How To Overcome The Fear Of International Expansion

By Katya Puyraud


We all suffer from fear of the unknown. It’s a perfectly natural response designed to keep our ancient ancestors from doing anything stupid. Without it the human race is likely to have been wiped out in a series of ill informed decisions, over zealous curiosity and the occasional poke at things with very big teeth.

But too much fear can be equally as damaging. It can cause stagnation, paralysis and doesn’t help us reach our full potential. While many SME owners have stated an intention to expand their businesses overseas, the fear of the unknown is often cited as a major reason for not expanding internationally.

With unfamiliar markets, new regulations, unknown costs and administrative procedures, it’s understandable that it can be difficult to know where to start. But for ambitious small businesses that are not put off by the seemingly complex process (which frequently turn out to be less complicated than first imagined), there can be very profitable rewards.

Benefits of international expansion

  • Improve your domestic competitiveness
  • Increase sales, revenue and profits
  • Minimise risk by not relying on one market
  • Reduce seasonal market fluctuations
  • Enhanced potential for business expansion
  • Sell excess production capacity
  • International trade could improve the chances of taking your company public.

As with most things, research and education can go some way to alleviating any feelings of uncertainty. Going through an effective due diligence process can help address some of the more common concerns.

An unfamiliar culture

In a report by BRICM, 84% of SME owners stated that understanding a target market’s culture or language is important or very important in determining its attractiveness. Familiarity is often why English-speaking businesses often opt for expansion into the US, UK, Canada and Australia.

Additional data from the Grant Thornton International Business Report, a survey of more than 2,500 business leaders in 36 countries, found that nearly 75% admitted that they chose a foreign market based on gut feeling. However this may not always be best for your business and the greatest opportunities may not always be found in a country with a similar cultural background.

For example the sheer scale of China has made it an attractive option in recent years and cultural differences that were initially perceived as a problem, may mean that your product or service has less competition than the more familiar markets of US, UK & Canada.

Areas to consider when conducting any in-house research on potential audiences would include:

Market Assessment

  • Size
  • Segmentation
  • Growth

Identifying Customers

  • Customer types
  • Target organisations
  • Individual names and titles (B2B)

Competitive Assessment

  • Competitor types
  • Key competitors
  • Value proposition

Employing a local resident, particularly during the early stages, can quickly provide knowledge and understanding of any important cultural considerations. Having an employee with a pre-existing network of local connections can also help with winning new business, customer service and provide reassurance to customers that they have a local representative they can call in an emergency.

Not sure which country to choose

While this should never be the sole consideration for selecting a country, certain countries and cities are better suited for particular industries.

San Francisco, London & Berlin all have a thriving tech scene, the eastern European countries of Poland and the Czech Republic have low manufacturing costs and the “Made in Paris” brand associated with apparel can have an immediate impact on a products desirability.

Determining what your business needs first before deciding on a country can help you think differently about the options available to you.

Diverting time between locations

Through the use of technology it’s perhaps more possible than ever to take a small business into international markets. Key employees can literally be located in any part of the world and as long as you develop robust management and reporting processes that monitor the quality and quantity of work produced, it’s now possible to effectively run a business without constantly being on site.

Prior to any expansion you can map out all of the businesses and management processes you’ll need before researching the online tools that will enable you to effectively manage your business. There’s a wealth of options to choose from but popular tools can include:

  • Cisco’s Web-ex: Video conferencing and the ability to share desktops
  • Hubstaff: Time tracking software that enables you to access data about what your employees have been working on.
  • Google Drive: Google Docs will allow colleagues to share important documents and files that are updated in real time.
  • Trello: Project management tool for workflow and ideas.
  • Slack: Instant chat between employees that includes integration with Google Docs and Twitter.

Financial concerns

After the global recession many governments granted financial support measures to not only help grow the domestic economy, but also to encourage SMEs to their country. This is particularly common in economically disadvantaged areas where the financial support is often used to help boost the local economy.

For example Germany offers governmental loans and grants of up to 50% for SMEs (under certain conditions) and there are plenty more opportunities for financial support throughout the world.

While understanding all the schemes available can be time consuming, partnering with someone who has experience in these areas can ultimately help you get financial support and your overseas business off the ground.

The competition is too expensive

It’s important to carefully examine your pricing strategies in order to make a profit without pricing yourself out of the market. While some countries may not be suitable for you pricing model, others may be ideal.

Pricing can vary enormously depending on which country you’re looking at. To get a clear understanding a good strategy would be to look at “landed costs,” which include the duties, taxes and fees charged by countries when goods arrive.

According to a study published by the Institute for International Economics, companies that expand internationally not only grow faster but are nearly 8.5 % less likely to go out of business than those who don’t. Arguably this is much greater fear for most business owners than the possibility of international growth, and by being open to all the possibilities available you may just find that there really are no serious fears that are preventing you from turning your ‘local’ business into a ‘global’ one.

This post was written by company formation agent Euro Start Entreprises. Helping businesses and entrepreneurs open and expand their operations throughout the UK, Europe, US and the Emirates. Follow us on Twitter.

Image Source: “Scary Halloween Night” by digitalart,

The post How To Overcome The Fear Of International Expansion appeared first on Blogtrepreneur – For Busy Entrepreneurs.


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