5 International Expansion Strategies that Work

Businesses of all sizes can benefit from putting together international expansion strategies, or operating their business in new countries.

Expanding across borders is no easy task, especially for smaller and medium-sized businesses. Even major enterprises lack the in-depth local knowledge of a new country’s market, including hiring practices, marketing strategies, and product-market fit.

To successfully enter an overseas market and grow your business presence, you will need to create an international business expansion plan that both meets your organization’s specific needs and takes into account the new market. Otherwise, you risk sinking valuable investment capital and slowing long-term growth.

Why is global expansion important?

Global expansion enables businesses to hire top tech talent, expand their customer base, diversify their market presence, and make a positive impact on an international scale. International expansion will give you more business opportunities abroad, if performed correctly.

How do you determine your international growth strategies?

Every company goes global for unique reasons. Global expansion can mean mergers and acquisitions, branch spinoffs, remote work, hiring across borders using a global EOR like Justworks, and much more. At some point or another, almost every scaling company will expand internationally. You will base your global expansion strategy on your business’s unique situation.

Determining your international expansion strategy goals and budget

Expanding internationally means something different for every company. Large corporations and major enterprises might want to start selling their products or services in a new market because they see an opportunity to win customers and beat out the competition. Small businesses and scaling startups, on the other hand, are running on more agile business models, which means they probably are looking to mitigate risks by testing out the new market.

As a business, you will need to set your budget by asking yourself the following:

• Do I need local legal, accounting, and employment experts?

• Will the organization need to build a human resources team?

• Are we looking to hire talent across borders?

• How important is our brand abroad?

• Who is our target audience?

If your goal is to grow your customer base, then establishing a subsidiary, branch, or entity in a new country might make sense.

Businesses launching physical products and services into a new local market, on the other hand, will almost always need a physical presence as well as a way to understand cultural differences.

For those looking to open up their talent pool and hire employees in a new country quickly, partnering with an EOR service provider like Justworks makes more sense than going through the process of opening an entity. Having an EOR guide you through the hiring process is the fastest path towards new business opportunities and success.

Tip 1: Research new markets

When it comes to selling products and services, what works in one country might not work in another. This is why you need market research before building your global expansion strategy. You will need to segment and analyze your market abroad to understand your prospective customers. Understanding consumer attitudes and cultural nuances is crucial for developing a marketing strategy and building brand awareness. What are their values? How much are they willing to spend on your product or services? Do your products and services align with the proposed value?

Some businesses plan to expand into certain overseas markets because none of their competitors have a presence there. However, being the first business of its kind in a new market can sometimes be more difficult, since you won’t be able to establish clear benchmarks, or understand if there is even a market for your products or services. What sells easily in the US or Canada might not in Mexico or Brazil.

You’ll also need to keep up with international affairs and the socio-political landscape. How is Brexit, the war in Ukraine, the energy crisis in the EU, etc. impacting those regions? For this reason, it might be better to test one or more markets by region (Latin America, for instance).

Tip 2: Make data-driven decisions

If you’re entering a new market with competition, then you can perform a more robust gap analysis to determine what your competitors are already doing, and what types of services and products customers are looking for. You will need to set KPIs in each country, re-envision your local PR strategy to match the new market’s culture, and determine your specific position.

Most importantly, you will want to keep in mind the overall economic forces in the country. Is there a recession? How is inflation impacting overall consumer trends? Are there other resources you will need for your global expansion strategy? Is there anything else you need to consider?

Many businesses are struggling while expanding abroad because they don’t make data-backed decisions or set clear quantitative goals.

Tip 3: Localize for your new market

One of the biggest challenges for expanding businesses is localizing their services, marketing, and employment benefits for the new market. Many businesses think they can take the same approach towards expanding in each new market, but this is simply not the case.

If you’re expanding into a new country, you will need to modify your website and marketing strategy for the new market. As a high-level example, US-based companies expanding in Brazil might need to translate their website and marketing materials into Portuguese.

For businesses looking to hire employees in new target countries, localizing compensation and benefits packages is essential. This means paying employees in the local currency and offering in-country benefits. The process of navigating local benefits is complicated, which is why many businesses partner with an EOR like Justworks to care for their employees.

Tip 4: Understand the pros and cons of international growth

As your business expands internationally, you will need to make sure that your company maintains compliance. Otherwise, you might find yourself facing lengthy lawsuits, costly fines, or even a suspension of your business license.

Establishing a physical presence by navigating local laws and regulations. If you decide to open an entity, subsidiary, or branch, you will probably need to set up a local bank account, lease a physical office, and register your business with local government institutions, such as social security. This process can take months. For this reason, employers looking to hire talent or simply test markets can streamline the process by partnering with an EOR service.

Maintaining corporate records. Each country has their own laws and regulations for operating a business. Depending on local and federal jurisdictions, you will need to carefully file paperwork or face legal penalties.

Setting up global payroll, compensation, and benefits solutions. To remain compliant in most countries, you will need to pay your employees in the local currency and offer them government mandated benefits. For this reason, many people choose to partner with an EOR or PEO service to streamline their HR and payroll processes.

Applying for local certifications, patents, and trademark reviews. Each country has its own requirements, and completing the necessary paperwork can take months, or even years.

Maintaining privacy and security. Businesses that expand globally need to maintain compliance with data regulations such as GDPR. This means investing in secure tools for document sharing, IT, and end-to-end encryption, as well as partnering with vendors that respect employee and customer privacy. You will also want to work with human resources specialists or an EOR to ensure that your employment contracts safeguard IP/intellectual property protections across borders.

Timing. Expanding at the right time can help you develop a good brand perception and improve your overall positioning, while building your business in a new target market at the wrong time can lead to thousands–or even millions–of wasted capital.

Creating new organizational hierarchies and building global management. You will have new employees to hire and classify correctly.

Tip 5: Embrace remote work

Covid-19 drastically changed the way people worked. As employees started working from home in the beginning of 2020, many US-based employers realized they could start hiring new employees regardless of where they were located geographically.

Maybe you want to build a sales team that understands the local culture in a new country, hire employees with a robust network in another country, or build a customer support team in another time zone. Remote work has made going global more important than ever before.

Some businesses took the remote work revolution as an opportunity to start recruiting new talent across borders. The Great Resignation ignited a fight for top tech talent in the United States, leaving many businesses scrambling to find top engineers, content strategists, marketers, data analysts, designers, and developers. The larger the global talent pool, the better chance you will find teammates with niche skills.

While businesses were able to identify top talent in new countries, many of them did not have the infrastructure in place to hire, pay, and care for full-time employees or even contractors.

What remote work means for the global economy

Covid-19 also led to a boom in eCommerce and expanded customer bases, especially for digital services. The digital-first age has also made it easier to soft launch your product into a new market. Still, selling your products in a new country means doubling down on quality assurance, building out a cost-effective product production system, and understanding the changing needs of your customer base.

Which option should you use to expand internationally?

For employers planning to expand globally, ensuring that your growth strategy is sustainable (and hence scalable) is a must. Building out a presence in a new market can be costly, so you will want to choose the path that mitigates risks while keeping in mind your resources, timelines, and access to capital.

Before making a decision, you should perform an audit to determine what your organization will need in 1 month, in 6 months, in 1 year, and beyond. Many businesses perform a SWOT analysis to determine their sales and revenue potential, businesses strengths and weaknesses, and potential threats from the competition.

Once the audit is complete and the roadmap established, you can set your budget and begin creating a business operations model by determining your immediate HR needs and business mode of entry.

If you’re looking to hire multiple people, sell products in the country, or expand in a specific region over a long period of time, establishing an entity, subsidiary, or a branch makes sense. 

This method will require setting up a human resources team, payroll, accounting, IT, legal, and other functions. This process can take up to a year, which doesn’t make it a great option for businesses looking to hire new talent quickly–for this, you should consider partnering with an 

The bottom line when expanding internationally

No matter what approach you take, forming strategic partnerships abroad, from partnering with an EOR to acquiring or merging with a foreign business, is crucial for your international business expansion strategy..

Expanding abroad will come with its own challenges, so you will need to adapt quickly and restructure your international corporate organization around new global objectives.

Most businesses, and especially startups, are used to putting out fires in their country. While expanding abroad, that approach simply won’t cut it.

Justworks Can Help Manage International Expansion

Choosing the right EOR to help you expand your business internationally can be a game changer. Justworks’ global EOR services enables small businesses to hire international employees quickly, pay them in the local currency, and provide local benefits. It’s hard to know where to start and what to put in place abroad to protect business and your employees. At Justworks, we have in-country legal teams and entities set up to ensure that your payroll is protected and that you’re remaining compliant abroad. 

From access to top talent pools around the world to streamlined international hiring processes, the advantages of working with an EOR (and using Justworks) are undeniable. Get started today.