Top Mistakes to avoid when growing your business overseas
Entrepreneurs are always excited to grow their business. Growing one’s business abroad is a daunting yet exciting decision full of challenges including product acceptance, foreign currency exchange rates frequently fluctuating and logistical issues yet there is always scope for growth. There are many international businesses that have successfully grown their business and made them a hit.
Almost every organization that makes this decision for growing business, commits errors, at least in the beginning. Although mistakes cannot be fully avoided, being aware of the common mistakes can help in easing the process of expansion and help the business grow. Here is a list of top mistakes to avoid when growing your business overseas:
Not having a clear goal or reason for expansion
Every organizational decision must be taken with a clear objective and vision. The leaders of the organization must be clear with what they wish to achieve with the expansion. For example, starting a subsidiary of your organization in a state such as Delaware in the US comes with several tax benefits and some amazing export-import benefits. Taking a rash and sudden decision not backed by a clear objective has a big chance of failure as employees will face a lack of direction.
Not Conducting Deep Research
Consumer research to understand the local audience preferences in a new international territory and understanding the feasibility of launching the product in the country is a must. Foreign currency exchange rates must also be taken into consideration For example, if a country’s consumers cannot afford or are not interested in buying expensive cars, it makes no sense to launch the product in that country. Conducting competitor research to know their strategies and economic research to understand the economic feasibility of the product is essential. Using different methods like observation, interviews and surveys for the research process and analysis of the research can help in forecasting the profitability of the business in a new geographical domain.
Not having a proper plan
Every successful overseas company had a detailed plan in place. After a thorough research, a proper plan with a timeline must be in place. One cannot get results overnight and so a proper step-by-step plan with strategies must be there. Kellogg’s corn flakes made a huge mistake of not having a strategic plan when expanding in India and later added products including Upma with an aggressive marketing plan to be successful in the country by appealing to local tastes. Intricate details must not be missed and knowing how to evaluate each step as the plan is being executed is imperative for the success of the business.
Not Diversifying as per Culture
McDonald’s, one of the most successful overseas when they expanded their business in India, added a masala flavor in their burger varieties and also focused on local cuisine variants of their US options, such as the Maharaja Mac. This helped in increasing their sales to a significant level. Diversifying as per the country’s culture is essential for profits and growth. Connecting one’s brand or product to the country’s dominant cultural tastes helps in gaining consumers’ trust and knowing their preferences will in turn help in growing sales. Starbucks, another organization that understands this fundamental expansion strategy, introduced snacks like Samosa and Kulcha in India, which is a great diversification strategy.
Not Checking all Legalities
Certain products may be banned in certain countries and at the same time, there are different rules and restrictions when it comes to logistics and Supply Chain in different countries and these have to be taken into consideration while growing business abroad. Understanding the feasibility of the business is a very important factor. Red Bull, the energy drink is banned in France and Denmark because of its contents. Certain soft drink contents are banned in many countries of Europe considering the health issues they may pose. Being aware of these regulations is important. Missing small details, like restrictions of inter-city travel for a certain product, can prove challenging for the business.
Not Hiring International Talent
Not hiring International Talent is another mistake the companies make while diversifying the business. Having people from nations with different ideas and perspectives adds on to the growth of the organization. It helps in understanding the values and preferences of people across the world and helps in customizing the products as per the demand of different countries. Lufthansa airways has a diverse staff from people across globe and has an inclusive and a growth-oriented work culture which has helped them in understanding various air-travelers from around the globe and making the customer experience enriching.
Not Evaluating Results or Reflecting back
Keeping a track of results and numbers on a regular basis helps in evaluating success and avoiding mistakes. Mistakes as simple as delivering at the incorrect address or delivering the wrong product to the consumers have something to learn from. Regular evaluation and checks are needed to stay on track and keep growing.
Not Having a financial Management Plan
One of the main areas in which you could go wrong is finances. Sometimes, cost estimation does not go as planned, from the time you hire a company formation agency to incorporate your business to when you hire personnel and even while your business is expanding. Unexpected or “hidden” costs manifest as computers, desks, chairs, office supplies, invoices, and other expenses.
Don’t forget about the “hidden” charges even though you may have set aside a particular amount for expenses; otherwise, you may end up spending more than you anticipated. While allocating funds for your expansion, you must give serious thought to all possible expenses. To help plan for them, it is usually preferable to increase the budget a little bit more than you anticipate. Keep a section aside for miscellaneous.
Conclusion
The business world, no matter how challenging, always has opportunities to grow. The excitement and thrill of achieving targets and coming up with ideas and strategies has had a profound impact on business people. Expanding the business abroad comes with a lot of scope for growth and hence, avoiding mistakes is necessary to avoid big losses and to stay on track and to keep flourishing every single day.
