Taking your business international can be a very fruitful adventure but it won’t come without obstacles. Navigating the waters of the global economy can lead to disastrous financial losses if your business is not prepared to expand internationally. There are a number of elements business owners should consider before contemplating taking your business International.
Top Ten items to focus on when taking your business international:
- The political, economic and business risk factors of the country (or countries) in which you are expanding.
- The local laws, regulations, and licensing requirements.
- Intellectual property and employment laws.
- The local tax and tariffs for foreign corporations and domestic corporations.
- The language and cultural barriers.
- The local customs, traditions, and religious differences.
- Entry barriers to foreign businesses and investors.
- The local market and competition.
- Exit barriers on capital
- Banking, exchange rates, and credit acquisition
In order to minimize your risks and maximize your investment while taking your business International, it is essential to fully analyze the local market, risks, and develop a strategy to enter the new market. Depending on the country and local regulations, different entry strategies can be developed. In some countries for example, entering the market as a foreign corporation can be very easy, while in others, partnerships/joint ventures with local companies are preferred if not required. Whether your goal is to globalize your business through foreign direct investment or by exporting your products or services to other countries, your strategy will vary based on the type of business and location of your international venture, and HafeziCapital can help in taking your business international.
The World Bank’s “Ease of Doing Business” rankings placed countries such as Singapore, New Zealand, Hong Kong (China), the United Kingdom, Denmark, Ireland, and Canada at the top of its list as the most favorable business environments for international expansions. On the other hand, the Central African Republic, the Democratic Republic of Congo, Guinea-Bissau, Chad, Venezuela, Burundi, and Niger were placed at the bottom of the list signifying an unfavorable business environment. (Source: Doing Business 2011. The World Bank. Rankings on the 183 countries are available at www.doingbusiness.org/rankings/)
It can be very intimidating for a local business to expand to a different city or a different state, let alone a different country. However, a little learning and preparation goes a long way in taking your business International. Globalization has become very successful and profitable for countless small businesses and is no longer the play-ground for large multi-national corporations. While the current international economic conditions are not favorable all around the world, several countries still offer great economic conditions and a favorable business environment to foreign companies and are offering a number of incentives for American companies establishing operations in their countries.