By Beata Green
Going global is no longer just a dream for small businesses. The task may once have seemed insurmountable, but technology has changed the game for small businesses. Communication, technology infrastructure and manpower are now more affordable and can be used to your advantage. There are numerous exciting opportunities internationally. For sure, a significantly larger part of the global market is located outside the home country of any business. Thus, there is a greater amount of profit awaiting any business that makes that leap.
While business globalization offers an opportunity to be more profitable, going global is really not for every company. Small businesses should first have a stable business to begin with in order for one to say that it is ripe for expansion. Moreover, expanding across the different regions in one’s home country must first be considered because similar laws, taxes and costs will be applicable and expansion is relatively easier. Naturally, it takes a huge amount of resources. One has to do extensive research on the business environment, people, and ways of life. There are many barriers such as language and culture. While doing it is relatively affordable, small businesses must devote a great deal of effort and investment in any form of expansion. Managing businesses across the globe can be taxing with the time differences. There are likewise serious considerations beyond one’s control such as political conditions and currency rates.
Nevertheless, there are plenty of advantages.
Global expansion allows for economies of scale- the larger an enterprise is, the more cost effective it becomes. Fixed costs can be spread more thinly over a bigger production base; while gross sales become higher. Once a business has already been established, it is relatively easier to copy the previous formula used in setting it up and thus making the new location more likely to be successful.
Globalizing a business is a way of spreading one’s eggs into several baskets. The advantages are similar to diversification albeit with common products or services, such that unfavourable market conditions in one place will be offset by good conditions in another location. It allows for a more constant and steady income flow where several branches contribute to a single business’ profitability. The threat or risk of local typhoons, economic downturns and the like are, in a way, minimized by global expansion.
The possibilities made by globalization are endless. It enriches a business’ viewpoint and experience. It offers various insights on expanding the business or in coming up with diversified products.
For those thinking about going global, here are a few things that may help in the expansion of small businesses.
Plan, Plan, Plan
Any business action should be well thought out, well-conceived, and well implemented. With a large amount of data available, business owners have all the information available to allow them to make informed decisions. Is there a sufficient market? What is the purchasing power that can be taken advantage of? What infrastructures are available in that country? Businesses can develop strategies using this varied information for an easy and efficient expansion.
Consider Import/Export Costs
One has to determine the legal procedures, customs duties, taxes and all other costs associated with a global business. Shopping for the best shipping costs among companies is also a must, considering that a large part of the business will deal with offshore exchanges and deliveries. The time it takes for a shipment to get from one point to another must also be considered.
Small businesses can partner with other entities that may have contacts that will help where the business needs to be established. Joint ventures with small businesses located in the country of expansion may also be helpful. Going global, while it has been made easier, remains an enormous task for any business. There is much ground to cover that has to be fueled by good research and strong business relationships. Networking may be the only way for some businesses to go through this route.
Establish a Local Connection
Each country is different. People have different languages, religions, values, and cultures. Thus, developing a local approach to leading a team in the country of expansion is a must. Aside from saving on travel costs, having a local who can be trusted will make establishing and managing the offshore business easier. They will have more knowledge in how business is done in that country and one may even be able to take advantage of lower manpower costs there.