Have you been thinking of stepping up your business and going international? Here are some questions for you to consider before you jump in. Companies that can answer ‘yes’ to these questions have a much higher chance of going on to be internationally successful.
Is the company ready to enter a new market?
This may seem like a basic question, but it’s an important one. Before you get started, you need to be sure that your team of employees have the right skills and expertise to start operating in an international environment. For example, whether you are looking to sell your products in China or India, you’ll need a staff member or consultant who knows that particular market and how your product can compete within that market.
It’s also essential to ensure that the company has enough money to cover the costs involved in running your business internationally. For example, you may have to consider the costs of exporting and work out how you can pay those costs if you don’t make money immediately. There’s nothing worse than starting to do business internationally and then discovering that you can’t afford to keep the operation running.
Are you confident you have chosen the right country?
As you probably know, markets like China and India are all the rage at the moment, and the idea of expanding there can be very tempting. But if you’re just starting out, it’s a good idea to start with a country which is similar to the one your business is already operating in. The reason for this is that the more similar the market, the less unknown variables you are likely to encounter, and the less risk you take on.
So if you’re an Australian based business, you might consider making your first international venture in New Zealand. Why? Because it’s culturally similar, they speak the same language and traveling there (if necessary) is easier and most likely cheaper. Contrast this with China, which has a vastly different culture, speak a different language and is rather far away. While the Chinese market seems to be promising, you have to keep in mind that it’s riskier.
It’s also important to note that marketing strategies will largely be affected by the language and culture of the country you plan to enter. However, we’re not saying that new exporters shouldn’t go to unfamiliar markets, but it’s important to carefully weigh up the risks before choosing a country, especially if you’re just getting started.
Are you sure your product or service is right for the country that you have chosen?
So let’s say you’ve been successfully selling your product or service in Australia for a decade now. You may think that this is a ridiculous question, because obviously you are confident about your product or service, but don’t let your success in Australia fool you. You can have a great product, but if it isn’t valued by people in the country you’re targeting, it won’t make you any money, no matter the quality! Make sure that you do your research and find out whether similar products exist within the market you plan to enter and take a look at how successful those products have been.
If you sell multiple products, a good way of mitigating your risk is by simplifying your offering. In other words, you don’t have to launch all of your products into the new market all at once. You may consider testing the waters by launching just one or two products in a couple of major cities. That way you’ll be able to determine what works and what doesn’t, as well as make any necessary adjustments before you poor a ton of money into getting your goods out in the new market. If your initial trial is successful you can ramp it up from there.
Do you understand your customers in the target market?
So you know your Australian customers pretty well now, but do you know much about your potential international customers? Acquiring knowledge of your customers takes time, in fact years, and because you haven’t operated in your new target market you’re going to have to devise a plan to get to know those consumers. And remember, it’s a two way relationship! You don’t know them and they don’t know you!
What’s makes this complicated is that consumers in different countries have different behaviours, values, traditions, social hierarchies and spending habits. Anything from advertising channels to consumer behaviour and consumer confidence may be different. So as you can imagine, there’s a lot of research to be done.
The thing to take away here is that assuming a foreign market is the same as your home territory is a big mistake. When businesses expand into a new country, they need to identify what is different about customers in that country – before they start. Also, don’t forget to identify any legal rules and regulations your business may be subject to.
If you are interested in expanding internationally, speak to Steve Lockwood on 02 9299 7044 about our international business services.