If you want to start a business in a new country, there are several factors that you need to consider. Notably, internationalizing your business without planning can result in a loss of time, money, and other resources. Also, it can take you more capital than what you had in your budget.
To prevent your business from realizing continuous losses in a new country, you need to conduct research or outsource professional consultations. If you encounter any language barrier when researching, seek help from translation service providers, such as the Turkish translation services.
What do you need to know before venturing into business in a new country?
To begin with, you should check whether the new market has potential customers that will buy your products and services. One of the things you need to look at is the purchasing power of people in the target country. If they cannot afford your products and services, you should cancel plans to start a business in that country.
You should also check whether people are willing to buy your products or services. To do so, you should check whether there are alternative products and services that people consume within the country. If there is a need for a different version, you can opt to adjust the design of your products.
Remember, the term middle class applies differently in different countries in terms of purchasing power. A US middle Class is not similar to India’s middle class. The latter has a lower purchasing power than the earlier. So, one should never over-invest in India in pursuit of its middle class as the target customers.
Even though every country has people that can afford anything, their number matters. If the number is low, you should choose the best method of serving a few customers. However, you should never invest heavily in such a country.
Sometimes, studying the gross domestic product and income per person can deceive you. To get the correct data and information, you should engage marketers and economists that have watched the country for a long time. Such a move will provide you with an accurate number of potential customers.
Last, you should get information on the economic status and stability of your target country. Exploring currency stability, inflation rates, and other trends will paint a picture of the economy of your target country. Importantly, studying such indicators will tell you about the level of risk to expect in your business.
2-Social and cultural factors
Different countries differ in spoken language, food, and religion, among other social and cultural factors. Such factors shape the way you can market your products in a new country. You should adjust your products to match the lifestyle of the people in the target country.
You should also organize your business practices to match the social and cultural factors of the new market. For this reason, sending your sociologists and anthropologists comes first before starting your business. Later, you can send your marketers and product developers to the target market.
If you are already in business, you can look for countries with a culture similar to your existing market. Alternatively, you can sell your products and services to regions that have similar customers. However, coming up with a balanced marketing mix can make you more prosperous in a new market.
According to Future Trans, you can opt to translate the information of your products into the language of the new market. Doing so enables the new potential customers to understand what they can derive from the products and services.
3-Political and legal factors
The professed attitude of your business should match with the attitude of the government and people of the target country. Some natives have a different attitude towards foreign companies, citizens, products, and services.
Importantly, prepare to show support to the people of the target country. Adopting such a strategy creates a friendly business environment. Your business can succeed because of winning the support and trust of the people in a new market. So, you should budget for some corporate social responsibility projects that will help the locals of the new market.
Regarding assessing the government of the new target country, you should check whether it is accommodative to foreign businesses. A friendly government offers incentives, tax relieves, and subsidies to investors. However, a hostile government can even ask for part ownership of your business.
Political stability is also a fundamental factor that you should consider before starting a business in a new country. Political instability can hurt your operations because of war and demonstrations that can interrupt your business operations.
Regarding the government attitude, check whether the government keeps on adjusting its policies that apply to businesses. If a government does not have policy continuance, you will keep changing your business operations in compliance. Such an environment is unfriendly for a business.
You should also assess the tax structure of the target country. Tax expense determines the amount of profit that you will get from your business. If the tax rate is high, you will realize low profits. Several tax classes are also detrimental to the profitability of your business.
A country with several legal requirements is unfriendly for a business. Such a level of requirements can affect your budget or delay you from starting your business operations. So, you should check whether the legal system of the new market is transparent or not. A country with unclear business laws is not fit for business because it can interpret it in any way and hurt your business.
Last, government interference is detrimental to any business. So, you should check whether the government in the new market keeps interfering with the management of the existing companies. In other words, you should check the level at which a government protects its domestic business entities.
Regarding the attractiveness of the market, you should check whether the market can generate high revenue. You should ask, are the existing businesses making a profit or loss? How much do the existing companies make in terms of profit? If the market features low-profit margins or loss, you should avoid it.
The assessment of the competition in your target market is a must. A market with several businesses that sell products and services similar to what you sell is expensive for your operations. Such a market requires high-level innovation and unique operating strategies.
Market dynamics are also factors that you should consider before starting a business in a new country. Such factors affect the pricing of your products and services. The dynamics include the behavior of the consumers and producers. So you should check whether the producers engage in unfair business practices. Also, you should check whether the consumers are selective.
To assess the revenue generation of your target market, you should explore several aspects. The aspects include the capital requirements, the industry structure, business gestation period, and challenges businesses face before succeeding. Such are external factors that you have little or no control on them. So, you should study the existing companies and their history.
You should also check the business growth rate of your target market. How long does the business take to expand? In such a market, investors employ huge upfront capital because the risk is low. Notably, a low number of competitors is a factor that promotes a high business growth rate.
Does the new market have a high level of product and services differentiation? If it does, the market is attractive to investors. Also, the market has a low competition rate because people are selling different products and services rather than identical ones.
4-Your business capability
You should audit your resources before setting off to start a business in a new country. The resources include market knowledge, product, and services portfolio, technology, partners, and capital, among other resources. The assessment of the level of the resources measures your competitive advantage. In other words, it helps you to know the size of the market share that you will gain in the new market.
Your business should have people with high-level knowledge of the foreign market. Never rely on your home star performers when venturing into a new market. Such people only know how the domestic market runs. So, consider outsourcing for experts in matters of foreign market entry.
Even though we list it last, having a business idea should be the first thing you require before venturing to a new market. You should ask yourself whether you will sell something to improve lives or add convenience to their lifestyles.
If your business idea is not original, you should ask whether it will improve the existing products and services. Also, you should assess whether your idea will stand out from the already existing business ideas. Last, explore whether your business idea will help you acquire a market share in a new country.
Importantly, your business idea should solve an existing social problem. Such a problem translates into the needs of potential customers. So, your business idea can seek to solve a social problem existing among high-end members of society.
If you consider the listed factors, you are on your way to success in a foreign country. The only thing remaining is to keep your costs at minimal levels to increase your profitability. That said, it is time to roll out your business plans and expect success in the new market.