Expanding your services to a new location outside your local domain signals business growth. This piece examines the benefits of starting an international business, its challenges, and how to overcome the constraints.
3 benefits of starting an international business
Why should you expand to a new audience? These are some of the benefits you’ll enjoy if you do so.
1. Access to a wider customer base
Every business thrives on customer patronage. Extending your services to new shores gives you access to consumers in a different market.
2. Increase profitability, sales, and revenue
Unless you’re a non-profit organisation, you’re in business for profit. Business expansion brings recognition and access to a new customer base, two recipes that boost sales, revenue, and profitability.
3. Improve competitive advantage
In simple business terms, competitive advantage sets you apart from your rivals. It includes cost structure, branding, customer service, and product quality. All the factors give you an edge in production and service delivery, causing increased sales or superior profit margins.
Entering a new market will help you achieve economies of scale (the cost per unit advantage of delivering service to a wider audience), branding and marketing, and collaboration with talents and experts that’ll give you an edge over competitors.
Challenges of starting an international business
Despite the benefits of moving to a new market, it’s not a walk in the park. As a business owner, these are the likely challenges you’ll face.
1. Legal and regulatory compliance
Moving to a new market means you have to navigate the different laws guiding your industry and the service you offer.
Some of the regulations you’ll deal with are listed below:
- Tax obligations
- Labour and consumer privacy laws
- Data protection compliance
- Product safety standards
- Customs duties, tariffs, and intellectual property (IP) protection
2. Financial and cross-border payment constraints
Business expansion is rarely cheap. You need money for new hires, product development and delivery, and marketing.
The financial expenses extend to international remittances and foreign currency fluctuations, which affect overhead costs and profit margins.
For instance, the cost of sending money to Nigeria from overseas increased for the 15th consecutive year in 2023. Similarly, micro, small, and medium enterprises (MSME) cited “high exchange rates” as the joint fourth-highest economic impediment in 2020.
The scarce foreign currency is why Oguntoyinbo Olayinka (WOW Superstores) relies on multiple sources for overseas payments.
“I don’t rely on one source of payment to avoid disappointments and I sometimes use Alipay when buying from China. Also, due to the $100 limit, I have to spread the payment across many accounts or use different cards when other options are not available. The naira equivalent is then deducted from my account,” Oguntoyinbo explained in 2022.
Others, like Akhewu Jennifer (Bliss & Bloom Nigeria owner), resorted to sourcing foreign currency from the black market to pay international clients.
She said, “In 2021, I tried getting $2,500 from my bank directly so I can travel with it and sort out payments. [But] it took them almost 10 days to even process it and I still didn’t get it despite presenting documents. I had to go back to my agents to buy [dollars] even though it was much more expensive.”
These data points and business stories suggest that your business success hinges on international payment smoothness (or lack thereof).
3. Supply chain complexities
The supply chain deals with the network of individuals and processes responsible for creating and delivering products to consumers. It covers raw material sourcing, assemblage, packaging, transportation, and customer service support for returned items.
While the supply chain isn’t the sexiest part of business, how and when you deliver products is crucial. This explains why brands are investing in supply chain management improvements, as Shopify’s data reveals:
Brands are investing in supply chain management to improve business outcomes. Source: Shopify
3 ways to overcome international business expansion challenges
You already know the problems of starting a business internationally. Now let’s discuss the solutions.
1. Conduct market research
Leap before you jump is true in life and business. Market research helps you understand consumer behaviour, economic, cultural, and political factors affecting business operations, and market opportunities for your products. Knowing the environment will help you make business-friendly decisions.
2. Set up a borderless payment solution like Crane
Besides dealing with unnecessary documentation and processing fees, traditional financial institutions (e.g., banks) take time to settle international payments. In contrast, the blockchain is a secure, borderless solution that requires less processing time and is open to anyone.
Crane is a typical example of a blockchain-powered payment service for receiving money from international clients from anyone, anywhere, in cryptocurrency. The benefits you’ll enjoy with Crane include:
I. Swift processing time with Bank Direct
Transaction delays are frustrating for businesses. Our blockchain-powered platform lets us complete transactions in five minutes or less, unlike banks and other third-party payment platforms.
We also provide bank direct for swift and automatic crypto-to-naira conversion. This is your cup of tea if you don’t fancy interacting with the crypto market, which many businesses understandably prefer.
II. Low transaction fees
On Crane, receiving money in crypto is free, and you’ll only pay 2% of the amount to convert the crypto in your Crane wallet to naira.
NB: Crane is an off-ramp platform, meaning you can only receive (not send) payments in crypto.
III. Security
We adhere to the relevant financial regulations, including the Know Your Customer (KYC) policies the Central Bank of Nigeria requires for customer identification and accountability.
3. Don’t sleep on logistical partnerships
You can’t run an international business without collaboration. In this case, a logistics partnership will solve the delivery dilemma.
The factors influencing the delivery partner include:
- The nature of your products
- Delivery speed and schedule of the prospective logistics company
- Geographic coverage
- Costs
Examples of logistics organisations that offer international shipping are listed below:
Business growth is rarely linear. Success requires dedication and calculated financial tweaks. This piece, however, provides relevant tips to make business expansion easy for you.
