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Key Financial Considerations for International Business Expansion

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By Zak Goldberg

Much like any new venture with a business, it’s a smart idea to first fully assess a number of key financial considerations with your international expansion, to make sure it’s the right move for your company.

International expansion can bring a wealth of benefits including: increased sales, more exposure for your brand, opportunities to work in other niches and much more. So, before you start making your first steps abroad, think about some of the following to get your finances in order:

 

The Cost of your Expansion

The first place to look is at the possible expenses incurred from your expansion. This might cover a variety of areas like:

  • Time and staffing dedicated to researching and scouting overseas locations and markets
  • The costs of purchasing a new headquarters
  • Travel time between your current and new location
  • General staff recruitment, training and provisions
  • Machinery, tech and facilities for your new site(s)
  • A new fleet of vehicles for your logistics

The next step here is simply be realistic about whether or not a full-scale overseas expansion is something your business can afford.

 

Potential Sales Revenue

When researching the location for your expansion, you will have probably looked at aspects like how receptive the markets are to your products or services. As well as this, you should use this information to inform the potential revenue you could expect from successfully working in this new country. Having a clearer idea of the possible ROI at stake could also help you determine how quickly you could recover financially from your expansion investment.

 

Extra Overseas Operational Costs

You’ll already appreciate just how much you need to manage and think about for your overall domestic operations and ultimately the same will apply for any locations you set up and start running overseas. You can’t simply double the typical costs of this though as you might also need to pay for local staffing or external support in areas like:

  • Translation work on your company’s website, products, branding
  • Networking and understanding the cultural nuances of the country
  • International supply chains to support your company
  • Sourcing materials and goods for any manufacturing
  • The general work carried-out on and off-site

 

Additional Support

After you’ve done some initial planning, you may also want to look into how you can source additional funds to support this. The bigger your cash reserves the better placed you’ll be to facilitate your growth and there are several different ways you could go about this.

You might want to look at securing a business loan from a bank or lender, or pitch your expansion ideas to your investors to see if they put forward more capital for this. Anything you can gain financially, whether large or small, can be incredibly valuable.Final Thoughts

Once you have taken the above into consideration you should then be in a better place to go ahead with your expansion. A final piece of advice here would be to make sure you regularly report and reassess your financial situation, as there might be instances or circumstances where you need to spend more than you first thought. This way you can move money around to support the different areas of your company that may need it.

 

About the Author:

Zak Goldberg is a Law & Business Graduate from the University of Leeds who has chosen to follow his aspirations of becoming a full-time published writer, offering his expertise on FinTech and business economics.

 

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