For many business owners, taking their venture abroad is a long-term goal. Not only does expansion into the global markets open up an entirely new customer base, it also opens the business up to numerous benefits. Stagnancy is the number one killer of businesses. In order to get to the top and remain there, a CEO must be open to change. If your business has become stagnant in its niche, it might be time to expand overseas, even if you are turning a great profit. Here are five reasons why you should consider taking your business to the next level – the global stage.
1. Increased Market Presence
Naturally, taking your business to other countries boosts your market presence. The more places you offer your product or service, the more customer base you tap into. According to The Business Journals, the United States is home to only 4 percent of the global consumer base. That’s right! You’re missing out on 96 percent of the world’s consumers if you only offer your product or service in the States. There are 170 million customers in Europe alone, and even more in Asia. This is why major corporations like Coca-Cola, IBM, Nike, and Starbucks have established strong overseas presences. They are tapping into some of the most powerful markets in the world. Is it time for you to do so, as well?
2. Increased Product Diversification
One benefit to expanding your market is product diversification. Different cultures fall in love with different things, and one product will sell well in the States, whereas another product will sell better overseas. Major corporations tap into what’s popular not only in the U.S. but also abroad. This allows them to design new products or services they can sell elsewhere, which, naturally, boosts their bottom lines. Perhaps you have an idea that was shelved because the initial demographic research suggested the product would not sell well in America. Would it sell well elsewhere? If yes, expanding beyond the States allows you to offer products in their appropriate marketplaces, which buffers your business against loss. A slow sales period in the States can be made up by a hot sales period in the U.K.
3. Increased Asset Diversification
Another way to buffer against loss is to diversify your assets. When you tap into the perks other countries offer to attract foreign business, you tap into an entirely new investment opportunity. For example, Sjamsul Nursalim of Indonesia built his multi-million-dollar empire initially in his home country. He is a coal, retail, and vehicle tire magnate. To diversify his portfolio, however, Nursalim decided to tap into the real estate market in Singapore. A country that is undergoing incredible economic growth, Singapore is a hotbed for property development, and Nursalim has invested in this medium. When you expand overseas, you diversify your assets, which if successful, increases gains and mitigates loss.
4. Increased Competitive Advantage
The stronger you are within your marketplace at home and abroad, the more you increase your competitive advantage. Obviously, you must make certain any expansion is viable, and this includes properly researching each foreign location in which you’d like to expand. The U.S. Department of Commerce is an excellent resource to utilize. It continually updates information about how products and services perform throughout the world. You must also research a nation’s import and export laws and their rules and regulations surrounding foreign business. Once you have your ducks in a row, however, you will be able to tap into a portion of that 96 percent consumer market and boost your advantage over your competitors. Wouldn’t that be nice?
5. Increased Employee Pool
Finally, nobody would argue that the United States of America is filled with tremendously talented people, but the rest of the world has top employees, too. Expanding overseas means you get to tap into a greater employee pool, and you may find that some of the talent abroad rivals anyone on your staff today. You can utilize this talent to help you open and run new locations in each respective country, or you can tap into this talent and recruit some of it to your headquarters in the U.S. Either way, the more people you have to choose from, the more likely you are to find the best person for every job opening you have. As with an expanded consumer base, an expanded employee base benefits your company over your competition. The best employees make for the best business.
Of course, you cannot expand abroad if you do not have the operating capital to do so. Bear in mind, it won’t just cost you money to expand, you must also be able to absorb losses in the new locations until they turn a profit. Many business owners only open one new location at a time. This not only decreases the absorbable loss, it also helps them understand how to expand overseas. Once you get the hang of it and each location starts to take off, the world really is your oyster.