If you have a small business in the United States, chances are you may be looking to expand into international markets. Perhaps your current market size has plateaued, and you’re struggling to generate more growth, or maybe you’re looking to grow your business from the start by earning revenues on an international scale. Regardless of your reason, there are steps you can take to get started with going international with your small business. The first step? Don’t go at it alone!
International Markets Are Still Attractive
If you’re still not convinced that overseas markets are worth your time, consider another reason: China, Canada and India are now three of America’s top four export destinations—the European Union is number five. It’s a diverse list in terms of products sold as well. For example, American businesses export more than $6 billion worth of gold jewelry annually to India; they also sell more than $7 billion in computers and components there each year. Selling internationally isn’t easy, though; you need an international distribution network and different supply chains for each market.
For example, Turkey ranked 11th among American export destinations in 2013. It’s an extremely important market for U.S. businesses—they exported more than $1 billion worth of civilian aircraft and engines there that year, along with nearly $2 billion in computers and computer parts. U.S.-Turkey trade is a two-way street: American companies exported almost $500 million worth of machinery and about $800 million in automotive products to Turkey as well.
Think Globally, Act Locally
International small businesses face many challenges. First and foremost, they have a hard time penetrating foreign markets due to cultural differences, language barriers, lack of local expertise and knowledge. When it comes time to actually set up shop in another country, few small business owners are equipped with the necessary resources.
American business owners should begin planning for international success before ever setting foot on foreign soil; just as important is understanding how such a plan needs to be adapted once your company is underway. For example, there’s little benefit in trying to sell fried chicken overseas unless you change it into something that resonates better (in China, Kentucky Fried Chicken changed its name).
Research and Get Ready
Before you consider how to go international, you need to know that there are different strategies for small businesses, depending on what kind of company you have. If your business is already selling products or services abroad, then you probably already know how best to approach entering new markets.
But if it’s not yet selling outside of a local market, or even a regional one, there are some other considerations before jumping into exporting: For example, will customers in another country be willing and able to pay more than they would domestically?
And if they’re less able because they live in a poorer country that doesn’t have as much purchasing power relative to yours, then maybe another strategy—such as opening an office abroad—is more appropriate.
Once you know how to best enter a new market, you’ll need to prepare your business for that effort. That includes doing some research into what it will take to operate in another country, such as figuring out whether there are import and export taxes you’ll need to pay or if there are other regulatory concerns like labor laws that differ from one country to another.
Develop a System for International Sales
Think outside of your local market when you’re looking for an international small business to start. First, you need to figure out what type of product or service your company will provide and then research where you could sell it in a way that makes sense—both culturally and logistically. If you’re in a situation where experts with experience in marketing in other countries might be able to give you helpful insights, be sure to speak to them before jumping into things blindly.
For example, suppose a family-owned real estate firm wanted to expand into other investment areas (not just homes). In that case, they could talk to people who manage things like industrial or commercial real estate properties. In addition to being helpful in decision-making regarding current and future projects and target markets, this advice can help determine the best way to establish relationships with new contacts via collaborative efforts.
Selling Is Still About Relationships
Although it can be difficult for your target audience to find you in a sea of competition when you’re an international small business and want to sell outside of your borders, this doesn’t mean that it’s not worth the chase. It’s true. Studies show that by 2018, international sales will account for as much as 60% of all retail sales. There are certainly challenges, though, for doing business overseas. You will need to plan ahead if you want to venture outside the country.
In addition, if you’re interested in going global and expanding your small business outside of your current market, you’ll need to understand that different cultures have different preferences when it comes to their shopping habits.
While Americans might be more likely than some others to shop online, international small businesses that cater specifically to certain countries or regions may do better by focusing on selling in person rather than online. You should also learn about each country’s unique import and export regulations so you can do business successfully. After all, not knowing what’s required of a seller can get you in trouble!
With consumers looking for something new and exciting all over the world every day, your small business has a lot of potential for growth if you put effort into learning how to go international.
Don’t Forget about Delivery
For example, if you’re selling bamboo flooring online, then there are places outside of your immediate country where your products could be delivered. Maybe there’s a market for your product in South Africa? Japan? Brazil? Maybe you can start shipping directly to their customer base and make some good money in foreign markets. Why not look into it? If customers are willing to pay, you can give them what they want!
Before getting started, though, you’ll need a few things. One is a freight forwarder. If you don’t know what that is, it’s someone who specializes in shipping your goods from one country to another. They can help you set up packaging and labeling so your product arrives safely overseas, negotiate customs regulations, and ensure that any legal issues or taxes are taken care of once your product arrives at its destination. It can be a real life-saver when shipping overseas and saves you time as well since they have experience doing all of these tasks with companies just like yours!
Keep it Legal!
The U.S. is one of a handful of countries that actively enforces copyright protection, but going legal isn’t just about avoiding fines and lawsuits—it’s also about communicating ethically with your customers. Protecting your work and enforcing violations sends a message that you stand behind your business and your product, which will make you look more professional and give you an edge over competitors who cut corners or take risks by ignoring laws.
Keeping up with all international laws regarding intellectual property rights (which, in many cases, differ from country to country) can be difficult; it’s best to hire an attorney familiar with these laws for your area and applicable for what products you are selling online.
Balance Risk and Reward
You can take two basic approaches when going international: go big or go slow. For most small businesses, a cautious and calculated approach will work best. Start by researching how other companies have approached expanding internationally, what they did right, and what they did wrong. Then use that knowledge to determine where you should target your expansion efforts first (and which countries might not be ready for your product). Once you’ve established yourself in one territory, you can begin to spread out.
Starting a business internationally can seem like a daunting task, but it doesn’t have to be. A little research and planning can go a long way in helping you avoid costly mistakes. Start by assessing your finances and estimating how much time and effort you are willing to put into expanding internationally. Then use that information as your guide for deciding which countries should be first on your list. When evaluating potential markets, focus on factors like cultural familiarity (or lack thereof), language barriers, population growth rates, and any existing trade agreements.
Best Industries for International Expansion
The question of how small American businesses can go international is a simple one. For example, suppose you’re in an industry where regulations make it difficult for foreign companies to do business in your country. In that case, you can be a prime candidate for expanding overseas. You’ll have less competition because fewer people and businesses do what you do. As such, you’ll have more freedom and flexibility when dealing with local regulations.
For example, if you’re in the healthcare business and there are strict rules about who can purchase and sell your product or service, then going international is a viable option. You won’t have any competition from local companies because of those regulations, and you won’t need special permits or licenses that limit where you can sell your goods. But before going international, make sure you can fulfill orders from every country and that your shipping costs aren’t too high. You could lose money quickly if you don’t keep these logistics in mind when expanding overseas.
A Few Industries with Great Success Expanding Internationally
In today’s global marketplace, it’s not always easy for a small business in America to grow its client base overseas. If you’re looking to branch out into foreign markets, think about industries that have a proven track record of success. According to a study by Paychex, the highest exporting industries tend to have government-subsidized export assistance and professional export organizations. These are just some of the U.S. businesses that benefit from international trade.
- Automotive Suppliers – Exporting auto parts is one of America’s most successful industries. Consider attending an expo or trade show—they’re usually held in major cities around the world—to meet local automotive manufacturers and introduce your product line.
- Restaurant Chains – According to Forbes, you may find great opportunities on other continents when you follow McDonald’s’ lead: nearly 20 percent of their outlets are located outside North America. The same can be said for Starbucks coffee shops. And while Pizza Hut has more than 6,000 locations in 90 countries across all seven continents, both Dunkin Donuts and Subway operate abroad as well.
- Agriculture Products – When exported at full value, farm products make up a large part of American exports. For example, per USDA estimates cited by Fortune magazine, over $65 billion worth of farm goods were exported between January 2015 and June 2016 alone; with soybeans being number one at $21 billion). To get started working with agricultural products on a global scale, consider attending a symposium dedicated to agribusiness hosted by companies like Rabobank–one featured speaker will even advise attendees on how to Grow Your Agribusiness Globally.
- Health & Life Sciences – From health care to pharmacy services and laboratory equipment, America dominates these fields due to our pharmaceutical industry’s specialization. There are many conferences around the globe featuring leaders in science and medical technology that could serve as opportunities for collaboration with scientists in various regions who may want help adapting a solution developed domestically for use internationally.
- Information Technology Services – IT Services provided throughout Europe—particularly Britain–helped propel IBM’s revenue past 80 billion dollars last year. While IBM does have offices all over Europe, it only boasts one location outside of its home country, so there is definitely room for expansion or acquisition if you’re planning on going big time!
Taking Your Small Business International
You don’t have to be a large corporation or even a corporation to go international. If you do business in other countries, here are some tips:
- Investigate your competition by exploring how they advertise their products and services in that country. Study their strategies and learn from them.
- Translate your website into each of your target languages.
- Create a media kit for each language; include information about you, your company, your mission statement, customer testimonials, business history, and any awards won.
- Research your target audience—who are they? What do they like? Where will you find them?
- Hire someone who can speak in your target language. Not only is it critical that they understand your message but speaking English as a second language carries with it an air of authenticity—especially if you’re in a competitive industry like fashion or technology. When consumers see your representative speak their native tongue, they’ll know that you take them seriously.
- Investigate your target country’s trade regulations and laws before setting up shop there.