Would you like to expand your business and access new markets? Then you’ll want to think about expanding into global markets.
U.S. companies that are only selling in domestic markets may miss out on a significant opportunity for growth. In fact, according to the federal government, an estimated 95% of the world’s consumers live outside of the U.S. For companies serious about growth, global markets are an opportunity that’s worth considering.
Formulating a strategy for going global requires the same kind of planning and market analysis needed for success in domestic markets.
What Is Global Expansion?
Global expansion refers to a company moving from their home market, or local market, into international markets. It’s a great opportunity for any company that’s looking to expand their operations and capture a wider market share.
Steps to Enter an International Market
Learn how to expand your business globally with these 10 steps for international business expansion.
1. Develop a game plan.
Formulating a strategy for going global requires the same kind of planning and market analysis needed for success in domestic markets. There are also some nuances that factor into the equation, such as logistics, customs duties, and currency conversion. But the good news is that there are a number of free or inexpensive resources available to help you get started.
2. Identify the product or service you have to sell.
It may seem self-evident, but you need to have a viable product or service, and know there is a market for whatever it is you hope to export. In general, many American exporters already have developed a domestic market for their products or services before venturing overseas.
3. Develop an export plan.
A free government resource to help you prepare an export plan is the Basic Guide to Exporting. The guide includes questions that potential exporters may want to ask as part of the export plan development process. By answering these key questions, you may gain a better understanding of everything from product and licensing requirements to logistics and pricing strategies.
4. Conduct market analysis.
As the Basic Guide to Exporting notes, some companies rely on secondary data sources because they are more readily available—and less expensive—than conducting primary market research. Whether you conduct your own research or rely on secondary data sources, conducting market analysis can help you to determine what the top countries are for products similar to yours. Other research should focus on your price competitiveness, potential distribution channels, and duties, taxes, or regulations that may constrain entry into a particular market.
5. Segment potential export markets.
Another key component in assessing export opportunities is to estimate the potential size of your market in the countries you have targeted. Market segmentation can provide insight about how many potential customers you have in a given country and, more importantly, how to reach them. One resource to consult when developing an export marketing plan is Exporting: The Definitive Guide to Selling Abroad Profitably by Laurel Delaney, founder of international consulting agency GlobeTrade.
6. Assess your competition.
Whether you sell in the United States or in some other global market, you need to understand who your competitors are. Every export market will have a unique set of competitors and understanding the competitive landscape is important before trying to sell in another country. In fact, a detailed competitive analysis should be conducted for every potential new export market you are considering. One tool for assessing the competition is the book Import/Export Kit for Dummies by John Capela.
7. Determine if there are packaging, labeling, or regulatory requirements.
Labeling, for example, may need to be customized for a particular market, and the term "Made in the USA" may not be acceptable on the packaging. One best practice is to plan on labeling products in the language of the country you are selling to. It is also important to determine if there are special labeling requirements, as is often the case with food and pharmaceuticals exports.
8. Use trade shows to test markets for your product or service.
In addition to traditional market research, one way to test the potential for your products overseas is to participate in industry trade fairs in the markets you are considering. One starting point for identifying potential trade shows is the Trade Show News Network website.
9. Test your strategy in a single market with low barriers to entry.
U.S. companies often start expanding internationally by exporting to Canada. Geographic proximity, along with cultural and language similarities, help make Canada a good proving ground for American companies venturing across the border for the first time. Regardless of which market you plan to enter first, set realistic goals and take baby steps first.
10. Leverage free and low-cost resources from government agencies.
The Small Business Development Center (SBDC) network is one starting point for new-to-export companies. Many states also provide free counseling for companies interested in exporting. A list of those resources can be found on the State International Development Organizations website.
A version of this article was originally published on January 25, 2017.
Photo: Getty Images
