Buying an existing international company in 2023 can be a great way to expand your business into new markets. Here are the critical steps involved in doing so!
There are numerous ways to extend your business internationally, each demanding unique background knowledge, expertise, and commitment. They can range from expanding to setting up a subsidiary in a foreign country with expert assistance.
One popular method of expansion among them all is; buying existing companies. However, it isn’t as straightforward as it sounds. You must consider a wide range of complex issues, including selecting the appropriate target market, administration, product adaption, price, customs, marketing, and your company’s export capability.
The huge list of challenges may appear frightening, but you can overcome them by preparing your company and taking a planned approach. The following article presents nine steps you should follow to reach this aim and propel your company to new heights.
How to Buy International Existing Companies
Internationalization is a significant undertaking, but it can modify your organization and lead to tremendous prospects when approached systematically and thoughtfully. Let’s go over the processes of internationalizing a company:
Research your company and expansion goals
When it’s possible to start selling things in another country online without much trouble, it is a good idea to begin in many countries fast. But making your business successful worldwide requires more careful thinking and organizing. This is why researching your company and performing due diligence is the first step in this expansion journey.
Examine your business thoroughly before expanding globally. Consider the following points:
Ability to Grow: Make sure you have the resources and capability to start selling internationally. This includes having the financial means to commit for the long term. Also, consider whether you can expand your team, production, and support to handle increased sales.
Leadership Involvement: Ensure that the owners and senior managers support this expansion. If necessary, seek expertise from outside. You should appoint a dedicated senior executive to manage the international side of the business, as relying solely on the CEO could lead to neglecting other vital tasks.
Your Team: Check if you have enough staff for marketing, sales, and other functions. Identify any training needs or gaps, such as operating new equipment or communicating in the target market’s language.
Products/Services: Determine how you will differentiate yourself from competitors in the foreign market. Be prepared to adjust your offerings to meet the preferences of international customers. Selling well in one country doesn’t necessarily guarantee success elsewhere.
Preparation: Research what changes or additions might be necessary for exporting. Instead of waiting for orders before investing, plan ahead. Many businesses make the mistake of waiting for orders to come in before committing resources, leading to delays and damaging their reputation.
Choose your preferred country for expansion
Analyze each country’s market appeal using precise and trustworthy data. Consider the following aspects while looking for the most excellent fit for your specific goods and services:
- The demand for your goods and services.
- Local laws that may apply to your company.
- Taxation concerns.
- Certification and licensing.
Perform market research
Conducting market research and identifying possible markets for expansion is the third stage in growing your business into an international corporation. This entails obtaining and analyzing data about the financial, political, and cultural environments of the countries under consideration and the demand for your commodities or services in their respective local markets.
You can better grasp the opportunities and constraints in each possible market by completing a detailed market analysis, allowing you to make educated choices about where you should direct your efforts.
One can obtain information for market research from a wide range of sources, such as trade journals, government sites, industry studies, and research companies. You can reach out to other companies that have succeeded in expanding into global markets and benefit from their firsthand knowledge. You can improve your likelihood of success while preventing costly blunders by investing time in rigorous market analysis.
Look for existing companies
If you already own a business, looking for companies in the same industry can be really helpful. When you get a business that can fit well with what you’re already doing, you can save money, work more efficiently, and reach more customers. This makes it less risky than starting a new business and helps you use what you already know to do better.
Surprisingly, intelligent investors can also find a chance to buy a business facing a hard time in another country. It could be a hidden gem if you see a company in a different country that’s like your successful business at home but is having problems due to bad management or money troubles.
Trying something new in a different country’s business world can be scary. To make it less scary, consider sticking with industries you already know a lot about. This way, you can make smart choices, handle problems without being too worried, and do things that align with how the industry is changing. Knowing a lot about how the industry works can really help you succeed when you buy a business.
Create a business plan
The next stage is to create a sound business plan. Setting defined objectives and targets for your worldwide expansion, as well as defining the techniques and strategies you will use to attain them, is part of this process. A complete market analysis, an evaluation of competitors, a marketing strategy, a sales plan, a finance plan, an approach for managing operations, and logistics should all be included in the company’s business plan.
A well-thought-out business plan is essential for success in international markets. It will assist you with staying focused and on track and providing a plan for your expansion efforts. It can also help you secure financing and persuade interested parties for your company’s sustainability. You can enhance your chances of being successful and avoid typical errors by taking the time to create a sound business strategy.
Find partners and distributors
To grow your company internationally, you must find helpful partners and distributors. Working with local partners or distributors who already know the market can be beneficial. They guide you in the local business landscape, offering insights and connections.
If you sell products, search for a distributor to sell your items in a new country. For a service-focused business, a local partner could provide the needed expertise and connections for expansion.
When picking potential partners, it’s crucial to research their reputation, experience, and past performance. Think about how well they can represent your brand, the value they bring, and if your goals align.
Adapt your product offering
Are your current products and services right for the people in the countries you’re aiming for? Lots of businesses realize they have to change what they offer to make their international customers happy.
Use what you know about the market and what’s missing in your product to make it better for that market. Make sure to think about translations or words that might mean different in other languages. According to CSA Research, around 40% of people will only buy things if they’re in a language they understand.
If you’ve already made your product better, check it over again to ensure it follows the local area’s rules and expectations to avoid problems. Get ready for more people to use your stuff by making sure your systems can handle more users. Depending on the place, consider whether you should protect your unique ideas with patents, copyrights, or trademarks. This might cost a lot and take a while to get approved but can be pretty useful in the long run.
Learning about the market will help you know what people want in the countries you’re focusing on. If you can give people what they want, your chances of doing well will greatly increase.
Be aware of your tax and legal requirements
The foreign regulatory system is essential in the steps to global expansion. Most countries have numerous legislative criteria that must be completed to conduct business within their boundaries. For the essential certificates, review government and sector-specific rules beforehand.
You’ll also need to think about labor laws, visa applications, and insurance to protect your company and its staff. We strongly advise contacting local professionals who can help you with the inquiries and keeping all records.
The same issues confront tax and financial systems. They must follow local corporate policies and procedures. To reduce excessive business risks, outsource your legal and accounting requirements.
Monitor your business
If you’ve chosen to create a new independent team, you need to be adaptable in making rules and procedures. Look at how your company is structured and figure out what you need to do your part well. In your new market, you’ll have to handle everything related to your workers, like paying them and giving them benefits. These things might differ from what you’re used to, but your business’s values should stay the same.
The steps above will give the people, in charge of the new branch or subsidiary, enough information to make a budget. This budget should be ambitious but possible, and the local team should take ownership of it.
- Make a budget for three years, and update it semi-annually.
- Check how things are going every quarter.
- Compare your budget with how things are going in real-time or at least every week, and look at the differences.
