If your business has reached its limit in U.S. markets, it may be time to expand globally. The U.S. accounts for just 4% of the world’s population, so global markets give you access to far more potential customers. However, expanding globally requires careful planning and an understanding of the legal, cultural, and operational realities.
How to conduct an international market-entry analysis
Before you invest any money in global operations, you need to know whether your business can realistically succeed in international markets. A market-entry analysis helps you determine whether going global is worth the money and time commitment. Here’s how to perform one:
- Identify demand. Start by considering whether customers in your target region already buy products or services similar to yours. Look at industry reports, trade association data, import statistics, and consumer-spending trends to estimate the total addressable market.
- Evaluate competitors. Next, identify any existing competitors and study their pricing, customer experience, and perceived value. Consider whether you’ll need to adapt your product or positioning to stand out.
- Assess regulatory barriers. Before entering a new country, check whether your product can be legally sold there. Look into basic import rules, taxes or tariffs, and any labeling or safety requirements that apply to your industry.
- Choose a market-entry strategy. Some businesses ship their products directly to customers, while others work with a local distributor or set up a small office abroad. Each option comes with different costs and legal requirements, so choose the one that best matches your budget and comfort level.
- Model financial feasibility. Before expanding, estimate the basic costs you’ll face, like legal setup, logistics, hiring, or marketing. Make sure you also build in a buffer in your budget for unexpected costs.
- Compare several options. Compare potential countries using the same criteria, such as market size, cost of entry, competition, or regulatory hurdles. Scoring each market helps you choose based on facts, not assumptions.
One of the biggest mistakes you can make is assuming a successful U.S. product will automatically perform well internationally. The truth is, consumer habits and cultural expectations can be very different in other countries.
Top challenges small businesses face when expanding internationally
Understanding the true demand
One of the biggest mistakes you can make is assuming a successful U.S. product will automatically perform well internationally. The truth is, consumer habits and cultural expectations can be very different in other countries.
Even if those international customers buy similar products, they may prefer different features, pricing, or branding. Researching demand, studying the competition, and reviewing local buying trends helps you decide whether your current offering needs to be adjusted.
Managing higher costs
Expanding abroad typically requires more capital than most business owners expect. Beyond the basic costs of manufacturing and shipping, you may need to pay for:
- Legal support.
- Compliance research.
- Local marketing.
- Hiring.
- Travel.
- Product testing.
- New packaging.
These costs add up quickly, which is why it’s important to build a 10% to 20% financial buffer (based on monthly revenue) for unexpected expenses. You should also consider how you’ll fund the expansion. For example, some businesses use cash reserves, while others rely on financing.
Navigating legal and regulatory requirements
Every country has its own laws regarding consumer protections, employment, data privacy, and customs procedures. If you plan to sell physical goods, you may also face additional regulations related to labeling, packaging, safety standards, or ingredient restrictions. Misunderstanding these rules can lead to costly delays at customs, product seizure, or restrictions on sales.
Businesses that hire locally must also comply with foreign labor laws, which may dictate how contracts are written, how benefits are offered, and what protections employees are entitled to.
[Read more: How to Find a Foreign Distributor for Your Product]
Adapting to cultural expectations
Culture not only affects how customers view your brand, but it also matters for hiring and managing staff abroad. Expectations around work schedules, job titles, benefits, and management style vary widely. Visiting the country you would like to sell to, talking with local partners, and listening to feedback from locals can help you start on the right foot.
Ensuring operational readiness
Many businesses discover that they’re not operationally equipped to support international customers. For instance, shipments may take longer, or existing suppliers may not scale well abroad. Many companies find that they need new systems to make a global expansion work.
A realistic operations plan helps you uncover gaps early instead of investing significant sums of money, time, and effort only to reach a dead-end. Starting small in one country with a single product line allows you to test logistics and refine your processes over time.
[Read more: How to Sell Globally on Amazon]
Case study: A small business that went global successfully
In 2024, the U.S. Small Business Administration (SBA) named Spectrum International LLC the Small Business Exporter of the Year. The Georgia-based company was founded in 2017 and is a specialty contact lens manufacturer. The company employs 28 individuals and sells its products in more than 65 different countries.
The company used the SBA’s State Trade Expansion Program grant, which helps small businesses offset the costs of entering foreign markets. For example, the funds can be used for marketing, compliance, and export logistics.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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