10 International Expansion Mistakes That Will Sink Your Business or Startup

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All businesses want to grow and expand. And for many, the lure of finding overseas markets is strong. After all, look how many Chinese businesses have expanded into the U.S. and are making a “killing” selling their products. Surely you can do the same thing. Just set up a website in a foreign language, feature your products, and voila – orders come rolling in.

Not so fast.

Expanding overseas demands a lot of research, time, energy, commitment on the part of your team, and, yes, money. Many businesses have jumped into overseas markets and have failed miserably. You don’t have to be one of them if you avoid these common mistakes.

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1. Expansion For The Wrong Reasons

Exactly what does this mean? Precisely this: if you are looking to expand overseas to boost a business that is flailing at home, and you think you can make some fast money somewhere else, think again. Businesses that are successful with their overseas expansions understand that they are in it for the long-haul. It takes time to spread a brand in a foreign market and to develop a customer base. Profitability is a long-term process.

2. Failure To Research The Market Thoroughly

There may be a sound market for your product in your home country. What is the comparable demographic in a foreign market you are considering? There are certainly a number of countries with a rapidly expanding middle class – people who are actively seeking consumer goods. But maybe not yours. Conducting enough market research in a country you are considering may involve using some local pros, but it will be well worth it in the end. Time, energy and money spent expanding into a bad market will be a “killer.”

3. Mistakes In Localization Marketing

Websites, blogs, social media – all are tools for marketing in our native land. But when we attempt to move those same efforts into a foreign market, there are some critical cultural considerations. Localizing a website and translating content correctly requires consultation with natives of that target market.

One of the things that many business owners do is contract with companies like The Word Point online translation service that employs natives in multiple countries to provide website localization and content translation. Because they have the cultural awareness that you do not, they will be able to advise you and help to ensure that all of your site and your content is appropriate for the target audience. And many businesses employ website designers in the target country.

4. Failure To Research Local Laws And Regulations

More than one business has failed to meet the legal requirements to do business in a foreign country. And those laws and regulations are continually changing. And those laws and regulations can relate to online businesses too. For example: recently, the General Data Protection Regulation went into effect in the EU.

Any online business operating within that area must conform to its requirements about consumer privacy and must have posted policies regarding privacy protection. And there are some countries that block access of their citizens to certain businesses selling certain products or services. If you don’t do your homework here, you are in for trouble.

5. Failure To Configure Shipping Arrangements

Believe it or not, many a company has moved into overseas markets without a plan for shipping, returns, and exchanges, etc. Do not open your doors anywhere without having this fully set up in advance. If you are scrambling at the last minute to get shipments out, you will have unhappy customers who will not return.

6. Not Running A Lead Generation Campaign

All of the research in the world is not equal to an actual litmus test. If you do not test your ability to get leads, you will not know how much interest there really is in your product. You should craft a landing age and purchase some local advertising. See what the response is over a period of time, not just days. Remember, expanding into a foreign market takes time and patience.

7. Not Sizing Up The Competition

You will have both local and other international competition. Again, this takes some research and probably some local expertise in the target country. Finding marketing pros in the target country will be invaluable in getting the information you need. Just be prepared to spend a little money.

8. Scrimping On Local Talent

No business can be successful without hiring some local talent – especially marketers and networkers. They do not come cheap, and trying to cut costs in this area is a huge mistake. Locate the best you can find – it will be worth it in the long run.

9. Not Physically Going There

You do need to go the cost of at least one trip to the target country, even if your business is solely online. You will need to meet face-to-face with the local talent you intend to use, to network, and to develop a better understanding of the culture.

10. Not Having A Comprehensive Plan

This is a combination of all of the previous mistakes. The only way to make a success of a foreign expansion is to spend lots of time in the pre-planning phase, this means that there are short-term, medium, and long-term goals; it means that the local team is on board; it means that the right due diligence takes place in terms of research and finding the right local talent to face the competition and spread your brand.

Global expansion is a given. We live in a much smaller world than we have ever lived in before. Businesses are reaching far and wide to foreign markets, and many are achieving success. Getting into these markets can be lucrative, but achieving that profit and ROI means doing it right, being patient, and letting the growth occur gradually. Gradual growth is sustainable.

 

Getting the chance to diversify, enter new markets, and drive more potential revenue are just some of the advantages of international expansion. However, there are still risks to expanding internationally such as issues with political stability and a few legal hurdles. A business becomes more vulnerable to these issues when they make mistakes. Here, we are going to talk about those mistakes to help you avoid them.

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1. Failing to adapt your sales and marketing strategies

Expanding to another country means that you will encounter culture and consumer habits different from what you are used to. Hence, you would want to be more particular and intentional as you approach this unless you want to risk your message and marketing budget falling on deaf ears.

To avoid sales and marketing mishaps, take the time to research the current market competition, their local language, cultural nuances, and local consumer behaviour. By having a clear understanding of what works and what doesn’t, you can better adapt your sales and marketing strategies to the local context.

2. Not listening to your local team

One of the most disappointing mistakes of startups when scaling overseas is pushing aside valuable customer insights from their local teams. In reality, your local leaders are your best resource for real and practical data. Remember that your local team is probably far more familiar with the local market than you are. Let them take active participation in discussions regarding strategies and operations.

3. Not having a solid plan or strategies for expansion

Before you venture out to a country or state, you want to make sure that you take a methodological and data-backed approach with every decision. Being fast doesn’t always equate to success if it’s haphazardly done.

Make sure that you have ready resources, research, and workforce to carry out this expansion properly. Otherwise, you may lose a substantial amount of time and money.

4. Not hiring top talent

As Red Adair said before, “If you think it’s expensive to hire a professional, wait until you hire an amateur.” 

As a startup, your team is going to be your best asset thus, skimping on talent to reduce salaries and wages, is not going to make things easier for you.

Unfortunately, this is extremely popular with startups due to their limited capital, but hiring incompetent individuals would just increase your employee turnover and eventually, you might even find yourself spending more on unnecessary hiring-related costs.

To deter this, always prioritise the quality of your candidates, allocate a sufficient budget to attract top talents, and set up a structured hiring process in place.

5. Not be aware of local employment, payroll laws and compliance

Failing to comply with local laws and tax regulations commonly stems from inadequate research. And in fact, there have been several startups that fell prey to this and weren’t able to recover the costs at all.

Bear in mind that there are regulations and laws relating to payment methods, taxes, and payroll forms that are specific to each country or state. You don’t want to run the risk of incurring tax penalties because of your lack of awareness. Consult with local legal experts before entering a new market.

6. Taking cross-cultural communications for granted

Failing to accurately translate marketing messages is a common mistake that even renowned brands weren’t able to steer clear of.

When Schweppes Tonic water launched in Italy, they unknowingly translated their name to “Schweppes Toilet Water.” And of course, that wasn’t received well by the Italians!

That being said, you would want to consider how your offerings and messages translate to other countries both literally and figuratively first before a massive rollout.

7. Lowballing international hires

A lot of companies see expansion as a way to maximize growth at a low cost; however, this usually doesn’t translate well. The best talent in the market comes with a price, and they know exactly what they’re worth. That’s why if you want the best talent, you have to be ready to provide a competitive salary as well.

8. Neglecting your international teams

Without having an established working structure, standards, and practices, your team’s operations and company culture will crumble. This is why besides working with a local pool of talented individuals, you need to appoint a well-rounded business leader from your international team who can personify your company culture and maintain employee engagement while aligning local teams with business goals and objectives; and at the same time, liaise with upper management in your headquarters.

Your visibility will mean a lot to your employees. Making a meaningful appearance now and then, whether by physical visits or having a virtual touch base with your remote team, will help you establish proper leadership.

9. Not seeking advice from business experts and legal consultants

Many startups try to cut corners by not having legal counsel or hiring friends and relatives for a minimum fee to act as their business and legal consultants. It may seem like an unnecessary expense at first, but in reality, having well-established lawyers and business experts on your side can guide you to take the right steps when establishing foreign subsidiaries.

For instance, they can help you with the following areas:

  • Employment Laws

  • Contract Laws

  • Corporate and Securities Law

  • Tax Regulations

  • Intellectual Property

  • Real Estate

  • Data Security

  • Foreign Government Considerations

10. Thinking that there’s no such thing as transfer pricing laws

Some entrepreneurs think they’ve found the loophole to pay fewer taxes by offering their goods or services in a country with low tax laws. But transfer pricing laws exist and some penalties apply to companies who fail to comply. Study this carefully to avoid getting penalized.

Everyone wants nothing but the best for their companies. Therefore, by being able to identify when you are making these common mistakes will empower you to make the most sound decisions for your international expansion.

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