Written by Colin McClelland in collaboration with Google LLC
If you’re considering global expansion that means your company is likely in a position where you need to take it to the next level for a variety of reasons. Read on to evaluate your strategy
1. What are five reasons companies expand internationally? What are the benefits?
- Raise revenue. Tap new customers in new markets. Your domestic market may be saturated and expanding globally may be the best route to grow your business.
- Add a competitive advantage. Starting foreign sales is a way to outpace your domestic competitors who may not be active internationally.
- Cut costs by moving manufacturing. You may find that production costs such as labour and property are cheaper in foreign locales than in your domestic market.
- Access a new talent pool. Entering a new market exposes you to new skilled workers and processes.
- Diversify your business. New markets offer opportunities to offer new products and services that you haven’t previously considered, and new ways to invest.
2. How do you start an online international business?
Please see the step-by-step Guide to Growing Your Business Globally.
3. How can you ensure that your company grows and expands internationally?
Start by following our step-by-step Guide to Growing Your Business Globally and use analytical tools to monitor your sales and suggest improvements. Keep abreast of regulatory, consumer, supplier and distribution developments in your market. For example, new laws, shipping constraints and competition trends. Check cost forecasts for commodities used in production to plan ahead. Adjust your prices.
4. What are some risks with international expansion?
Your target market is in a different country and you might have to manage operations there. Managing from afar is risky because you’re not there to personally see what’s going on. Visiting is costly in time and plane rides. Setting up a local manager is costly and requires trusting someone else.
Ensure your product, sales pitch, payment methods, websites and technology make sense in local languages and match local laws and customs. Some companies missed opportunities because they didn’t bridge cultural gaps between their home and target markets. You want website users to have the same experience globally, but local approaches vary to things such as gifts, gender relations, holidays and colours.
- Local partners
Some countries require foreign companies to have local partners and share intellectual property. Conduct due diligence on potential partners, suppliers and distributors across the entire process of production and sales. You might need to consult a lawyer who knows the landscape.
- Exchange rates
Currency valuations may also put your business at risk. You might be buying supplies internationally in U.S. dollars while consumers pay you in local currency. Political turmoil, disasters and trade disputes can directly hurt your business, besides the risk from devaluing the local currency. Many people globally have limited access to U.S. or Canadian dollars to pay you in those currencies. Customers paying in a foreign currency through a credit card will pay more in fees, and you’ll pay more in payment processing costs.
5. How do you grow your company internationally?
More than 50,000 Canadian companies export, and about 90 percent of those are small businesses.1 The confidence those companies have in international growth in foreign markets has expanded to its highest level in more than 20 years as the impact of the pandemic diminishes.
6. What are the benefits of international growth?
Export Development Canada found that 65% of exporters are looking for new markets, with the U.S., Mexico, Britain, Australia, France, Germany and South Africa as the leading choices. Also, 22% want to invest internationally, with the U.S. as the foremost destination, followed by China, Britain, United Arab Emirates, France, Germany, Australia and Brazil.
7. Which are the Canadian companies that have expanded internationally?
There are many Canadian companies that have expanded internationally. More than 50,000 Canadian companies export, and about 90 percent of those are small businesses.2 The confidence those companies have in international growth in foreign markets has expanded to its highest level in more than 20 years as the impact of the pandemic diminishes.3 Some large companies that went international include Scotiabank, Tim Horton, McCain Foods and Bombardier. Startups that eventually grew internationally include Lululemon, Canada Goose, IMAX and Herschel.
8. What has the federal government offered small businesses led by women?
Please go to the Canadian government website on its $6 billion Women Entrepreneurship Strategy, which has information on loans, networking and related programs. Export Development Canada has an extensive guide for women business leaders exploring new markets. The EDC Export Help Hub can answer questions and connect your marketers with people in specific areas of know how. EDC recommends developing an export plan with the aid of Canada’s Trade Commissioner Service, EDC’s Trade Accelerator Program including a women-only cohort, and Business Development Bank of Canada’s Business Strategy and Planning guide.
This list is not exhaustive so it’s imperative that you have additional conversations with your accountant, lawyer and banker about your unique business and the potential impact on its expansion. Start that conversation with a Scotiabank Small Business Advisor and read Your Guide to Growing Your Business Globally.
1 June 2021 Trade Confidence Index by Export Development Canada. Record rebound in Canadian trade confidence | EDC
2 Innovation, Science and Economic Development Canada Small business branch
3 June 2021 Trade Confidence Index by Export Development Canada. Record rebound in Canadian trade confidence | EDC