Taking a business from the local market into the uncertain waters of global trade is a grand undertaking. Numerous crucial factors will play a role in shaping the decision that the time has finally come to expand beyond your country’s borders; however, beyond these border awaits a whole new world of risk and opportunity.
From local legislature and tax laws, to numerous dug-in competitors that own the market, to costly suppliers and distributors, all the way to the geopolitical situations that shape every unique market in the world, it will seem for a time that everything and everyone is against you. All of this boils down to finance management and cost vs ROI, so let’s take a look at the crucial money matters you need to be on top of in order to successfully take your company overseas.
Research present and past currency fluctuations
Once you expand into a new market, your business and all of its financial operations will have to adapt to the local climate. This means that the local financial management will have to operate according to currency volatility and fluctuations, working hard to minimize damage in case of drops in value, and maximize revenue potential across the board.
To achieve this, you will need to tend to meticulous market research, and take into account the stability of the local currency. You can start by conducting a SWOT analysis of the prevailing market conditions, the competition, doing thorough market segmentation to acquire knowledge about the viability of your products in the new market, and research the present and past currency fluctuations. These insights will help you create a detailed financial roadmap, plan and prepare for monetary hardships, and even prevent loses in the long term.
Stay on top of geopolitical risks
When you’re venturing into a new market, no matter how much research you’ve done and how much you have prepared to take the local marketplace by storm, it’s important to remember that you’re still playing on someone else’s turf. As a newcomer and an outside player, you might not be prepared to withstand the prevailing geopolitical situation, or the fluctuations the local businesses are able to use to their advantage.
Deep industry insights in the local market will tell local businesses when to push for innovation and when to push for conservation and consolidation, and you should be prepared to do the same, or face the crippling consequences. Everything from natural disasters to local elections can influence the stability of the local currency, so you need to have a team of local financial experts and FX professionals on deck to help you mitigate risk and preserve resources.
Consolidating your resources
With all of these proverbial balls in the air, figuring out the best way forward for your company in terms of export and import challenges can be a difficult challenge, as there are many variables to take into consideration. To mitigate financial risk and better consolidate your resources while preserving your cash flow, you will need to know the prevailing trade finance mechanisms that simplify global import and export processes, and help keep assets of all parties safe.
The ugly truth of the global trade world is that the majority of companies are not familiar with trade finance and its many opportunities, which leads to a loss in revenue, investment opportunity, and equity before a company manages to generate a positive ROA (Return on Assets). Creating a positive return on assets is a slow and grueling process for most overseas businesses, which is why it becomes imperative to use trade finance to expedite and simplify the process.
Get in touch with potential local partners
No matter how big or small the market may be, the success of your brand and its recognition in the new arena will greatly depend on word-of-mouth marketing. Quite simply, you need someone of note to vouch for you in the new marketplace, someone who is not only acquainted with the local trends, but is also a part of these trends as well. This needs to be a partner company or individual whom the local people trust.
What’s more, this partner needs to understand your business and your brand. They need to understand what sets you apart from the rest, what makes your offer unique, and why you deserve to be an equal player on the field. These local experts will be able to connect you with your new audience, and vouch for you in the competitive arena. Having the cultural, language, and local business contacts at your side will give you a fighting chance against the rest of the competition.
Expanding your business into a global market might seem like an appealing and lucrative opportunity, but the financial risks and implications caution against any rushed decisions. Instead, take the time to research the markets in question, develop a sound financial strategy, and get in touch with local experts that will help you make a positive impact in the industry.
About the Author
My name is Raul, editor in chief at Technivorz blog. I have a lot to say about innovations in all aspects of digital technology and online marketing. You can reach me out on Twitter.
