When your business growth has come to a standstill, you might have at some point, thought about expanding to new overseas markets. New market entry is a significant leap and can present many new challenges. It is a disruptive process.
The benefits, however, far outweigh the required effort and potential risks. Done correctly, with the right assistance, the downside is minimal. What is important to realize is that the decision is urgent and immediate action is necessary. You cannot afford to wait.
Here are 5 compelling reasons to expand overseas:
1. Increasing competition
Similar to you, most business operators in Singapore will agree that business is challenging at the moment. Given the relative ease of overseas companies entering Singapore, besides facing competition from local companies, you are also fighting for market share from foreign competitors. Many industries are nearing a state of oversaturation, especially retail.
Expanding into new markets will give you access to millions of new potential customers. Competition levels, market saturation, and sales cycles could well be way more favourable than your current environment.
China, for example, is set to become the largest consumer market with sales for this year predicted to be $US5.8 trillion. That is not something that can be ignored. Many markets are already way ahead of anywhere else in the world and retail and e-commerce are growing rapidly.
Doing business in China is not without its challenges but there is great support from companies that can assist and guide you through the process as well as numerous government assistance and grant programmes available.
2. Take advantage of government grants and support (while they are still available)
While expanding into foreign markets is becoming increasingly important it can be a daunting task. The good news is that there is a lot of support available. There are many incentives and government grants that will make the transition faster and easier while removing much of the risk.
These incentives and support offerings will make international expansion a much better prospect but they are not going to be there forever. This is just another reason why you cannot afford to wait.
If you own a local SME, some assistance programmes and grants that you can take advantage of to ease your expansion goals are:
Enterprise Development Grant (EDG)
Market Readiness Assistance (MRA) Grant
SME ‘Go Digital’ Programme
Productivity Solutions Grant (PSG)
3. Increase brand recognition
A powerful and recognizable brand is essential in the modern competitive business environment. International expansion can increase the visibility and impact of the brand. You will also benefit from economies of scale with brand building marketing particularly with digital marketing.
Operating a cross-border or international business has other advantages. It will boost the image, credibility, and prestige of your company in all markets. There is a perception that big is better.
4. Diversifying business risk
If you only have a presence in one or a small number of markets your business is at the mercy of conditions in those economies and markets. As we have seen time and time again in the recent past, even thriving economies can suddenly experience a major downturn. Often this happens very fast and with little warning.
The best way to mitigate these risks is to diversify into other markets. Natural disasters, political conditions, legislation, shifting consumer trends and economic factors are just some of the threats that could radically change a particular market. Growth in new markets could offset the decline in existing markets.
Diversification is also an opportunity to rejuvenate the business. You might have reached maturity in existing markets with sales hitting a plateau. Expanding into new markets could give you access to a market that is still in the growth stage.
5. Your competitors are doing it
Most markets are competitive these days but you might well find an edge in new markets. The issue is that many companies have already realized this. Many have already expanded into foreign markets or have made significant progress towards achieving this. When your competitors enter a foreign market and you do not, it gives them a distinct competitive advantage. The longer you wait, the larger this advantage becomes. It will become increasingly difficult for you to successfully enter those markets once they have established a firm presence. Urgency is critical.
Obviously, if you are the first to enter a new market, this gives you a significant advantage. Once you have established a presence and started to grow your brand awareness, your competitors will have a greater challenge when they attempt to expand into those markets.
It will also give your company exposure to new technology, business methodology, ideas, and talent. All of these can enhance operations and performance.
The more successful your business is, the greater the threat of competition and therefore the higher the urgency to expand. Often it is not an option to expand but essential for survival.
Final thoughts
It is clear that there are good reasons to explore new markets and that there are companies and programmes available to assist you. It is essential to ensure your company is actively working towards this if you are not already active overseas. Competition is not going to go away or decrease and the longer you delay, the harder expansion will be. Get the right people working with you and take action now.