International trade is on the rise, with more businesses looking to take advantage of the benefits of overseas markets by franchising their business – like less saturation and the opportunity for reduced manufacturing costs.
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But expanding into new markets isn’t without its risks. Those who neglect to properly research the market and culture of their new territories are setting themselves up to fail.
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Mike Ryan, Chief Executive at PACK & SEND, shares the key considerations for businesses looking to make the most of international trading opportunities.
Market research is a must before doing business in any new territory. Those who go in blind risk wasting time and money on a region that doesn’t have a rich consumer base, where the industry is dominated by an existing company or where there isn’t the resource to produce their product or service.
Once you’ve shortlisted your new territories, conduct consumer research to make sure there’s a demand for your service. This should include a mix of primary and secondary research to give you the most accurate picture.
Begin with first-hand consumer research like focus groups and interviews, in which you can chat directly to the local target market about their needs and those of the wider community. Then use secondary research like public data records and business reports from the region to validate your findings.
Local experts will be the key to your success, from research to implementation. Consider working with a regional business expert for consultancy as you roll out your new location. Their knowledge of local marketing and manufacturing laws and current competition will help you avoid costly pitfalls and make the transition a smooth one.
They’ll also help you understand the culture of your new area, which can make or break your business. Consumers hold the cards when it comes to your success and won’t hesitate to reject your brand if you don’t share the same values.
Conducting thorough research on the region’s political and religious history, with the help of native experts, helps you avoid targeting areas with a clash of cultures.
You're always going to face competition, but those able to conduct a thorough competitor analysis before moving into any new region put themselves in a strong position to challenge the status quo or even avoid wasting time and effort targeting an overly saturated market.
Start by identifying the key players in the market and consider your similarities and how your offering differs. Can you provide elite customer service? Are you able to negotiate a better price than the competition? If those that currently dominate the space are global businesses, can you offer a local speciality or expertise?
This is where partnering with a local expert can also prove valuable. When positioning your unique selling point, you need to make sure it provides value to your consumer. Native business experts can help you tap into the needs of local people and businesses, giving you the edge over competitors.
For example, when Uber moved into the Chinese market, they partnered with two Chinese companies, not only giving them access to their consumer base but also helping them build their brand and reputation with the help of a recognised brand.
This allowed them to conquer a market where other large US companies have failed – with their US reputation counting for little in China due to its international firewall regulations.
Agility is key when moving into new markets – when you spot a gap, you need to move before your competitors. So, in the early stages of your venture, outsourcing tasks to freelancers and dedicated companies can help you move quickly.
This may mean more time-consuming tasks – or jobs which require specialist regional knowledge – like payroll and administration are outsourced, leaving senior employees to manage key roles like marketing and sales as you look to grow your reputation early on.
Consider Franchising Your Business
One means of expanding into new territories is franchising your business - working with a qualified franchisee to open a branch in a new region. While you’ll oversee the fundamental regulations for each franchise, the individual franchisee is given autonomy to run the franchise day-to-day, including marketing, hiring and more.
The key benefit to franchising your business internationally is partnering with a local franchisee who understands the market. When it comes to region-dependent tasks like local pricing decisions and providing customer service in the local language, franchising takes the hassle out of hiring staff and managing everything yourself.
Plus, franchising allows you to expand your portfolio without losing key employees to overseas markets. A common roadblock to international expansion is negotiating with existing employees to relocate abroad and assist with the growth of your new branch.
However, finding a native franchisee means you don’t have to settle relocation bonuses or lose senior employees to your new region.
Finding the right franchisee in different regions can be challenging – you need to make sure they have relevant experience and understand your business’ values and vision.
Paid online adverts allow you to target your search to those who’ve previously looked at franchising opportunities, getting you in front of the right people. Local directories and direct mail can also help you build up a list of potential candidates.
Compliance Is Key
Each trading region has its own regulations on tax, products, sales and marketing and more. And they’ll likely differ from your native market. You must be aware of the trading laws in your new market so you can stay compliant from the day you go to market.
Failing to comply with local regulations could see you fined or even refused a trading permit and can be especially costly in the first few months of trading when you’re trying to grow your presence and build consumer loyalty.
This is where outsourcing is also effective. Delegating complex legal tasks like payroll and compliance to specialists not only helps you avoid potential fines but also frees up your decision-makers to be reactive in your initial months of trading.
Plus, if the worst happens, you don’t have to worry about making staff cuts or redundancies. Once you’ve reached revenue targets or time milestones, you can think about bringing these tasks in-house and employing your own dedicated teams. This will be cost-effective as you grow your presence in the new market, either by opening new branches or simply by growing your team.