Tips for medium-sized businesses to expand internationally
Among the many reasons your small to the medium-sized business may choose to expand is to take advantage of global growth and new markets. Of course, the path to successful global expansion for SMEs can be difficult to navigate. Each country and industry presents unique challenges for international growth. With the right tools and smart strategies, a medium-sized business can adapt and succeed in markets all over the world.
Challenges SMEs face when expanding internationally – and how to overcome them
Whether you're considering expansion or already putting plans into action, the global economy can present unique challenges to growing businesses. Expanding into a new country is in many ways like starting a business from scratch. You need to develop your customer base in a place where no one may have heard of your brand. Furthermore, the market and culture in your target country may be completely different from what you experience at home.
For most growing companies, these differences require a completely new approach. Although there are great challenges for an SME to enter an international market, there are also many rewards. Careful planning and commitment can help you overcome some of the most common obstacles mid-sized businesses face as they embark on global expansion.
1. Understand your market
Finding and learning about an international market is the key to successful expansion. When you start a new business or introduce a new product, you start by conducting thorough market research. Researching the demographics of your area will help you tailor a business strategy for a new business. When you enter a new market, you have to start this process all over again.
Many medium-sized companies expand to extend the life cycle of a current product. When your domestic market becomes saturated, a new country allows you to introduce the same product to a market unfamiliar with it. Of course, this can be risky without doing proper research. Something that is considered a necessity in one country may have a limited market value in another culture. Introducing your products in a country where similar products already dominate the market leaves little room for growth.
A thorough market analysis can help you choose the right country to expand into. Understanding a population helps you find the best way to position yourself in an international market. When doing market research, make sure you include multiple elements and data sources.
- Local competition: Are there other companies selling a similar product or service? Are you hoping to replace or disrupt an established industry? Your potential competitors can indicate whether there is room in the market for your product or service. They can also help you see how a local market works, which can be quite different from what you know in your home country. Many competitors can be a sign of a fairly crowded market. At the same time, zero competitors, although this seems enticing, can be a sign of difficulties you may encounter in the future. If there is a small number of competitors, you can learn from their mistakes and fill the gaps in the market.
- Barriers to entry: Even if you don't have any strict competitors, you can still find other forces that compete with you. For example: if you introduce an app to find local properties, you may be competing with the more traditional real estate market. You may have to work to convince real estate agents in the area that your app is a tool worth using. Alternatively, trying to break into a market where most consumers do not have the purchasing power to afford to buy a home may limit your growth potential.
- Information sources: Many different data sources can help you get a complete picture of consumers in a particular country. You can conduct primary market research by surveying potential customers. For more first-hand information, you can meet with state trade commissioners. News publications, local trade associations, and statistics can augment this research. The government of your home country may publish market reports for other countries to help small business owners expand into certain countries.
