7 Steps to Expanding a Business Internationally

Expanding business internationally is a strategic decision to unlock a world of opportunity for growth and success. As businesses consider entering new markets, they will need to prepare for the complexities of global operations. This is an essential part of evolving and innovating the long-term development of a brand.

When companies decide to go global, it offers new customers or talent, increased market share and revenue, and diversification. Although the process of expansion might feel overwhelming, you can break it down into manageable steps for strategic operations. We’ve outlined the six steps to expanding business internationally to help you get started.

1. Analyze your current operations

2. Research potential new markets

3. Start small and test growth potential

4. Consult with experts

5. Hire your workforce

6. Streamline HR and payroll

7. Maintain compliance

Global expansion is no walk in the park. Before a business can enter a new market, it has to have a firm understanding of its current operations. Global growth requires a significant investment of time, energy and resources to be successful. The home market of a business should operate smoothly with a proven business model.

Even if you have streamlined operations in your local market, it does not necessarily guarantee success in foreign markets. You’ll need a strong foundation with customer service, supply chain management, and technology infrastructure to reach international markets. Once you’re satisfied with your current output and expanding internationally aligns with your business plan, you can move on to market research.

Every company is unique and will have different reasons for entering the global market. The more research you conduct in a new country, the more likely you will have success. Not all products or services translate effectively into a target market.

Make sure you have a solid understanding of the economic and political situation of the countries you consider. Additionally, you should learn all the legal requirements for employment and business operations. This will help you understand the potential complexities and challenges associated with your specific operational needs.

Market research enables businesses to identify product demand and pathways to connect with the local culture. Here are just a few examples of how you can ensure proper due diligence:

· Competitor growth data

· Consumer demand

· Consumer preferences and culture

· Target audience size and status

· Potential growth partners

· Supply chain logistics

Testing a new international market offers businesses a pragmatic approach to expansion. It allows them to minimize risks, optimize resource allocation, adapt and iterate strategy, build local partnerships, learn from experience and maintain flexibility. By taking a measured and strategic approach to global business, you can increase your chances of sustainable development.

Businesses often leverage one of two strategies for testing a new market: hiring an independent contractor or using an professional employer organization (PEO). Independent contractors have control of their schedules and communication preferences, but you don’t have to pay benefits or taxes. A global PEO uses their own network of legal entities to lease employees to your business in compliance with local regulations. In either case, you can start with a small local workforce to determine the viability of your products or services in that country.

Some businesses rush into a new market without any experience or expertise in global expansion. Unfortunately, this creates far more problems in the long run. Noncompliance of local regulations can lead to penalties and fines, and could set your business back from its goals.

Experts in international expansion possess in-depth knowledge of global business practices, cultural nuances, regulatory requirements, and market trends. This experience enables them to provide strategic guidance tailored to the unique needs and objectives of each business. By leveraging this expertise, businesses can make informed decisions, mitigate risks and maximize opportunities in their international endeavors.

Related: 5 questions to ask when evaluating a global business expansion partner

In many cases, these experts can also offer a comprehensive range of services and support. Businesses can access specialized resources and capabilities that may not be available in-house, streamlining the expansion process and accelerating time-to-market in new countries. Additionally, global expansion experts can help businesses navigate unforeseen challenges and obstacles, providing proactive solutions and strategic guidance to ensure smooth and successful market entry and growth.

When you’re confident with your expansion strategy, it’s time to hire your international workforce. In most cases, hiring independent contractors is not a sustainable strategy.

Many countries have strict regulations to protect contractors from unlawful employment. In France, you could face a €225,000 fine and up to two years in prison for employers who conceal employee working hours. Independent contractor misclassification would be a €150,000 fine. In Spain, you could receive a fine ranging from €3,750 to €12,000 per reclassified contingent worker for failure to register them before Social Security.

Related: 5 tips for optimizing your global hiring strategy

If businesses want to avoid the risks associated with contractors, they will need to hire through a legal entity. They can either establish their own foreign entity, or they can work with a global PEO provider to hire on their behalf. This is why it’s important to first consult with experts to determine the best route for your business.

Indicators that setting up your own legal entity might be the best option:

· The market is stable and you want to expand your operations in that region

· You have a large employee headcount

· You want to take advantage of your own tax strategy and benefits

· You have the time and resources to set up the entity

Indicators that partnering with a PEO might be the right strategy for you:

· You are doing some initial research and want to test the new market

· You want to hire fast in low volume countries

· You need local HR expertise and support for your international workers

Streamlining HR and payroll for your global workforce is critical for ensuring smooth operations. This process involves integrating and automating various functions to create an efficient system to manage the complexities of a diverse, global team. Prioritizing these efforts will help minimize errors, reduce the administrative burden, and ensure compliance with local labor laws. Here are some examples of how you can streamline your efforts:

· Consolidate employee data

· Standardize HR processes

· Adopt unified systems for scalability/flexibility

· Have local support for foreign employees

Related: 10 international HR mistakes

Advanced HR software solutions and payroll platforms can automate routine tasks, such as attendance tracking, time-off management, payroll processing, and benefits

administration, across multiple jurisdictions. These technologies improve accuracy and enhance the employee experience by providing self-service portals. Businesses can achieve real-time visibility into their global operations, enabling more informed decision-making and strategic HR management.

Compliance is a never ending battle for many businesses expanding to international markets. Global operations necessitate a deep understanding of local requirements to avoid legal pitfalls and financial penalties. Wherever a business operates, they must stay on top of any changing regulations, including:

· Labor laws

· Tax obligations

· Reporting standards

Related: DIY Global Expansion

Collaborating with local experts or a global PEO can help you navigate these complexities. They can help manage the compliance and adapt processes to meet local market needs.