16 Nov Global Expansion in a Challenging Economy for Tech Companies
In March 2020, the global economy was hit by a wave of uncertainty due to the Covid pandemic. In most areas, not only did economic growth slow down, but also there has been a significant rise in uncertainties. It’s difficult to run any business under these circumstances. The market is less interested in new investments and businesses that don’t have an immediate impact on the bottom line. This is certainly affecting your company as well. It’s time to review your business strategy and see how you can expand your company internationally in this time of uncertainty. Let’s explore some key questions you need to ask yourself before taking that step forward:
What will your business be into in 5 years?
As you look ahead to 2023, you need to imagine how your business will operate and ask a few questions:
- What will it look like in 5 years?
- What will it be responsible for?
- What products will you offer?
- How will it be structured?
- What will be the business model for the company?
It’s important to think about all of this because it will give you a clearer idea of your long-term goals for the company. It will also help you narrow down the most important things you need to focus on for the short-term. This will hopefully make the expansion process smoother. It’s also worth keeping in mind that your business may change significantly between now and 2025. In this environment, you need to be ready for that to happen.
Is now the time to expand internationally?
As the prices of raw materials, energy and service costs increase, it’s easy to knuckle down, carry on as you are and hope you can ride out the storm. The predicted growth in high tech industries as a result of smart cities, means IoT and our reliance on GNSS technologies remains high. This gives way for smaller, more dynamic, high-tech companies to expand into core global markets. Their lean nature gives a distinct advantage over larger companies as they are usually quicker to adapt and adopt.
How can you keep your costs low when doing international expansion?
As you look at ways to expand internationally, the first thing you need to consider is the costs associated with doing so. In today’s market, it’s important to find ways to keep costs down.
You have fewer customers, so you have to work harder.
You have fewer sales, so you have to work smarter.
You have fewer employees, so you have to do more with less.
When expanding internationally, you will have to look at different ways to keep costs low.
You may want to consider:
– Setting up a new office in an emerging market. This can help to bring the cost down of your overall operations. You can share resources and local knowledge, expertise, and experience, with an in time-zone approach. Though setting up an office in another country can help to save costs, it can also be both time consuming and add additional layers of financial responsibility and liability to your company.
– Prioritizing your products and features. When you’re expanding internationally, you need to make sure that you don’t add too many products and features to your product. The market you’re expanding into is likely to be more focused on core features. Prioritize your features to make sure you don’t over-extend yourself.
– Outsourcing departments in your company. Many of today’s companies do not have the resources to hire talent into their departments (admin, sales, logistics and so on). Outsourcing some of these can certainly be the more financially viable solution.
Here’s an example:
Outsourced business development and sales companies, especially ones that operate globally, will have local knowledge, connections, and sales channels experience in region and most likely already be able to leverage an existing network which is in place to get your product to the right market. This level of expertise comes with years of experience that your company may not have, or may not wish to invest in, straight away, from day one.
Admin companies will have specialists in your industry, allowing you to operate in the most efficient way, ensuring your staff and customers’ needs always come first.
Offshore manufacturing and logistics companies may be a cheaper option for when you start to sell internationally, reducing distribution costs in the process.
What is the growth market for your product or service?
When you’re looking at ways to expand your business, you also need to consider where you want to grow. This will help to determine your growth strategy. The main question you need to ask yourself is what is the growth market for your product or service? For example, if you’re looking at expanding into the defense, aerospace market or specialize in the timing industry, you want to make sure that there is a significant amount of demand for your products or services. This will help you to determine the best growth strategy, one that perfectly fits your company.
Bottom line
With the global economy so uncertain now due to the aftereffects of Covid-19, the war in Ukraine and global cost of living crisis, it has never been more important to analyze the cost of growth for your products and services if you are looking to expand internationally.
In our opinion, this requires careful planning and a key strategic view into what growth markets there are, to enable you to fully maximize and sustain your company growth.
If you would like to discuss your technology and feel your company could benefit from our guidance and experience on local international markets and your growth plans for 2023 and beyond, get in touch to book a conversation and make sure you follow us on LinkedIn.
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