Expanding overseas is a natural step for many successful businesses to take. However, major expansions are not without their risks. If you are thinking about taking your company overseas, you need to budget for the following key elements.
Production costs can vary wildly from one market to another. If you plan on producing products locally, you must establish your supply routes and workflows before you land. It’s no good trying to improvise them as you go. In some cases, you won’t have much choice over where you get materials from and where you ship goods to. Your supply lines will be chosen for you.
But wherever possible, you should have a clear idea of what your production costs will be. You should also work out what redundancies you can put in place if a critical supplier becomes unavailable. Consider all possibilities, as well as how each one will affect your business financially.
The overheads of running the same business can vary considerably between different regions. You need to understand what the precise situation is regarding your overheads before you commit to any overseas commercial space for your business. The various zoning regulations, or lack thereof, in some markets makes it hard to assess what a fair price is without some local knowledge.
Having someone on the ground with first-hand experience in the market is ideal. Even with pandemic-related travel restrictions, people are offering their expertise in this regard to a freelance basis. A little local knowledge can go a long way to reducing your overheads in a new market.
One of the trickiest aspects of expanding overseas is staying on top of recruitment. Recruiting in a foreign market is a big challenge. It is arguably a more significant challenge even than marketing, which is notoriously difficult to do in new territories.
Fortunately, there are businesses like New Horizons Global Partners, who offer international PEO services. Their South Korea PEO is representative of the kind of comprehensive service they offer. By using New Horizons Global Partners, SMEs can recruit overseas without having to establish a legal entity. In the case of New Horizons, they will also provide an employer of record service, handling HR and payroll on behalf of overseas businesses.
Moving into a new market inevitably means moving to a new currency. The costs you pay for everything will vary according to the exchange rate between your native currency and the market you are moving into. From relatively minor purchases such as office furniture and supplies to major expenditures like real estate and employee salaries, you need to be mindful of the exchange rate. You also need to find out how stable the currency is. Some are liable to significant price fluctuations.
Budgeting for international expansion isn’t a quick process; it takes time to ensure that all the pieces are in place. However,proper budgeting is essential if you are going to survive. The more different your new market is from your native one, the more important preparation will be. Stick to the advice above and make sure that you have considered everything in your budget.
