New Zealand’s relatively small domestic market means many of our businesses eye offshore opportunities to boost their revenue. But expanding offshore can also help counter local market fluctuations and seasonal downturns, for example, and boost a company’s competitiveness as it gears up to take on new territories.
1. Are you ready?
Despite the many potential benefits of offshore expansion, it’s not without its risks. So firstly you need to assess whether your firm is ready and resilient enough to take on those challenges.
Ask yourself, are there other opportunities at home that would be easier and more profitable to explore first? Do we have access to the capital and people capabilities required (while still keeping our domestic business growing)? And do we have the hunger and stamina to succeed offshore?
2. Define your target market
If you’ve assessed that heading offshore is the right move, the question is ‘where?’ If you’re a small firm, from a small country you won’t be able to take on the whole world at once – or perhaps even one whole country; a particular state or even a city may be a more obvious target. Which offshore markets look most like the ones where you’ve already achieved success? Where do the bulk of your offshore enquiries come from? Where are others in your market succeeding?
3. Research, research – then research some more
You may have a good idea of where your products or services will resonate, but you still need to validate the opportunity: how big is your actual market and what will it cost to acquire those customers?
Desk research can help you understand the political, economic, and business climate of the area you’re targeting, and the cultural, language and regulatory barriers you may face. Then there are considerations such as foreign exchange. New Zealand Trade and Enterprise and ExportNZ, for example, offer detailed information, as can local economic development agencies.
Ultimately, however, there’s no substitute for spending time in-market. Even places that seem much like home have their own nuances that may not be evident until you’ve experienced them first hand.
4. Seek advice
Connections are vital when you’re looking to do business offshore, and often the best way to make those is to seek advice from others who have ‘been there and done that’. This could be business owners who have already found success in the markets you’re targeting; experts who specialise in helping New Zealand companies access offshore markets; or other organisations – such as The Icehouse, Kiwi Landing Pad or your bank – that have the connections and capabilities you need.
5. Make a plan
There are a number of different approaches you can take to international expansion: setting up a subsidiary company to sell directly to consumers either through a physical or online presence; engaging a distributor or an exporter; acquiring an existing business; or perhaps setting up a joint venture. And that means coming up with a business strategy around how you’ll utilise a particular approach, or approaches.
This is where in-market connections become so important. If you’re wanting to use a distributor, for example, you’ll want to find a partner who’s as invested in success as you are (and who won’t let your products languish on shelves alongside hundreds of others they’re representing).
6. Stay the course
Success in any new market won’t happen overnight, especially when it’s not on home turf. Your offshore strategy should include realistic timeframes (with some contingencies) for reaching sales targets, backed by sufficient resources to see those through.