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Expanding to a new market is an exciting endeavour. It is the next step in building an international business, exploring new leads, and establishing a new client base.
But how do you determine where to take your business?
Choosing the right location is the foundation for success, and should therefore not be taken lightly. In fact, before you even start to think about the next steps for expanding your business, you should take a second and ask yourself these 5 fundamental questions that can help you determine which market is the best choice for your business expansion.
First and foremost, you need to conduct thorough market research to determine whether a specific market holds enough business potential for your company to be successful in. This is crucial as entering a market that seems promising for one industry, doesn’t necessarily mean that it will be beneficial for you as well.
Different countries have different cultures and the people living there have individual needs that might not be the same as the demands of your existing customer base. Make sure to ask yourself how much business potential a location really has, and don’t let the success of other businesses blind you.
Depending on your particular strategy, you might want to consider future potential, and not just look at estimated growth for one or two years to come. And you want to rely on hard facts, such as data about population growth, current trends, and income projections over the next few years.
The second question you should ask yourself before you decide on a new market is how many competitors are already established in a particular market. Just because there are some competing businesses does not necessarily mean you shouldn’t enter yourself, but it can make things more difficult if a market is already quite saturated in your area.
Looking at the amount of competitors as well as their success and growth rate after entering a market can give you valuable insights into what to expect from your own expansion - and might even hold some warning signs for you to consider.
The ideal market has no pre-existing competitors, allowing you to clearly benefit from expanding. If a country already has 10 companies offering the same products or services as you, you might want to re-think your decision and look for a more open market to take your business to.
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Another important aspect to consider before your expansion is the legal situation in a particular market and how it could potentially influence your business expansion. This refers to anything from local labor laws, to minimum wage, tax regulations, but also the political situation and overall stability of the system in your country of choice.
Ideally, you want to have a stable government that supports business expansions and economic growth. Low taxes and clear labor regulations are also extremely helpful when setting up a business in a new market.
Finally, bureaucracy can be another deciding factor for your expansion. Countries with a lot of regulations and requirements for business registrations, or that make it very hard to obtain working visas, might be the wrong choice for your business. So be aware of what to expect when it comes to legal obligations in a new market.
Establishing a business in a new market is quite challenging in itself. Having to deal with power shortages, unstable internet connections, or unreliable transportation and logistic hiccups can have an additional negative impact on your business expansion. That’s why it pays off to inform yourself early on about the local infrastructure and availability of products and services.
After all, you don’t want to go through the efforts of entering a market only to find out that you won’t be able to use it’s full potential due to a lack of local resources. Checking the internet availability and usage rates for example is therefore one of the many things you should do before expanding to a new market.
Last but not least, the backbone of every expansion is the local team that works on pushing and establishing your business in a new market, which is why you want to make sure that you have access to the right talent. Skill sets can vary greatly from country to country, so being aware of certain areas of expertise depending on location is very important.
One way to gain more insights into skill levels is through the Global Skills Report, published annually by the online learning platform Coursera. But a glance at a countries’ educational system and spendings in that sector can also be a good indicator of how well versed talent will be in a certain area.
Still not sure where to take your business? These are our top 9 countries for international expansion.
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