in the country’s business laws? You’ll need a local lawyer, fluent in English, and you’ll need an experienced accountant to guide you through unfamiliar and potentially dangerous territory. Do not just rely on online research, you really need to have someone on the ground to conduct targeted market research. Talking to expats via forums and chat groups may also provide some alternative perspectives on the location under consideration.
What kind of presence do you want to establish?
Establishing a virtual office abroad is a light touch, low-cost option, but will only serve as a toehold. You will require a physical office if you really intend to establish your business overseas. The cost of office space may well be a key factor in deciding where to establish your base. If you wish to open operations in Europe, for example, you’ll find that Portugal has some of the cheapest office space in Europe, averaging out at around 288 euros per square meter per year. This compares very favorably with a country like France, where the average cost of office space is around 890 euros per square metre per year.
The availability of a pool of inexpensive skilled labour may well be a key incentive for your choice of location, however, there may be different cultural practices or perceptions of which you need to be aware. Will you need to relocate an existing manager who understands the company’s ethos, products, and services?