Best Practices

Why a company would like to expand overseas? Challenges and Benefits.

Have you ever wondered why a company would like to expand overseas?
Gabriel Fairman
2 min

Have you ever wondered why a company would like to expand overseas? The answer is very simple: international expansion opens the door to exponential revenue growth. Each new country is pure potential from a revenue perspective. Like anything else, the closer you look at it, the more complex it becomes, but the fact is that new markets mean new opportunities.The first question is should my business look to operate in other geographies? And the answer is going to be again wishy-washy at best. Opening the door to another market means dramatically changing your operational overhead. You will need:

  • People to help you navigate the legal, tax, operational, and other implications of doing business in this new market 
  • Produce content for that new market, understand your consumer demographics in this new market, learn to hire in that new market, and how to maintain and grow your ops.

It really is what it sounds like: opening a big can of worms. It’s worth opening that can of worms if:

  1. You have leveled off growth in your home market
  2. Have credible evidence to believe that it will be easier to grow your business in this new market vs. to continue to grow it in your home market
  3. Have evidence that points to enormous growth potential due to local market scarcity, lack of competition, etc.

Tip 1  - Make sure that you have truly exhausted your domestic possibilities

It’s hard enough going through establishing your business in a new market when you have absolute confidence that it’s the right thing to do. If you do not have credible evidence that suggests that it is the right thing to do, push it out. Make sure that you have truly exhausted your domestic possibilities. It’s your home-court advantage. You know your country better than any other. You have a better feel for what price means, for how to think of your consumers, of your competitors, etc. Often people expand into another country either because:

  1. They have to deliver hyper-growth to investors
  2. They ran into a revenue generation wall and need to save the business
  3. They believe they found Eldorado or some lost city that will allow them to live forever with eternal fame and glory

And in my opinion, these are all terrible reasons to expand internationally. The best reason why a company would like to expand overseas is a combination of:

  1. A clearly established appetite for your product or service
  2. Enough product/service maturity that allows it to layer on an additional market without the excessive added overhead

So let’s say that you sell for instance a special kind of accounting software. People love your software in your country but after twenty years your growth has flatlined. It seems like it’s the perfect time to expand right? Could be but most accounting software is region/country-specific which makes it hard to take it to another country and continue to retain your edge without fundamentally changing how the software works or adapting it.

Tip 2 - Consider whether your product can be internationalized

It’s important to consider whether your product can be internationalized as is or if it requires deep modifications to thrive in another market.As much as you pay for market research, going into a new market is like starting from scratch. You run the business risk all over again and you need to be ready for the business to either take years to turn profitable in that geography or perhaps never turn profitable.

You are going into uncharted territory with your product and it’s important to embrace this regardless of the upside that seems to be waiting for you on the other side.It seems like we want to discourage you from taking your business internationally. Don’t get us wrong. :) We would love to translate your content and help you take on the world, but we are more interested in ensuring that you are making sound decisions that will ensure the longevity and prosperity of your business.This is why in my opinion if a company would like to expand overseas, it should:

  1. Start small - If you open up new territory don’t start off with a big office, lots of hires, and burn through capital like it’s 1999. Make sure you can start with minimum overhead as that buys you maximum time to learn the twists and turns of your new market, try different approaches, zero in on your consumers, find your marketing strategies and build a business with time on your side.
  2. Establish a framework that allows you to change and pivot over time. Maybe your home-market campaigns won’t be as effective, maybe the net margins won’t be what you need them to be, and you may even need to adapt your product to the “taste” of your new consumers
  3. Give yourself time. Most companies that expand into another market are not necessarily ready to deal with adversity from the onset. We expand typically driven by opportunity, but if you plan on being successful in a new market you need time to mature in that new market. A long-term strategy allows you to be ready for years of negative ROI without jumping ship too soon.
  4. Know when it’s time to pull back. Often one of the hardest business decisions is when to throw the towel. Too soon and you’ll never know what could have happened and too late and your losses may be catastrophic. It’s important to realize that no matter how great your product may be, it’s not necessarily going to be a worldwide hit. Some regions may not be ready for it, may not value it enough, or may be so difficult to navigate for a small market size that they are just not worth it.

So overall, I would be very cautious before expanding overseas. Before turning my attention outward to other countries, I would first make sure that I have exhausted all domestic efforts. Be aware that cognitive biases play tricks on our decision-making. The expertise of your local market can make it seem disproportionately complex while your superficial knowledge of another potential market may lead you to oversimplify the operational challenges. The converse can be true: your familiarity bias may lead you to be closed on your local market and oblivious to huge opportunities in the next neighboring geography.

Learn to walk before your run

If you operate in the US, chances are that you can augment the reach of your brand by adding another language without operating in another country.

This is a lower-stakes protocol you can engage in that will force you to go through the motions of translating your content, adding multi-lingual support channels, and dealing with the challenges of a multi-lingual brand before you are neck-deep in terms of operating in an entirely new territory.It’s like a warm-up exercise. It will show you where it hurts organizationally and forces you to create a stronger multilingual brand framework without the immense pressure of generating an ROI-positive operation somewhere else.

This may also lead to some very pleasant surprises and generate unexpected revenue streams by making your brand more appealing or accessible to previously untapped local markets.With the right framework in place, it’s relatively simple to layer on several languages and tackle many new markets in parallel. Conversely, without the right framework, it can be a nightmare to layer a single new language onto your operation.

So starting with less pressure and more time way before the need is actually there, will allow you to hone in on the framework. After that, smart small. Invest more resources in things that work and pull back from things that don’t work. Focus on geographies with the right combination of maximum potential upside vs. minimum operational complexity. Once you have your first triumph you will be a step closer to having real authority over all the best practices that will allow you to be successful anywhere with an appetite for your product.

We present to you a lot of reasons why a company would like to expand overseas. And of course, you can count on Bureau Works to help you in this special decision.

Try Bureau Works Free for 14 days

Commitment free, no credit card required.
Get started now
The first 14 days are on us
Free basic support