Once you’ve established that you’re ready to expand internationally, the next steps are figuring out which international markets to pursue, how to enter those markets, and which timeline is most appropriate. This article gives you a framework and a top-step process to help you create a prioritized list of target countries. How to select the best country for international expansion.
Many small business owners decide to take their business international and attempt to enter four or five countries at once without achieving success in any of them. They may react to a lead via email from Sweden, follow up with a person they met at a trade show in Germany, or produce an order based on a check that arrives from Dubai. All of these scenarios offer international expansion opportunity. However, each will require a concentrated team effort to get the products to the customer with the expectation of repeat business. Without a strategy, such as selecting one market to penetrate, the likelihood of success over the long term is fairly low.
This step in truly understanding the countries you’re considering is researching the competitive landscape. This means looking at the entire ecosystem, including your competitors (which may differ from your potential substitutes in the eyes of your customers), the presence of current or potential partners, the existence of complementary products and services, the type and availability of distribution and marketing channels, and of course the preferences and habits of your customer base in that market.
Establishing an entity in a new market is a major step for any business, but it isn’t the only option. For companies looking to hire marketing or software development support, project-based contractors may be the most effective employment method. If looking to test the market with a small sales team, international PEO is a solution that will put compliance at the forefront. It can also mitigate risks associated with global expansion. Moreover, a company can seamlessly transition into entity establishment once its employee count makes the most financial sense to do so.
But for companies that are certain they want to establish an entity and are expanding into a country that offers a low corporate tax rate, establishing a permanent presence through entity establishment may be advantageous and not just financially. Establishing an entity may cost more upfront, but it can be seen a sign of credibility and commitment to become a permanent part of the market by the local community.
In fact, simply going through these steps will deepen the knowledge of potential markets for you and your team members and help you better determine if you’re operationally prepared to take the next steps toward international expansion.