Most business owners have a goal at one point or another to be able to expand their business internationally. However, as time has told again and again, there are many obstacles that stand in the way, whether it be lack of information, advice, or support. As a result, many entrepreneurs delay or even give up on their expansion plans due to the seemingly daunting nature of their aspirations.
The benefits of international trade are self-explanatory; the only way for a business to grow is through an international market. A company with a solid business plan and a confident team will have no problem abroad. The only thing out of an enterprise’s hands is the unpredictability of currency rates. With a trusted currency expert on hand, it is never too early to expand your business abroad.
The main advantage of expanding abroad is the introduction of a new market. With more production, firms are able to capture economies of scale and produce at a lower cost per unit. With increased revenue, a company will be able to hire more personnel, leading to increased productivity. New employees bring a fresh pair of eyes to the office and could stimulate more efficiencies. Furthermore, with the increased market share, the company will not have to worry about financing as their strong financial position will allow them to acquire assistance with no problem.
All that being said, firms should beware of growing too quickly. If expansion makes the firm unable to keep up with financial obligations, the company is in trouble. In addition, a subpar plan in an international market could have catastrophic effects when the team is underprepared and lacks adequate knowledge of the market.
Although there are potential disadvantages to expansion, the benefits far outweigh the costs. Furthermore, most costs are manageable and kept internal. For example, compromised quality as a result of rapid growth is easily contained with internal controls in place. Putting off expansion will only be disadvantageous as your company will be less experienced in the international marketplace compared to competitors. Again, the only cost of international expansion that is out of a company’s control is the volatility of the foreign exchange market. A broker will be able to hedge the risks of the market appropriately and uniquely to each and every business.
An early start to international expansion will give a company more time to acclimate to the new environment and thus get ahead of their competitors. When currency fluctuation worries can be laid to rest, a company will have more capacity to focus on their business and grow sustainably.
Posted in Business Resources on Apr 12 2018