If you’re thinking of expanding your business, going global can offer a wealth of new opportunities and revenue streams. You might even find greater popularity in foreign markets than in domestic ones; however, there can also be some negative consequences to your expansion.
We’re going to explore the potential pros and cons of going international so you can weigh up if it’s the correct decision for your business.
3 Pros of going international
First of all, let’s take a look at the top benefits of expanding your business to international markets.
Access to new markets
Perhaps the greatest benefit of an international expansion is the access to new customers, which further increases your sales and brand visibility. Depending on your marketing, there may be people in other countries already eager to try your product. This can help establish a strong consumer base and mean your expansion gets off to an excellent start.
Diversification of revenue streams
Another point to consider is that by operating across various countries, you’re diversifying your revenue. In other words, if a particular event causes sales in one territory to plummet, you’re still supported by your sales in other countries. This can help your business become more durable and overcome any unexpected issues.
Competitive advantage
If your business successfully enters the global market ahead of your competitors, you’re much more likely to build a loyal, international customer base. This will put you in a strong position when your competitors do eventually expand internationally, and improve your chances of long-term success.
3 Cons of going international
Of course, there are several issues you can encounter when operating internationally. Here are some common problems you’ll need to watch out for.
Complex regulations and compliance
Each country has its own legal, tax, and import/export rules, and navigating them can be confusing without expert help. This often requires hiring additional people to help your business operate more effectively in these new markets.
Currency exchange rates
The exchange rates between various currencies can vary day-to-day, and even a small change can have a massive impact on high volume. To protect your business from exchange rate fluctuations, you might want to consider forex hedging. This can provide better financial security for your business, especially with turbulent exchange rates.
High initial investment
One of the biggest barriers to global expansion is, of course, the financial cost. To ensure that your business is set up effectively in new international territories, you may need local legal advice, staff, offices, distribution networks, and more.
Ultimately, it’s up to you to decide whether an international expansion is the right move for your business. While there are some incredible benefits, it can also come with risks. It’s important to weigh up how the expansion may affect your business before making such an important decision.
