Despite the ongoing uncertainty created by Brexit, UK businesses managed to showcase robust levels of confidence and sentiment towards the end of 2016. There has been a change in the mood during the first quarter of 2017, however, with confidence in negative territory as the spectre of a so-called ‘hard Brexit’ looms large.
While this is likely to encourage some entrepreneurs consider consolidating their activities in a bid to manage costs, the nature of Brexit means that this may be negated by the rising cost of imports and an increasingly weaker pound.
With this in mind, domestic businesses may be better served by expanding into the global market place and diversifying their revenue streams. Here are some steps that you can take to do this in a cost-effective and productive manner that turns a household business into a globally recognisable brand: –
1. Determine the global need for your products and services
When looking to expand globally, your first action must be to determine whether or not there is a need for your products (or services) in specific marketplaces. This should involve two main aspects, which when combined will establish the viability of your proposition among global consumers and determine whether or not local suppliers have left a gap in the market.
To begin with, you need to identify the potential markets that exist across the globe. Then, perform a simple market segmentation analysis in each one to determine whether or not there is an audience for your saleable items.
From here, it is important that you carry out what is known as gap analysis that compares the full range of competing products that exist within your chosen markets. This is arguably the most important part of your research, as even if have a theoretical market to sell to this means little if there is not a viable gap to exploit.
On a final note, be prepared to consider the price range of competing goods across international markets. After all, you need to offer an appealing value proposition to customers no matter where you sell, while local suppliers have lower cost-bases and will find it easy to compete more aggressively should you enter their space.
2. Measure the cost of expansion against your potential return
After such extensive research, you find yourself in a position where you are able to target several international markets. Not only this, but you will have identified the sales opportunities that exist within each one, while determining potential price points and an estimated turnover.
With this in mind, the next stage of the process requires you to measure any potential returns against the cost of expansion. From building your product inventory to complying with international tax and retail laws, each aspect of expanding a business overseas has its own cost-base that can quickly accumulate over time.
The key is to be thorough and accurate when recording costs, so that you are left with a financial understanding that allows you to make an informed decision.
It is also important to include indirect costs too, such as the expenses related to business travel and overseas negotiations. Although outlets such as Statesman Travel have reduced the cost and the time required to book and manage international trips, you may need to make several visits to liaise with manufacturers and distributors alike.
It is also imperative that you consider the impact of currency variations, particularly with the value of the pound trading within a relatively low range at present. This will impact on the cost of expansion, depending of course on the specific markets that you wish to move into.
3. Understand customs and culture to effectively market your proposition
Hopefully, your cost analysis will have established a model that enables you to expand your business profitably. Even the best-laid of expansion plans can be undone by thoughtless or ill-prepared marketing efforts, however, and this remains a considerable risk when dealing with unfamiliar cultures, customs and consumer behaviour.
It is therefore crucial that you take steps to ensure that you understand each international market in intricate detail before actively selling goods. Firstly, you should leverage data to determine the behaviour of consumers in various scenarios, paying particular attention to their levels of disposable income and typical holiday spend.
You will also need to identify any local customs and cultural anomalies that may impact on how your business market goods and services, as this ensures that you effectively engage with your audience while also showcasing understanding of their origins.
The language that you use is also crucial, as many global branding campaigns have failed due to linguistic errors and inaccurate translation. By paying attention to the language that you use when marketing your products and ensuring that phrases are translated accurately, you can guarantee the impact of your messaging while avoiding ridicule!