Many businesses today are looking to expand globally, yet it can be a very daunting task. Business and legal expert Andrea Zechmann says that it’s imperative for any business owner to meticulously explore every potential avenue to ensure that the expansion ends up a success rather than a failure.
“There are many factors that can separate a good expansion versus a bad expansion,” Zechmann said. “It’s important to have good relationships in the market you plan to expand in and fully understand all facets of the customer and regulatory landscape.”
While each global expansion is different and unique in some ways, every successful one should follow three basic phases.
Phase 1 — External Due Diligence
The first phase of any successful global expansion is external due diligence. While business owners may be enticed to try to do this on their own, it’s important to utilize the help of a local consultant that’s not only located in the area of the intended expansion but who’s from there.
“When you work with someone who’s native to the area where you’re planning to expand, you’ll be gaining invaluable insight into factors that others may just not be able to see,” Zechmann said. “Trained professionals can fill you in on all the regulatory details, but people who were born and raised in a location can give you the hard-to-learn facts about what might make your business successful.”
You should research your target customer as part of this external due diligence. Compare the target customer in this new location to your current target customers. What is their typical lifestyle, journey, and behavior?
You also need to research the market so you can clearly understand how to differentiate your product or service in that new market. Does your company already have brand awareness in that market? If so, you can leverage that to make the transition to the new market easier.
Andrea says it’s important to treat each market as unique and then make them feel that way.
The final step of external due diligence is researching the local regulations. Local government regulations are one of the most challenging hurdles to overcome when entering a new market.
To help you understand the regulatory barriers to entry, create good relationships with local government officials. This can be done by hiring local consultants before you ever have “boots on the ground” from your team.
For instance, Andrea Zechmann says a good analogy when considering a timeline when contemplating entering a highly regulated market is ski hills. India, Russia, and China would all be considered “black diamond hills,” as it takes up to five years to enter these countries as a new business. If you were expanding from the U.S., the U.K. would be a “bunny hill” because it is similar to the U.S. market, so it may only take one to two years to launch into that market.
Phase 2 — Internal Due Diligence
After fully investigating external factors to your global expansion, it’s time to look inward. Here, it’s essential to analyze whether your current team has enough experience in entering the global market and whether the workforce as a whole has the capacity to take on this expansion.
“The internal due diligence phase will allow you to see whether your team has created a thorough timeline and achievable milestones on the journey to your global expansion,” Andrea Zechmann says. “It’s also important to understand whether the team has taken sufficient time to consider all aspects of the expansion, such as the research, time, and cost.”
Even if the external due diligence produces positive feedback, your global expansion will have a tough time succeeding if your internal operations aren’t fully prepared for what’s ahead.
Phase 3 — Rollout
After both external and internal due diligence is completed, it’s time to roll out the official plan for expansion.
“When rolling out into a new market, it’s essential to have a realistic timeline from the start,” Zechmann says. “Most people think it will be a short process, but it typically takes at minimum more than a year to complete from start to finish.”
Each market is unique in every aspect of the expansion. This includes not just how you will market your business and differentiate your products or services but how long it will take you to launch.
Knowing a realistic timeline from the start will help set up realistic expectations for the team as a whole, which will ultimately put the company in a better position to launch a successful global expansion.
About Andrea Zechmann
Andrea Zechmann uses her business and legal background to assist businesses in entering new markets, global expansion, and strategic partnerships. She brings a solid track record of innovative leadership at some of the fastest-growing companies in her industry and helps companies refine strategies, enhance partnerships, and propel expansion. Andrea loves to read and volunteer at her local animal rescues in her free time.
