Benefits of global expansion in 2022
In today’s global economy, expanding your business to an international market is appealing for many reasons especially when it comes to increasing profit margins. Recent studies show that 45% of middle-market companies make more than half of their revenue overseas. However, there are more reasons to expand internationally than just profit. The fact is when it comes to outpacing the competition in 2021, thinking globally is more of a requirement than an option. In this article, we’ve looked at some of the key reasons why you might want to incorporate international expansion into your business strategy in 2022. Let’s get started.
1. Expand into new markets
When you’ve been operating in a local market for a while, finding new customers can be difficult. For many businesses facing this challenge, the main appeal of international expansion is the opportunity that untapped markets provide to increase revenue. Expanding internationally offers many businesses the chance to reach new territories and consumers, increasing overall sales. International expansion opens new doors and gives you access to a whole new set of customers who have never seen your product or service before, and your product could be filling a market gap in another country.
2. Diversify your profits
Going global gives you the chance to gain new revenue streams and diversify your profits. Decreasing your dependence on one single market can strengthen your business and mitigate risk, protecting a company’s bottom line against unforeseen events. Operating internationally also gives you the chance to offset any negative growth in one market by operating successfully in another. Especially if your product is seasonal, having multiple revenue streams from different countries can allow you to operate year-round too.
Having a strong corporate currency exchange strategy is crucial to managing your profits in an international market. Remember to incorporate this into your expansion strategy to ensure that you’re mitigating currency risk to maximize your profits. This can be difficult to configure yourself if you don’t have experience, so employing a currency specialist to develop a long-term currency strategy is a good idea.
3. Gives your business a competitive advantage
Operating internationally gives you many advantages over your competitors in terms of cost, staff, marketing, and more. The key is to access the international market before your competitors do. This will allow you to get out of a saturated market and find new customers who are eager for your product. If you can succeed internationally, this will also help to improve your status as a credible and lucrative company, which will make you stand out against competitors and make you seem more appealing to potential new staff.
4. Reduce business costs
For some companies, expanding internationally is driven by the opportunity to reduce the costs of producing goods. For example, in certain countries such as Malaysia and India, labor and materials have a much lower cost, which is why many manufacturing and warehouse operations are set up there. Fine-tuning your resources in this way can leave more money to be used elsewhere in the business in areas such as marketing or product development.
5. Benefit from global talent acquisition
Another great benefit in doing business internationally is that it gives you access to a wider talent pool. This is a great way to scale up your business in terms of skill sets and size. Hiring international candidates can bring additional benefits such as advanced language skills, new perspectives, more business contacts, and a different educational background. Language skills and knowledge of the local area will be integral to your company especially when communicating with your clients in countries you’re not familiar with.
6. Utilise local financial incentives
Companies that operate internationally can benefit from investment opportunities that don’t exist in their home country. For example, many countries will offer financial incentives to companies looking to invest in the area, such as corporate tax deductions. Developing markets, in particular, want to attract foreign business as it helps them to grow as an economy. When doing business abroad, you can tap into these benefits and use them to your advantage.
Of course, going global with your business won’t come without its challenges. Language barriers, local laws, and currency exchange are just a few of the barriers you will face during international expansion. For guidance on how best to navigate your expansion, read our guide that shares our best tips on how to expand your business internationally in 2022.