There are a lot of opportunities for businesses in Canada, but with today’s technology disruptions it’s easier and easier to enter the global market. It used to be that, to expand in foreign markets, small and medium sized businesses (SMEs) needed to invest heavily, hire local staff, and establish a local office, warehouse or manufacturing operation. That’s no longer a given as technology recognizes no physical borders. In 2014 the Mckinsey and Company said:
“Flows of goods, services, and finance reached $26 trillion in 2012, or 36 percent of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders, and more than one-third of financial investments are international transactions. In the next decade, global flows could triple. Our scenarios show that global flows could reach $54 trillion to $85 trillion by 2025, more than double or triple their current scale.”
If you are planning on going global, here are a few things to consider.
Know your market
Don’t just assume that your success in Canada will automatically translate to different countries. For some places (like the US) the market might be very similar, but even in a place like the US you need to do your homework. You need to be aware of the different legalities in place and local competition. These factors can vary greatly within a market as well.
Be in it for the long haul
You need to be prepared to wait. Traditionally, most companies don’t start producing a positive cash flow in a new global market for two to five years. Plans often get interrupted by bureaucratic issues, and currency fluctuations can wreak havoc with profit margins. Because of the many potential complications, it is good to focus on one market at a time and not expand too quickly.
The government wants to help
Canada provides many resources for businesses looking to expand outside of the country. Export Development Canada (EDC) and Business Development Canada provide insurance and financing for goods and services exported from Canada. Also Industry Canada, EDC and Foreign Affairs, Trade and Development Canada (DFATD) offer data on various locations economic, social and political factors. They can also provide help in making business contacts in your chosen market as well as help you select local service providers such as lawyers or accountants.
Understand the culture
How to do business can vary across cultures and really put a wrench in your plans if you’re not prepared. You need to be familiar with local customs and how they view and develop business relationships. Many find it helpful to partner with a local business person, especially when different languages are involved.
Planning is key for the global market
A good plan is vital when expanding your business. The seismic changes in technology have helped make doing business across boarders more achievable for SMEs but you can never take success for granted. Political, social, environmental and economic factors will always be in play and can dismantle even the most carefully laid plans.
Talk to us at Inclera to find out how we can help you expand your business.