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Top 6 Challenges of International Expansions and How to Overcome Them

As your business starts expanding globally, there are some challenges you will encounter. Many of these will revolve around our business, staff, partners, customers, and operating in a new environment. Challenges might also be tied to how fast you want to expand as well as how much time and money you are willing to invest. Because there are so many hurdles to overcome as you expand your business, we have put together some things you can put in place to better navigate the challenges you are likely to encounter.

Language and Cultural Barriers

It should be obvious that if you are expanding into a country with a different culture and language, you are likely to encounter some challenges reaching not only your customers, but also your business partners. While it is possible to solve some of the language challenges using an app or software, that is almost impossible to do when it comes to cultural barriers.

One of the best ways to overcome these challenges is to have a local team in place. They will help you communicate better as well as help you position your products better for the new market. 

Additionally, your business will have to adapt to the realities of the new market(s) you will be entering. This might require some changes to your products and services, finding a niche market for them, or overwhelming them if that is what the market calls for.

Local Competition

If a market is good enough for your business to enter, you can expect that other entrepreneurs are thinking the same, which means you might face some competition as you establish yourself. Your competition might have certain advantages such as not having to deal with currency conversions, fees, and tariffs or long lead and slower turnaround times. To counteract the advantages your competition might have on you, you will need to be careful as well as aware of everything they are doing.

Finding the right partners and building relationships is a great way of counteracting local competition. Building relationships with companies that handle storage, shipping, and logistics, for example, is a great place to start as it gives you a foothold in the new market. Also, the businesses you partner with can sell your products and services to their customers while you make the transition into the new country.

Navigating Hiring Staff

Starting operations in a new country requires that you hire additional staff to handle the additional pressure your business will face in the new country. In addition to the staff you already have, you might be required to hire additional staff in the new country. The specifics of how to go about this will vary from country to country but the general process should be the same.

The best way to go about this is to ensure your organization is ready and that you establish a great team that will handle things on your business’s behalf on the ground. Business owners might be wary about hiring additional staff, especially in cases where funds are limited but the increased revenue and profits from a successful expansion should more than cater to the increased payroll.

Making your organization ready often involves having the right infrastructure in place to handle the expansion. That might be renting new spaces or even establishing infrastructure to help with exports and imports. On the other hand, establishing a great team will often require that you outsource hiring.

Using local consultants, professional employer organizations and consultancies will help you get a team in place quickly. For countries with strict employment and labor laws like Germany, you might have to use a German PEO (professional employer organization) to ensure full compliance with the various laws that exist. A PEO such as New Horizons Global Partners can help make hiring in Germany easier as they will handle everything to ensure your company stays compliant and hires the right people. New Horizons Global Partners can also handle administrative tasks such as writing employment contracts, handling leave, and helping with social security contributions. You can get in touch with New Horizons Global Partners at nhglobalpartners.com to see how you can expand into Germany as well as other countries.

Tax and Other Compliance Issues

Dealing with taxes while trying to comply with all the laws that are at play is always challenging even when you are dealing with a single country. That effect is magnified when you start dealing with multiple countries and in fact, fees, taxes, tariffs, and law compliance are a huge hindrance for a lot of small businesses that would like to expand globally. 

A great way to overcome these challenges is to do your due diligence. Do as much research as you can on your tax and legal obligations before you start the expansion. Additionally, having someone handling this for you, such as the PEO discussed above, is a great way of ensuring both of these things do not become a problem, especially when you are starting and need to move as quickly as possible.

Supply Chain Risks and Challenges

Every business that has a global presence has to deal with exports, imports, shipping, and logistics as part of their supply chain. Managing a supply chain that stretches across the world is a real challenge and it introduces a few problems of its own.

If you are shipping products from one continent or country to another, physical distance is just one of the issues you will encounter. You have to also think about the cost and time it will take to ensure inventory or supplies reach you and products reach your customers. You also have to think about delays and the likelihood that your shipments might be impounded by customs.

The best way to mitigate all these risks is to have a robust plan in place. This plan should take into account competition and demand so you do not end up with overstocking or understocking issues that might lead to increased costs and shipping times.  

One thing you can do to avoid surprises is scout for various logistics partners. By doing this, one partner can take over as soon as one is not able to deliver. An added benefit is that you can also get competitive pricing and the shortest lead times on shipments if you have several suppliers on your list.

Political Risks

Political landscapes are always changing around the world, which means you should keep an eye on risks associated with political realignments. Two of the things you should always be on the lookout for are the likelihood of these risks materializing and how much of an impact they will have on our business if they do.

These political risks can be mitigated by doing proper research into any new countries you want to expand into as well as talking to experts on the topic. Additionally, having an exit plan will help you get out of complicated situations with as little complexity and loss as possible.

The rate at which businesses are expanding globally is increasing, and if you are thinking of doing the same thing, you might want to learn some lessons from companies that have already done so successfully. Additionally, you should be aware of the challenges you are likely to face as well as how to navigate them so you are never caught in a situation that you cannot get out of.

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