Many companies have considered expanding outside of their normal region of operation with varied degrees of success. Although there is no miracle solution which dictates when such a bold move should be made, every good leader should consider the following before taking such a life altering and potentially financially crippling decision. Let’s face it, there is so much more than signing a 5 year lease just to have a physical presence.
Check with Legal
This may seem as a no brainer. However, depending on where the new company would be established, the ease of doing business in said region will differ from location to location with legal requirements sometimes delaying the process. Factoring enough of a contingency for the legal processes in the exploratory research stage, could truly assist in the sealing the deal on the expansion or be the final nail in the coffin.
Recruit a local
Expansion models differ depending on many factors. However, most expansions would ultimately take the company into unchartered waters as it relates to culture and business customs. Having a point person on the ground could help break the cultural barriers and provide essential market intelligence. Some company’s even use a local rep in the initial stages when the virtual office is being established. A relatively low cost method with high returns with done properly. Or, other have partnered with smaller local firms in associated fields to gain insights and support on the ground with minimal risk.
Choosing a Growth Strategy
Depending on the product or service on offer, a company now has to review it options and ensure it employs the correct strategy for the best results. Some typical starter options include the home base strategy where a company could test the waters with ease by operating virtually outside its region. In this case, the company is dipping its toe in the water with little risk and can use this method to do more market research before committing fully. One step up would be a portfolio strategy where physical operations exist outside of region but office reports to home base. This option like the home base could be potentially difficult to gain market share if the head office or home base doesn’t adapt quickly. Understanding the market forces will help. The last option is establishing a full office which operates on its own with support when necessary. Some companies may have done extensive research and can make that financial decision or in some cases, operations at home are saturated so the next necessary step would be venture out to a market at an infancy level of growth to boost overall sales.
A good leader knows when his brand is strong. However, having a respected and strong brand in the home base doesn’t always mean others outside of the operating space would know your brand. No matter how awesome your PR efforts could be. A good way to get ahead is to develop your brand even before you enter the market. Support a cause to push your Corporate Social Responsibility across the shores and get noticed. Attend a conference or workshop in the sector to have a presence on the ground, network with persons in the similar sector and research opportunities on the ground.
The bottom line, research is key. Don’t’ know where to start? Speak to a company with business development and research skills with expansion capabilities. Don’t take a leap unless you ensure the water isn’t shallow.