Globalization has been the buzzword in the business community for many years. With technology making our world a smaller place, businesses big and small seem eager to be a part of the “going global” trend. But just what does expanding internationally mean and how much of an investment does it require? Many entrepreneurs are unaware of what an international expansion entails, which is the reason why many of them aren’t successful.
Here are five mistakes entrepreneurs make when going global:
- Not spending enough time exploring potential markets
The decision to expand your business internationally is a huge step. Many entrepreneurs seem to get too caught up in the allure of going global that they often forget to evaluate the compatibility of their specific business in their market of choice. It’s important to allow adequate time for research on potential markets. Spend time exploring and getting to know potential markets that fit your specific business. Expanding internationally is not about which countries you’d like to personally visit; it’s about where your business can grow and thrive.
- Underestimating costs and break-even time
Expansions are expensive! Don’t be fooled by the common misconception that outsourcing labour drastically lowers your operating costs – this may be true in the long run but breaking in to a new market will significantly increase your costs in the first few years. Adequate research about your market of choice and what kind of fees, licenses and legal documents are required is essentials for a successful expansion. Expansions take time to be profitable so it’s best to be conservative when forecasting break-even time, don’t expect and instant return on your investment.
- Discounting the importance of cultural differences
Sadly soft skills such as business etiquette are often overlooked when it comes to international expansions; however they play a significant role in the success of your business. In order to enter a new international market you need to be able to build contacts and make the right connections. Networking internationally can be tricky especially when customs and traditions vary among cultures. It’s important to fully understand the differences between your own culture and the culture in your market of choice. For example is the country you’re looking to expand in to a collectivist or individualist culture – do they focus on the Me or on the We? If you can’t form a rapport and network effectively with people from different cultures; expanding you business internationally will be a challenge.
- A lack of product flexibility
Sometimes you may need to change your product to better suit a new market. Entrepreneurs need to be aware that the look of their product will need to evolve to better appeal to its potential buyers. A great example of this is Coca Cola – everyone the world over knows about the soft drink, but a bottle of Coke doesn’t look the same in every country – it’s evolved to suit the needs of new markets. In North America we have large 2L bottles of Coke but some countries only sell 1.5L bottles of Coke- the reason? Simple – their fridges are smaller. If you want to be successful internationally you need to be able to adapt your product to suit your new market.
- Not changing your marketing strategy
What works well in one country may not work well in another, and this is especially true for marketing strategies. Some countries respond very well to social media marketing, while others respond better to direct selling. Effective marketing is extremely important when introducing a new product. Learn from local players and adapt your marketing strategy to suit the new market. Don’t get stuck in a cookie cutter strategy be open to new ideas and try a few different strategies until you find the one that works best for your particular product.
Praveeni Perera is an experienced entrepreneur having co-founded a training and consulting company catering to clients around the world. Her area of expertise is international expansions. You can connect with her via Twitter or LinkedIn