Guidelines for Businesses Expanding to Global Markets Back office outsourcing is one way of ensuring more scalability and effectively meeting the challenges of a new market. Here are some other considerations.
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Businesses already having a solid customer base in their own country may think of expanding
internationally and obtaining a global clientele. However, this is not without challenges. Technological advancements such as digitization, Big Data, cloud storage, Internet of Things (IoT) and so on have made things much easier than before. Trends such as back office outsourcing and other business process outsourcing solutions also have enabled businesses to be more scalable and handle the challenge of expanding into new markets. According to the Small Business Administration, at present 96 percent of the world’s consumers live outside the US and two-thirds of the world’s purchasing power is based in foreign countries. This makes it important to grow one’s business in other geographical areas, provided a potential customer base exists in those foreign markets. Michael Lee, head of international marketing and business development for Alibaba.com, advises to look for markets similar to one’s own. Even if the market may not be identical to yours, the familiarity you have with the market will enable smooth business discussions. He says the fewer the differences between your country and the one you export to, the easier it will be to do business with that country. Let us consider the major challenges of international business and how those can be addressed.
Barriers posed by language and culture: This is a hurdle that has to be successfully overcome. You may need to hire bilingual staff that can translate for your company. Outsourcing tasks such as overseas customer service is a practical option to consider if you don’t have the budget to hire full-time translators in-house. English remains the primary language of the internet and a W3Techs report says that more than 50 percent of web content is written in English. However, only a quarter of internet users are English speakers. So, if you are planning to expand the global reach of your business, the language of your target market is the ideal place to begin with and it can be done through translation and localization. Translation involves converting your website content from one language to another. Localization specifically customizes many more aspects of your website to meet the target market needs—you may have to localize currency, date and time-formatting, and also address needs such as local UX preference, cultural affinities and stigmas. Translating to multiple languages can be a daunting task but there are many online services that provide website localization. Day Translations is a wellrespected full-service translation and localization service that has Amazon and Facebook among its clients. Unbabel is another useful service that provides sales and customer service in your customers’ native language by incorporating AI (artificial intelligence) and human translation. When expanding your business to foreign territory, it is important to research the cultural practices in those countries. Joseph Paris, Jr., chairman of business consulting firm XONITEK and founder of the Operational Excellence Society, says that you need to understand the ways in which people communicate. He gives the example of northern Europe where there is “far less chit-chat and you might feel that the party is being blunt to the point of rudeness” whereas that is not the case. In southern Europe, a lot of personal conversation and activity takes place before business matters are discussed. There “cutting to the chase is seen as being impatient.”
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Different tax codes and compliance: The United States taxes worldwide income; and the IRS has imposed special reporting requirements on this income. Business owners must have a clear idea of the tax codes, business regulations as well as packaging standards in different countries. Since foreign banks may be hesitant to deal with U.S based accounts because of the considerable administrative burden involved, you may have to set up a separate foreign business entity and back account to facilitate handling transactions. Local competition: If a product similar to yours is made in the targeted market, it may not be easy to persuade customers there to trust your brand more than the local one. This is especially challenging for small and mid-size businesses. They will have to work very hard to prove they are trustworthy and better than the competition. Payment Mode: Another major hurdle that businesses face is how to accept global customer payments. Payment processors like PayPal have blacklisted some countries where they do not assist with transactions and this limits your customer base. There are other services like Payoneer that helps to remove the friction from cross border payments in a number of ways. Payoneer can provide virtual bank accounts for your customers in the UK, Japan, and the EU. It allows your customers to pay via domestic wire transfer. Once you receive payment, you can withdraw the funds in your home currency and transfer to your local bank account. It not only facilitates the payment process for your customer but saves you significant money on currency conversions and transfer fees. Payoneer has integrated with Amazon and Upwork for freelancers and consultants and these integrations allow businesses to save money on fees and get paid within minutes. It simplifies payment tracking and also keeps your accounts receivable on one platform.
Any business planning to expand globally must consider all relevant scenarios. To get a firsthand idea of business prospects in the target market, you can consider traveling to those countries. You can then conduct research and test your product in the foreign marketplace. You also need a reliable business partner and team when considering global expansion. Make sure to think carefully about the impact any new ideas may have on the foreign customers. Adapting to the foreign market and culture is very important even when remaining consistent in branding. Global outsourcing provides you with a global pool of talent at your disposal. This is better than hiring employers or freelancers in one’s own market alone. Today, more and more businesses rely on business process outsourcing companies as it improves efficiency by minimizing cost. With tools like Slack and Zoom, communication is made easy through messaging and video conferencing. Tools like Toggl and Asana ensure time tracking and project management that help all of them to be on the same page irrespective of their physical location. There is no doubt that expanding sales and operations to international markets is an effective way of driving growth. When taking that important step, businesses must employ due diligence and adopt the best business strategies after comprehensive research into the foreign markets.
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