5 Biggest Mistakes Businesses Make When Expanding Internationally

International expansion could potentially be one of the most important stepping stones to your company’s long-term growth and profitability. However, there are some common pitfalls to be aware of when you introduce your business to international markets. Here’s a list of some of the biggest mistakes businesses typically make when expanding internationally. Understanding these mistakes can help you avoid them when working to expand your business into new international markets.

1. Not Understanding The Local Culture In Your Target Markets

Localization is one of the most important processes to be attended to when expanding a business internationally. There are multiple facets of localization to be considered. 

This is crucial even if your company is already successfully marketing products or services in the same language elsewhere. For example, if you’re already successfully marketing in Mexico, it would be a mistake to automatically assume that you can use the same marketing materials in Spain, Puerto Rico, or Argentina without having them reviewed by a local expert in the new region. There are always going to be regional cultural differences to take into consideration. It is all too easy to overlook small nuances that could result in the failure of your company’s marketing efforts in the new location.

One of the top priorities will be sourcing expert translators to translate your documents and marketing materials into the local languages spoken in your target market. If you don’t already have good translators on staff, and you don’t plan to hire them, you can use an online service such as RushTranslate to accomplish this. 

When you do marketing on behalf of your business in a foreign market, you will also want to be sure you’re hiring local experts to evaluate the marketing materials to ensure they are culturally appropriate. Many businesses have failed to take this important step, and as a result, have found that their marketing efforts failed. 

2. Failing To Make A Solid Plan For Expansion

Without a plan for expansion, your efforts are likely to fail – and making a solid plan entails having a detailed understanding of your business goals and aspirations. 

You must first decide if you plan to export your company’s goods or services to the target country or if you plan to establish a presence for your business in that country. 

If your plan is to establish a presence in that country, you then have to decide whether it’s better to establish a branch or a subsidiary.  You’ll also have to decide whether you need an office there, whether you’ll hire workers in the target country, and what, exactly, those workers will be doing. Will the workers be freelancers or employees? How many hours will they work? Which benefits will you need to offer to comply with local employment laws? In each case, the taxes due and legal requirements will be different.

3. Not Understanding the Local Laws in the Target Country

Each region you do business in could be expected to have its own set of required licenses and its own procedures for international tax registration. You can’t just ignore these important aspects of doing business in another country. 

If you don’t understand the laws in the country you’re expanding into, it is all too easy to inadvertently break them. Doing so could leave you with a huge mess to clean up when you finally figure out what you’re doing wrong. 

For example, in some countries, it is possible to create a branch simply by hosting an e-commerce website in that country. For some countries’ tax laws, you’ve set up a branch there if you’ve rented shared office space there. Once you’ve done these things, there’s likely to also be an obligation to register with any relevant government agencies in the country where you’re doing business. There’s also an obligation to pay tax on any income that’s attributable to the local branch. 

4. Not Working With Qualified Advisors

Your certified public accountant is qualified to advise you on tax matters within your home country. However, it would be a mistake to exclusively rely on the advice of your local CPA when it comes to tax matters relating to international expansion. Unless your CPA is specifically experienced with taxation requirements in the target markets where you’ll be doing business, you need to hire local experts in those target markets. 

The same goes for lawyers, business advisors, real estate professionals and any other professional advisors your company routinely works with.

5. Appointing the Wrong Channel Partners

It’s extremely common for businesses to appoint channel partners because those partners took the initiative of reaching out, making contact, and asking to represent them. It would be a mistake to accept such an offer without doing further research to ensure that this channel partner would really be the best fit for such an arrangement. 

It’s possible to make countless other mistakes beyond these – however, these are 5 of the most common mistakes businesses make when expanding internationally. If you’ve been tasked with helping a business expand into international markets, you need to be aware of these mistakes and take any necessary precautions to help the other stakeholders understand how to avoid them.