By Paul Sleath, CEO at PEO Worldwide
When you’ve achieved a certain level of success in business, you’ll probably want to start thinking about expanding — maybe even internationally. In fact, in today’s global economy, you SHOULD be thinking about global expansion.\
While a growing number of companies are expanding overseas, many are yet to take the leap. However, expansion is crucial to increase profits and reach new customers.
Expansion could involve increasing physical locations or offering more products or services. For example, you may want to diversify your revenue stream so that you aren’t reliant on selling just one core product or service. Equally, if your business started on a relatively small scale, you may NEED to expand to handle an increase in volume.
When you’ve exhausted growth opportunities at home, global expansion can help to grow your business. If you’re on the fence about taking your company global, consider these key benefits of international business expansion…\
Explore new markets
Once your company has been successful in your home country, it’s time to look at markets overseas. For many businesses, global expansion offers a chance to conquer new territories and reach an entirely new customer base — meaning you’ll be able to generate more business and increase sales.
Gain a competitive edge
Expanding abroad allows you to get out of an oversaturated market — helping to reduce the effects of tight competition. Plus, businesses that expand into markets where their competitors don’t operate often have a first-mover advantage, which allows them to build strong brand recognition to support future business ventures, such as contract negotiations, new marketing campaigns and further expansion.
Opportunity to diversify
Keeping your business in the domestic market can limit profit potential and leave you exposed to market changes. Taking your business international allows you to diversify your assets, an action many businesses take to protect their bottom line and stabilise their revenue. For example, if the market is slowing down at home, being able to tap into a global market will help cushion the company through unforeseen events or during difficult economic times.\
Access fresh talent
Another reason to expand overseas is the opportunity to access new talent pools. Hiring international employees can bring a whole host of advantages including advanced language skills, diverse educational backgrounds and new perspectives. Plus, local workers will have the expertise needed to communicate with and service customers in that country (without the complications of time zones and language barriers).
Many companies have found it advantageous to move some of their operations to other markets due to varying statutory employer costs in different countries. Equally, it makes financial sense to have a base in the country where you’re supplying your products or services. Economies of scale also play a part here. As your business grows, you’ll likely be ordering larger quantities — meaning vendors and suppliers will be more incentivised to provide you with discounts or strike up a good deal.
Global expansion is not without challenges…
While there are plenty of fantastic reasons to expand internationally, there are also drawbacks. Expansion into new territories isn’t something to take on without thorough research into the market and a good understanding of the pitfalls of growing too fast.
Before entering a new market, it’s also vital to consider the regulatory and cost hurdles associated with employing workers overseas. Every country has its own employment laws to contend with — which can be daunting for even the savviest businesses (and a major obstacle to expansion across borders).
This is why many companies choose to engage a Global PEO when expanding internationally. If you’re unsure about managing payroll overseas, onboarding new employees or completing visa applications, an International PEO can take full responsibility for all employment issues, improve costs structures and reduce risk by keeping you on the right side of compliance.