Typically, growth opportunities on home soil only take a business so far.
At some point, any push to expand will need to consider opportunities overseas to grow bottom line.
This can be challenging for small and medium-sized businesses. That’s assuming that the political, social and economic climate in the overseas market is stable.
Here are four tips to take the uncertainty out of doing business abroad:
1. Know your market with due diligence
Determining that an overseas market will be as receptive to your products or services as customers at home is a naïve assumption. Everything from cultural to legal hurdles (foreign ownership rules, in particular) and fierce local competition can dictate the success of your overseas venture.
As a new operator, look in-house and examine your business: kook at what your products or services deliver to each market. Do they have what it takes to be successful in the market? You also need to have a proven business plan; It helps to focus on one or two foreign markets at most, and ensure they offer low risk and high potential, as over-reach is a surefire way to derail your global ambitions.
2. Play the long game, especially with cash
Be committed to any overseas move across your entire business and have patience! It is not uncommon for companies who start in a new market find themselves working with negative cash flow for up to as long as five years. As such, be prepared to sustain operations if losing money, and even put aside funds for unforeseen challenges such as bureaucratic delays or currency fluctuations that could erase skinny profit margins in one fell swoop.
3. Utilise government resources
Certainly when it comes to exploring opportunities to do business in New Zealand, understand the advantages of investing in New Zealand, find out about the sectors and regions of opportunity and get a rundown of the economy and its regulations from New Zealand Trade & Enterprise.
The ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) aims to liberalise and facilitate trade in goods, services and investment between New Zealand, Australian and the ASEAN economies. It contains measures to improve the business environment and promote cooperation in a broad range of economic areas of mutual interest.
The Australia New Zealand Closer Economic Agreement (ANZCERTA) is one of the most comprehensive free trade agreements in the world. For more information, visit Trans-Tasman Closer Economic.
Also check out any grant and government funding opportunities which may be available to get your business ready for overseas expansion.
4. Understand cultural nuances
Strong relationships are always a helpful prerequisite for doing business successfully and do take a long time to nurture. Prospective customers want to get to know you, meet you and expect regular contact to develop solid working relationships. (A general rule is that it takes as many as 12 touch points in emerging markets to secure the deal.)
Language differences can be confronting, along with differences in work styles. That’s why opting to partner with a local business or use representatives on the ground that either come from that country or having someone on the ground to provide service and support and to explain cultural peculiarities is a definite advantage.
While it may be difficult, gaining a strong foothold in a foreign market can be a viable opportunity, assuming that your business employs the right due diligence and expansion strategy. Business owners need to invest heavily and tap the necessary resources to make key business contacts, set up distribution or supply networks, hire local staff or establish a local office or warehouse or manufacturing presence, navigate often complex legal and bureaucratic systems and sometimes attempt to operate in a different language with a divergent set of cultural, business and ethical standards.