Have you considered tapping into new markets in other regions? Entering a new geographic region can unlock growth opportunities for your business, but it requires proper research and planning. Before you take the leap, make sure you and your business are ready to tackle these challenges and strategies to make the entire process smooth sailing.
What Is Geographic Expansion?
Geographic expansion is a strategy allowing a business to expand to other areas with the intention of upscaling business operations. It opens up a wealth of opportunities for the company — from boosting its reputation to getting recognition in new places. The ultimate goal of geographic expansion is to set the business up for future growth and success.
Some companies that have successfully expanded into different regions include:
- McDonald’s: The world’s largest fast-food chain has over 38,000 locations in more than 100 countries. The U.S. company began its geographic expansion in 1967 when it opened its first restaurant in Canada.
- Toyota: Founded in 1937, this Japanese automotive company now sells vehicles in more than 170 countries and regions worldwide.
- Samsung Electronics: This South Korean company employs over 266,000 employees in 74 countries.
Common Challenges When Expanding Into New Regions
Geographic expansion promises several great opportunities for the business. Before taking the first step to geographic expansion, here are a few challenges you should keep in mind.
1. Choosing the Right Regions
Figuring out which markets to pursue and how to appeal to them is essential. Create a list of regions or countries with attractive markets and assess factors such as competitive landscape and market size to see if your business has the opportunity to be successful in those areas.
2. Talent Acquisition
One significant challenge of geographic expansion is hiring qualified talents. The onboarding process may be more challenging as it will be via remote hiring. To speed up the hiring process, consider hiring an outsourced service provider. Doing so will save you considerable time searching for the right talents for your business.
3. Cultural Differences
Are you familiar with the traditions and practices in the country or region you want to expand into? How about the way people interact with each other in a business setting?
As a business owner, it’s essential to understand the nuances and adapt business practices accordingly. For instance, Asian firms tend to value long-term, stable relationships and prefer working from home whenever possible.
4. Legal and Regulatory Needs
It’s essential to have resources to handle tax and labor requirements in the new region. This includes obtaining necessary permits and licenses along with awareness of local labor laws, logistics guidelines and tax regulations.
5. Logistics and Infrastructure
This can also be another barrier when expanding into new regions. The internet and smartphones make it easy to communicate overseas, but there’s nothing quite like being physically present to talk to distribution partners and prospects. Your business also needs a reliable supply chain and distribution network to reach customers.
6. Unforeseen Expenses
Expanding involves more than just office rent and basic costs. Venturing into a new region often means dealing with new jurisdictions for business licenses and permits. Each location has its own set of requirements, and obtaining the necessary permits can entail fees and administrative expenses. Businesses should factor in expanded fuel and toll costs, potential changes in tax obligations, and increased maintenance and service charges associated with operating in a new area.
Tips to Make Geographic Expansion Successful
Follow these proven strategies to scale your business successfully in a new region:
1. Do a Market Research
Before tapping into new regions, it’s vital to conduct extensive market research. Figure out the answers to the following:
- Target markets
- Customer behavior
- Hiring practices
- Salary requirements
- Employee contracts
- Legal and tax regulations
This information will help you position your brand and services to the market, guide you in hiring the best people for the job and make sure you’re complying with the local laws.
2. Team Up With Local Businesses
Forming strategic partnerships with local businesses unleashes growth opportunities for your company. It will give you insights into the local market and local network access. When seeking business partnerships, look at those that share similar goals and values with you.
More importantly, their offerings should complement your services. For example, if you are launching a ride-hailing app, you can partner with a local music streaming app. Both products may be different, but they have the same goal — to acquire active users.
3. Invest in Technology
There are many ways technology can boost your business in a new region — it helps improve operation processes and enhance customer experiences. Automating manual tasks with the help of technology can also help out your employees.
In addition to automating administrative tasks, consider investing in software for accounting and payroll, team member onboarding and scheduling.
4. Create and Monitor Your Strategy
Create a strategy that utilizes all the information garnered from the market research. Consider the region’s culture, language and values when talking to your target audience. Lastly, ensure your pricing matches the market.
Tracking your progress regularly is as important as establishing a strategy. Define your SMART objectives — specific, measurable, attainable, relevant and time-bound — and determine if you’re meeting them. If you’re not hitting your targets, make necessary strategic adjustments.
5. Establish a Cohesive Culture
Having multiple offices in different regions means working with people across different cultures. One way you can unite everyone is to create a cohesive corporate culture. Your business needs vision, mission and values to bring people together and drive them towards a common goal. Implement virtual recharge sessions, learning webinars and other interactive activities to bring staff together.
Ready to Expand Your Business?
Entering new markets and regions requires more than passion. Whatever the size of your business, you’ll need proper planning and implementation to make it successful. These tips offer a great headstart.
Jack Shaw, editor of Modded and author of numerous articles on business success and self-improvement, seeks to inspire readers with his practical tips and strategies for growth. His writings can be found on HellaWealth, USCCG and more.