If you’ve built a successful business and seen a lot of growth, you might be thinking about global business expansion. Taking your business into other countries and breaking into new markets is the best way to significantly increase your profits. You can also make sure that your growth continues at the same rate.
However, expanding your business globally is a huge risk and a lot of companies end up going about things the wrong way. Some businesses will go all in and invest nearly all of their money into their global business expansion. If all that effort fails, you risk losing your business entirely.
That’s why it’s essential to have a plan that properly entails everything to do before, during, and after the expansion. If you decide to go ahead with plans to take your business global, remember the three main reasons why global expansion fails.
The Three Main Reasons
Why Global Business
Expansion Fails
Cultural Barriers
You must learn to recognize the cultural differences with each international company you do business with, from all around the world.
When you’re trying to forge business deals in another country, you need to know and recognize how they do business.
You also need to be able to communicate with them effectively, which is hard if you don’t speak the language.
It’s also very important to successfully navigate any language barriers that might cause misunderstandings when doing important business.
The first thing you must do is find a translation company that will make sure you’re able to communicate effectively. Check out these Para Plus Translations reviews to learn more about how a translation company could help your business dealings in another country run a lot smoother.
You could also dedicate a person from your company to work 1-on-1 with one of the translators. Have him/her focus on learning the basics of your clients’ language.
That person could also look into any special greetings and make sure your whole team knows to be aware of them.
What are some of their traditions? When your client reaches an agreement in their business or signs a new contract, do they celebrate?
In America, it’s customary throughout most industries, for the business that proposes the agreement or contract signing, to take their new client out to dinner and to pay for everyone. If you accidentally offend people during a business meeting, you could ruin an important deal simply because you didn’t understand the etiquette.
Financial Law
Financial laws vary greatly between countries and lots of businesses get caught up with issues when they move abroad. One major issue that people have is trying to move their money back home.
They may have to pay tariffs on their own money and probably didn’t account for that when planning their expansion.
People also struggle with the tax laws in a new country which is a big problem because if you file your taxes wrong, you could end up with some big fines.
Trying to handle business finances in your home country is difficult enough! It’s a real challenge when you’re trying to handle different financial systems in different countries. That’s why it’s important that you always keep a close eye on your business finances and do plenty of research into the law before you start your expansion.
Political Barriers
International businesses are often affected by political issues between countries. This is something that lots of people don’t consider because they’ve never had to deal with it before.
If you’re moving into a country that doesn’t have a particularly good relationship with your home country, you may find that you don’t get a very positive reception.
It will be difficult to access certain resources that you may need to make your business succeed out there.
Political issues between countries can also make a big impact on trade regulations and that could really hurt you if tariffs suddenly shoot up. Before you decide on which countries you’re going to try to move your business into, consider any political situations.
Global expansion is always going to be a challenge. But if you consider the reasons above for its failure and learn to do things differently, you’ll do great!
Edited by Jessica Rose Adams
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