As the labor market tightens, it’s getting tougher to keep qualified, talented employees in your orbit. When rockstars receive enticing offers daily or weekly, even cutting-edge employee retention strategies can only do so much. And forget about finding qualified recruits to replace lost talent — the skills gap is now a chasm, and the situation is only projected to get worse in the coming years.
What’s a business owner to do? It sounds counterintuitive, but the most effective way to thrive in a competitive labor market might just be to go bold and expand overseas.
The idea of going international is terrifying to many small and midsize business owners. That’s understandable. It’s a big world out there. Global companies face a slew of complex challenges that don’t affect their domestic rivals. Many companies don’t survive the overseas transition.
On the other hand, the world is more interconnected than ever before. Thanks to unprecedented freedom of movement and the inexorable democratizing drive of the internet, the purchasing power of nearly eight billion people — or a large chunk thereof — is within reach. The trick is knowing how to grab it.
That requires putting your products in front of folks in foreign lands. And, if you manufacture physical goods in the United States, that means mastering the minefield of international logistics and export law. As you launch your international business, you’ll want to keep these five things in mind.
1. Not All International Markets Offer the Same Opportunities
There are promising international markets, and then there are promising international markets. It’s not always clear from the numbers which are which.
Before you move into a new country, you need to conduct a thorough economic and market analysis to determine whether the opportunity is worth pursuing. If you can’t foresee turning a profit in a new market within 36 months, be extremely cautious about investing there. Just ask Target what happens when you’re not careful.
2. Some Markets Are Friendlier Than Others
Tariffs — ‘nuff said. Import duties can singlehandedly destroy your fiscal rationale for entering a new international market. If you can’t price your products at or near what your local competitors are asking, or at least make up the difference in quality, you have a high hill to climb.
3. You May Want to Grow Locally
A follow-on to the tariff issue: Once you reach a certain scale and time-in-business, it’s almost always more cost-effective to manufacture locally or regionally (i.e., serving several national markets from one strategically located facility). Plus, locally made products carry extra cachet. If you’re already operating at scale, run a cost-benefit analysis before closing the door on a local facility.
4. Regulatory Requirements Matter
The U.S. isn’t the only country with strict product safety laws. Plenty of other countries require local and foreign manufacturers to play by their rules too. Unfortunately for small and midsize manufacturers, these rules frequently vary from country to country. Before entering a new market, determine whether you’ll have to modify the products you plan to sell there — and whether it’s worthwhile to do so at all.
5. You Need Trusted Partners on the Other Side
You can’t be in two places at once. And, even if you’re a seasoned road warrior, you probably don’t want to spend your life on trans-Pacific flights. To maintain your sanity and protect your time, you need to cultivate in-country partners who you can trust — and to whom you can devolve a considerable degree of autonomy and authority.
There’s no magic formula for finding the right partners. When you enter a new market, you’ll need to devote lots of time and effort to building and promoting your presence there, or delegate those tasks to your immediate subordinates. But it’s in your interest to move past this ramp-up phase as quickly as possible. When in doubt, check with the American Chambers of Commerce Abroad.
Is your business about to go international? What worries you most about the leap?