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Overseas expansion is a great avenue for business growth, considering that 95% of the world’s consumers live outside of the U.S., according to the Office of the United States Trade Representative. Entering a country for the first time presents many opportunities, as well as many challenges, for companies seeking new, organic growth. Much of the time, failure can be attributed to setting course on a strategy with insufficient information, lack of knowledge or inexperience in the new market.
As CEO of a global Professional Employer Organization (PEO), I have seen the full range of outcomes for companies setting up in new markets: the good, the bad and the ugly. Here are some insights and best practices we’ve experienced in working with hundreds of companies over the years in new market entry.
Prioritize building a local team
To improve the likelihood of success, it’s imperative to identify the right people and resources to form the foundation of your company in a new country. Your new hires need to be drawn from the local market, with full autonomy, access to resources and budget authority. Many of your early steps overseas will focus on the “Who” not the “How,” to pay homage to the title of Dan Sullivan and Benjamin Hardy’s best-selling book. As a company founder or CEO, you want to prioritize putting the right people in the right seats to successfully launch and grow your business overseas, not mastering the endless minutiae, operations and compliance that comes with new market entry.
That likely means talking with business owners, connecting with market advisors and networking with people who can share experiences in the country or otherwise guide you. It may also mean working with a global PEO like my company, INS Global, to shortcut some of these initial steps to new market entry (more on that later).
AmCham: A good initial contact
For American companies interested in foreign expansion, the U.S. Chamber of Commerce runs a useful worldwide network of affiliates. These overseas-based, locally run AmCham entities are a great first step for resources, information and events overseas, as well as possible partnerships for companies looking at overseas expansion and foreign direct investment.
The U.S. Chamber of Commerce maintains a public directory of the 130 AmCham chambers and business councils in over 100 countries globally and is a great starting point as you look at the right people, partners and programs overseas to connect with.
With a presence in nearly every country worldwide, AmCham can provide guidance regardless of location. Some of their services include:
Networking, matchmaking and business facilitation opportunities;
Trade mission organization;
Government relations assistance;
Market and economic research;
Arbitration support and legal consultation;
Direct marketing assistance and export promotion;
U.S. Visa processing;
Keep in mind that AmCham’s focus is on helping American companies launch and succeed in foreign countries. If your company isn’t U.S.-based, many other countries have a similar network abroad to help with new market entry, such as the British Chamber of Commerce.
Network and engage
Connecting with individuals who have experience in internationalization can help you learn about the process and set realistic expectations, both of which are unlikely to come through reading alone. Seminars, workshops and business associations such as the European American Chamber of Commerce offer platforms to connect, as well as to share and learn from the experiences of others. To find some of these people, you can consult with the various national Chambers of Commerce, as identified above, local universities or online business network groups within specific industries in the market you wish to enter.
In addition to networking, mentorship can also be beneficial. Finding someone who has firsthand experience with the challenges of growing a business in your new target market can give you advice that’s much more applicable than anything you can read online. They may even be able to make contacts for you.
Depending on your target location, your embassy or consulate in that country might have resources available to assist you in understanding the local market, cultural nuances and consumer preferences. They can often provide you with an overview of costs of production, public-private partnership programs, compliance requirements and success stories from other foreign businesses that have succeeded in the country.
If you do contact your embassy or consulate, your main point of contact will most likely be the commercial attache or consular advisory officer, who specializes in assisting companies exploring foreign direct investment. Sometimes these individuals can provide you with lists of other companies from your home country that successfully entered the market there, networking events and initial introductions.
For example, the British Department of Business and Trade offers a variety of services to companies that are looking to invest or set up a business in the UK, through sector education, wealth management assistance, troubleshooting business environment issues and more.
Partner with a PEO
When exploring overseas expansion, you should consider ways to streamline the process by partnering with providers in some areas where you lack knowledge and expertise in the new country. For example, when working with a global PEO, you can hire people legally in the new market without needing to set up a legal entity yourself. This enables companies to set up a presence in a new country and hire a team within weeks, not months.
Success in market entry relies on allowing plenty of time to discover markets in detail and being willing to be a continuous learner. Meanwhile, having partners to help you and prioritizing a local team with experience can give you an edge.