When’s the Right Time to Grow a Business Overseas?

Thereare numerous reasons that a business may be interested in expanding its products and services to an overseas market. First of all, the tax implications might be a little different. This could provide some important regulatory benefits for a business. Companies are also looking to expand their customer base. They view the overseas world as a massive untapped market for potential customers. Of course, businesses are always looking to save money on employee salaries too. They know that people working in other countries may not be as expensive as some of the employees that they have at home.

For these reasons and more, businesses are always looking to expand to an overseas market; however, it is important for businesses to pick the right time to do so, and how does a business know when it’s the right time to expand?

Here are a few questions you should be asking yourself.

  1. What’s the Balance of Customer Acquisition to Overhead Expansion?

One of the most important factors that businesses must look at before expanding to an overseas environment is the saturation of their customer base at home. In this manner, businesses need to look at their rate of customer acquisition. How quickly is a business acquiring new customers? If that rate is accelerating, that means that businesses are acquiring customers faster than ever and there are still more gains to be made at home.

On the other hand, if the rate of customer acquisition is slowing, it could indicate that the business has saturated its customer base at home. Then, the business needs to look at how expensive the cost of customer acquisition is. How much money does a business need to spend in overhead expenses to acquire a new customer?

If a business is spending more and more money to acquire new customers, it may be time for them to look at new ways to acquire new customers at a cheaper cost. This means looking overseas where the employee salaries might be lower and the number of potential new customers is high may be a viable option.

If companies are running out of potential new customers at home, it might be time to expand overseas.

  1. What is Required to Run a Business Both Overseas and Domestically?

There are numerous factors that are required to run a business both overseas and domestically, not the least of which is handling payments that are taken from customers overseas. It can be challenging to process customer payments that are run in a foreign country, particularly with the tax implications, possible currency exchange fees, and the geographic distance of some of these payments. It is important that companies can protect this sensitive customer information as well.

Many businesses have gotten around these financial processing problems by using SEPA payments and other similar systems. SEPA ensures that businesses have a way to collect customer payments rapidly and efficiently overseas – while keeping their information safe. Banking fees will also be reduced with this payments technology as businesses can processes everything from one single account, rather than having to use a separate one for their international banking.

  1. Can Your Staff Manage the Move?

One of the most commonly overlooked steps of expanding overseas is the number of extra executives and managerial staff that will be required to run a business that functions both at home and abroad. Running an overseas business presents numerous challenges.

There will be products that must be shipped over international borders both by land and by sea. There are also multiple tax implications that must be considered for businesses that function both abroad and domestically. Of course, nobody should overlook the logistical problems of trying to coordinate a business that functions in such drastically different time zones.

This means that businesses need to ensure that they have a strong executive leadership on their team. These should be people that are both intimately familiar with the inner workings of the company while also having the experience to run a show internationally.

Try to make sure that these people are in place before moving forward with an international expansion.

While expanding a business overseas presents many challenges, it also represents a great opportunity to businesses who are ready to take on this challenge. Businesses that have grown large enough to sustain an international arm should consider overseas expansion.