Should You Expand Your Successful Business Overseas?

Imagine you’re an Australian who wants to expand your food-based business to Singapore, based on market research showing that Singaporeans are foodies. Since your delicious lamington sponge cakes have done so well at your bakery in Byron Bay, you feel certain that they’ll be treated as delicacies in Singapore. Singaporeans will simply love your sweet sponges, dipped in chocolate, coated in coconut, and stuffed with Australian home-made jam.

Since you’re too busy to travel in person, you’re thinking of sending Fred, one of your bakers, to Singapore, bake lamingtons at a friend’s restaurant there, and see how well people like them. You can pay Fred his standard salary as well as cover on-the-go expenses by using a service like Ria Money Transfer Australia since they have several receiving locations throughout Singapore. If the idea works as well as you think it should, then you and your friend might partner to open up an Aussie bakery in Singapore.

Novel Ideas Sell Well

Although this is a completely hypothetical story, it illustrates a key idea about how a small business can expand overseas:

Essentially, what works in your neck of the woods may work even better elsewhere—because what is familiar to the people in your urban neighborhood will be exotic to people in other parts of the world. As a result, what sells reasonably well at your own store, restaurant, or other retail business, preferably something you make or manufacture yourself, could be a huge hit elsewhere.

If your business is doing well where you live, then it might do even better in another country.

Two More Reasons for Expanding Overseas

The idea of increasing sales from your product because it will be seen as a delightful novelty in another country is only one example of why you should think about expanding your business overseas.

There are, in fact, two more reasons to consider expanding your business overseas:

Seasonal fluctuations – You can reduce seasonal fluctuations. If your business does well only at certain times in the year, but business tends to be slow and unprofitable at other times of the year, establishing a business in another country may help balance your income flow.
Future market saturation – You can reduce your dependence on the markets of your own country. Good business ideas tend to get copied by competitors who come up with variations on a theme. So, if your business model is doing well right now, there may be a time when market saturation will reduce your profit margin.

But Will Your Product Sell Overseas?

Although there are at least three good reasons to expand your business overseas if you’ve proven your business concept, there is also the possibility that your idea will be so unique that it will fall flat.

Before investing in building your business overseas, here are three things you must first research.

Research if your idea will work in another culture. Going back to our apocryphal story about lamington sponge cakes, it’s possible that this is something that only Australians relish. It could be that people in an Asian culture won’t also fall madly in love with it. Testing your idea out before investing in it is essential.
Research if your idea is well-known in the target culture. If lamington cakes are not well-known in Singapore, two possibilities emerge. One, people will love it because it’s simply delicious. Two, you may need to invest in a product story to market the idea. Perhaps, you might want to share the funny story of how the eighth Governor of Queensland, named Charles Wallace Alexander Napier Cochrane-Baillie, who was the second Baron Lamington, came up with the idea for the cake which is his namesake. The British colonial administrator discovered the sponge cake after a maid-servant incorrectly followed the instructions for a cake recipe.
Research the culture of the country. Will you or your staff feel at home in that country or will it be difficult to learn the language and integrate into that culture?

Final Thoughts

In conclusion, expanding your business in another country could do well or abysmally. While there are many good reasons why it’s a good idea to start a business in another country based on your existing business model, you’ll need to do plenty of market research to decide whether your proven business concept will also flourish in another culture.