If there is one business lesson learned from the pandemic it is that — for better or worse, in sickness and in health — the global economy is interconnected. With supply chains put to their toughest test since World War II, who would have guessed that toilet paper and hand sanitizer would become such hot commodities?
Despite the economic woes of the past year, the interconnectedness of the world’s businesses can also be an asset — one that more and more small businesses are looking to tap for expansion and growth opportunities. While new challenges like foreign currency fluctuations can arise, entering the international arena enables small and medium-sized businesses (SMBs) to hedge their bets against potential downturns in the U.S. market and significantly improves their overall growth potential.
Growing international markets
For American small businesses looking to dip their toe in the global market, the most obvious countries for expansion are Canada, Mexico, the U.K./European Union, and Japan. These regions have well-established relationships with U.S.-based companies, adequate infrastructure, and many English-speakers. But there also are other fast-growing, less competitive markets that businesses might want to consider.
For example, according to The Brookings Institution, seven African countries — the Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Nigeria, South Africa, and Tanzania — will soon be home to half of the continent’s population. Income levels also are rising among all socioeconomic groups across Africa, with 43 percent of Africans now considered middle or upper class. With this rising standard of living comes increasing demand for goods and services making certain parts of that continent ripe for introduction of new companies and their products.
Taking steps toward global expansion
For small and medium-sized businesses hoping to expand their footprint outside of the U.S., there are a few basic steps that they should follow.
- Prepare an international business plan to evaluate your readiness and set goals.
- Conduct foreign market research and identify prospective countries for expansion.
- Evaluate and choose the best international distribution methods for your product: opening company-owned foreign subsidiaries, working with on-the-ground representatives and distributors, and/or setting up joint ventures.
- Determine prices, negotiate deals, and see to the legal issues surrounding exporting.
- Consider and be prepared to address any cultural, social, regulatory, or economic differences between the U.S. and the foreign country.
- Explore government and private sources of financing, and determine how you will ensure you get paid for your goods or services.
- Be certain you package and label your goods to adhere to any foreign regulations.
Boost your international expertise
Expanding a business to the global market requires a well-thought-out strategy. Expert advice and global insights are also key to success. As someone who advises various businesses, the more you know about your client’s industry, including transnational considerations, the better you can help them navigate potential international expansion or global impacts to their supply chains.
That’s why Vertical IQ has launched Global Perspective, its most recent enhancement to the company’s cornerstone Industry Intelligence product, the Industry Profile. Each Global Perspective Industry Profile chapter offers users critical information about industries with a large international presence and includes:
- A list of major global companies impacting the industry
- Insight into worldwide demand through import/export trends over the past several years
- A breakdown of total imports and exports between the U.S. and other countries
The chapter will be included for industries such as manufacturing and wholesale, and will help advisors and sales professionals discuss global impacts within a business owner’s industry and explore their potential for global expansion. You can learn more about Global Perspective by viewing the recent press release about the launch.
We look forward to hearing your feedback about this highly anticipated new Vertical IQ enhancement!