When asking the question “Is it worth the trouble to make my business go global?”, the answer is a simple one: Yes! If you really want your business to remain competitive, you must expand internationally. If not, your competitors certainly will and you’ll be missing out on much more than profitability. By expanding globally, you’ll be able to increase your cash-on-hand, acquire better employees, improve their production efficiency and iterate faster.
There is no doubt that we live in a global village. Teenagers and young adults are texting nearly 24/7, and you bet they all have an opinion on which phone is the best. McDonalds, Starbucks and Levi jeans can be found everywhere, and you would likely be hard-pressed, even in the most remote, 2nd-world countries, to find someone who has never used the internet.
Each day, more and more products are being shipped around the world, landing in the hands of consumers who have never visited the country of origin. For example, many of the products in the U.S. are manufactured in different countries, with one of the most well-known being China.
If your plan is to grow your business, you must have a plan for international expansion and really consider the opportunities you’ll have when you do ultimately reach a global market:
1) Get more customers
Like it or not, the United States roughly has about 4% of the world’s population, and that number is decreasing each day. China is in the lead with 19%, India with 17% and Southeast Asia with 9%– and these statistics are growing every day. Furthermore, not only are the populations of these regions rising, their GDP per capita is as well. While the U.S. does hole nearly one-third of the world’s purchasing power, that number (as you might have already guessed) is falling quickly.
2) Get access to a larger talent pool
When you’re in the need of a specific talent, such as skilled engineers, you will only be limiting yourself and the potential of your business if you only stick to your region. However, when you expand nationally, you’ll no doubt have access to greater numbers of skilled workers and highly-educated professionals.
3) Make your business more profitable and efficient
This should go without saying, but taking your business to a global level will certainly increase the number of potential consumers of your product or service. Not only that, but you may also be able to extract higher margins.
There is no question that when exporting products your costs will change; however, you should also consider the fact that it’s been shown that consumers in developing countries will pay the higher cost for access to higher quality products that are well-branded.
When we first think of companies like Apple and Walmart, no doubt the two largest companies of the era, we must keep in mind that it’s the economies of scale that helped make these companies. Many assume that once they increase their output through international expansion, they can do so with much lower variable costs– and this is certainly true. With lower variable costs, you will be able to increase margins, offset exporting costs with reduced production costs and you’ll be able to keep your prices more competitive within your home country.
4) Iterate at a faster pace and make better products
Regardless of consumers’ different tastes and opinions, once you export your products, you will instantly have the opportunity to gain new insights about your current domestic offerings, as well as encourage new ideas for products that may serve both markets.
It is no secret that international expansion will soon be standard operating procedure for nearly all business ventures. Just look back 15 years ago, when it was a rare thing to have an online presence. Now it is almost unheard of not to be active online. Global expansion is definitely the next wave of commerce.