Are you struggling to expand your business cross-border in North America?
Well, we have got you covered.
So why do some companies fail when trying to enter a new market? In this article we have listed some of the most common mistakes so that you can avoid them.
Mistake 1:Not getting appropriate advice
We understand why companies do this, most of the time you’re focusing on building your product to an extent such as finding an in market sales team, following up leads, and battling logistics nightmares. However, there is the temptation to file your return the same way you did last year.
Additionally, you must start with a gentle conversation with your tax advisor, get an idea of what they recommend, the next step is estimate the costs for advice. Start early and talk to your advisors whenever something changes even slightly.
Let your advisors take the burden of understanding how the tax rules apply to you in every country you operate in. Which will lead you to focus on doing what you do best.
Mistake 2:Ignoring the advice you did get
If you have gone to the trouble to get advice, would love to see you follow through on it. If you don’t know how to, ask your advisors, and keep asking until it makes sense, because getting advice and Ignoring it is almost worse than not getting advice at all.
However, don’t rely on tax advice provided to someone else you know who started expanding businesses, advice you got at your last company, or something you read on the internet.
Lastly, Tax law changes every year, and your current business is not the same as your last one, or your friends’ one. Getting advice specific to your situation is your best bet.
Mistake 3: Not having strategy or a plan
One of the biggest problems is that businesses face problems because they rush into expanding without proper planning.
However, it’s very important to analyze which markets to target, define clear goals, make a detailed action plan and have an accurate understanding of the related costs.
Mistake 4: Not doing enough research on your target market
On top of planning your expansion, you need to ensure that you have a through understanding of your local market
Here you will get to know the following aspects about your target company
- Local industry trends and forecasts
- Key players: Competitors, suppliers, partners.
- Market dynamic: Distribution channels, marketing channels etc.
- Culture and traditions.
- Regulations: Taxes, legal, customs.
Mistake 5: Underestimating the Importance of Cultural Differences
Many companies that don’t bother to research the market ahead of time often make crucial errors in their execution, which will ultimately lead to failed expansion.
However, the most common mistake is to assume that your business model can be duplicated across international markets without adapting to local marketing channels, consumer behavior, or product preferences.
Mistake 6: Expecting a return on investment too soon
It’s a good idea to estimate international expansion costs, but it’s also very important to give yourself buffer room in case of unexpected expenses.
International markets play a significant role when it comes to long term strategy. Expanding to a new market means adapting yourself to the new country, building new relationships and a reputation, as well as understanding the dynamic of the local business environment. It’s quite rare that a new market yields a return on investment within the first year or several years.
Additionally, it’s important to allocate a sufficient amount of financing to enter a new market.
Mistake 7: Going at it alone and ignoring key local players.
Working with a Local partner who already knows the market can save a significant amount of time and money.
It may be beneficial to acquire a well established local business, allowing you to benefit from their existing client base and reputation.
Otherwise, it may be necessary to open an office in the new market with a local team that has a full understanding of business practices and consumer behavior.
Summing up
Hope this article helps you in understanding some of the most common mistakes businesses make while expanding.
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