Have you heard of Slack? It's a widespread messaging tool that facilitates business communication. We at Corefy use it daily, the same as other 12 million active users worldwide. In January 2021, Slack was acquired for $27.7 billion. In 2012, it didn't even exist.
Isn't it astounding to understand that many of today's most renowned, profitable, and globally omnipresent businesses started as pet projects not long ago? Their journey has been primarily facilitated by the possibilities of the internet combined with well-crafted business expansion strategies.
For this article, we've carefully analysed numerous cases and studies to derive the best business expansion practices, gathering them into one blog post for your convenience. Here, you'll also find statistical data on why businesses usually consider expansion, critical indicators of expansion preparedness, and challenges occurring while expanding. And in the end, there are recommendations for taking a shortcut and accessing new markets faster.
Many companies believe that entering a new market would unveil new opportunities, help attract more customers, and earn more money. According to a survey by VelocityGlobal, more than half of tech businesses in the US and the UK named growing their customer base as one of the main reasons to enter new markets.
For some, taking their operations global is a must to remain competitive. Scaling up and accelerating operations is the second most crucial factor for most companies.
Besides these reasons that are on the surface, numerous others are not that evident. For instance, expanding to access talent is also a common practice in tech. Interestingly, this reason was mentioned by American companies 10% more often than by British ones. In today's uncertain time, some businesses plan expansion to diversify their portfolio and alleviate the risks, namely the threat of trade barriers. Merger and acquisition deals also account for a considerable share of respondents' answers.
Let's summarise by saying that businesses believe access to foreign markets would make them more successful. That's what 73% of senior decision-makers confirmed in GoCardless research.
However, not every business is ready to go global, as it requires profound preparation and specific settings.
5 indicators that you're ready for expansion
Plenty of signs indicate it's time for you to conquer a new market or increase your share of existing ones.
- The industry you're in is gaining traction. We hope you do track the progress of the industry you're in. If so, you'll know if the market is saturated or has a place for growth. Analysing and predicting market trends is also helpful and may allow you to seize occurring opportunities earlier than your competitors.
- Your company is ahead of the plan. If you've been outperforming your benchmarks for a few months, it may indicate either the chance to accelerate your activities or the weakness of your benchmarking. Make sure it's the first one.
- You have sufficient resources and a solid growth strategy. You'll need time, money, and endeavour for a successful expansion. Calculate if you're capable of investing in your growth now.
- You've gathered a strong team of professionals who enjoy working with you. We at Corefy believe the team is what makes the difference. Reliable and committed colleagues who support your aspirations double your chances for success!
- Your reputation crossed the borders before your business did. If you're one of those businesses people crave to have at their location, congratulations — you're doing great! The demand and the word-of-mouth support would facilitate your expansion immeasurably.
The main challenges businesses face when expanding
Let's not get too romantic about international expansion. Besides all the good that going global can bring your business, there's also a fly in the ointment you should be aware of.
First, regardless of your team's greatness, expanding without hiring additional personnel in the new markets is hard, and international recruiting is tricky. Even if you don't need to hire new people abroad (which is unlikely), you'll have to relocate some of your current employees. It is a challenging task, too. Not everyone in your team may want to migrate to the new location. For those who would, you'll have to provide favourable conditions, take care of the documents and procedures, and cover all the expenses.
Secondly, the new jurisdiction may charge larger taxes than you pay in your original market. Prepare by analysing which taxes, fees, and tariffs expansion to a particular country incurs. Additionally, legal conditions for your industry may be stricter in the new region, or you may have to comply with some specific local regulations. Moreover, the payroll process can differ, and many businesses consider it challenging.
It's great to have a local expert consultant who has experience in successfully bringing companies to their market. Still, finding and hiring such an expert is a formidable challenge itself.
And last but not least, accepting payments from foreign customers and managing international payments would require a study. A lack of expertise in the topic can damage your expansion, and all your other efforts risk falling flat. For 39% of businesses, the complexity of international payments is what's holding them back.
How to enter new markets faster?
So, how to cope with all the challenges and access the new market faster?
Following these four recommendations will boost your expansion.
Consult with a local expert
As we've mentioned, finding a local expert may be difficult and pricey, but it undoubtedly pays off. A person or a company with proven local expertise will prepare you for the market entrance much faster. They'll help you understand local regulations and taxes, find the best partners to start, teach you about local business culture, and provide critical insights into the new market. It's a double win if you find an expert with experience in your niche.
Prepare infrastructure & Processes
For a confident start, think through the workflow for your foreign operations and plan all the processes needed. Organise a team for your new market, buy or lease necessary equipment and software, carefully prioritise the tasks for the first weeks, and decide which processes would be handled by your local team and which would remain the headquarters' responsibility.
Compliance with your new market's regulation is a must, and you can't tune out of it. The local expert would help you deal with compliance, but if you don't have one, consider hiring lawyers or compliance officers with local legal expertise.
Find a partner to handle payments
The right payment partner can considerably soften the load for you. Besides giving you access to payment methods needed for expansion, a good payment service provider will also offer a solid toolkit for efficient payment management and optimisation. They can also unload the burden of complying with payment security standards, like PCI DSS, and implementing new payment-related technologies, such as 3DS2.0, P2P routing, cascading, etc.
For instance, Corefy is a one-stop shop for growing businesses. Our solution not only allows connecting new payment methods in a few clicks but enables working with multiple payment providers conveniently, managing everything in a single place. We сontinuously work on upgrading our platform to ensure our clients get the best-in-class experience and technology.
Moreover, our team deeply understands the global payment market and has experience dealing with numerous providers and acquirers. We use that knowledge to assist our clients as they scale up, suggesting the best solution for each payment challenge. We would be delighted to help you out on your expansion journey!
Book a demo to meet us, learn more about how Corefy can help you handle payments, and have all your questions answered by qualified specialists.