For most companies, the big goal is to expand into international markets and thereby reach new levels of success. However, global growth is not a simple process without the right expertise and preparation. We talked to Partner Director Nordics, Borislav Sinik in G-P (Globalization Partners), to get his views on the subject. Boris is also a speaker at the UT Trondheim Conference on 13th March.

“When looking to expand into international markets, it is best to do some research before making a big leap. It is crucial to consider markets where local infrastructure is robust enough to support your operations, the ones that best fit the products or services you offer, and the ones you can best navigate local regulations, laws, and tax codes. It’s also advisable to start with a small team and get help with local research and local culture.”
- Borislav Sinik

Underestimating the challenges involved in expansion is more common than you can imagine. Even the most successful and well-established companies can experience difficulty navigating the obstacles that come with entering local markets.

Our team at G-P is committed to making international growth a quick and painless process for companies like yours. That’s why we’ve gathered 10 key expansion mistakes to be wary of as you begin your growth journey — all of which are known for hindering expansion progress.

1. Beginning without a strategy

Improvisation is a recipe for disaster when it comes to your expansion strategy.

Establishing a plan or blueprint to your growth ensures the process is more structured and sustainable while mitigating risk and ensuring efficient use of resources.

To define your strategy, start by analyzing your business to understand its strengths, growth potential, available resources, and value propositions. It’s also important to evaluate your target market, local competition, and ideal customer base. This will help set clear objectives and define a timeline to track progress.

2. Noncompliance with in-country labor laws and regulations

Companies should enter new markets with a clear understanding of the country-specific local labor laws and regulations. These laws often involve complex legislation around taxes, employment contracts, employee benefits, and other key employment factors.

Failing to comply can lead to major setbacks and penalties, including everything from hefty fines to lawsuits and a damaged reputation that can have lasting impacts on your brand.

3. Trying to be a pioneer

Many companies make the mistake of trying to break the mold by doing something completely new or different. However, when it comes to global expansion, there’s no clearer path to success than using tried-and-true models and methods.

As companies test the waters in new markets, they should consider replicating strategies that helped other companies succeed.

After all, it’s easier to avoid problems if companies take a step back and learn from the mistakes and successes of those before them.

4. Relying solely on internal expertise

International expansion requires in-country expertise and knowledge — from a deep understanding of cultural customs and business etiquette to the local labor laws.

Without local experts to guide them, most companies will find it overwhelming and time-consuming to fully immerse themselves in all aspects of the local business culture. Experts will help companies define the best strategies to enter and succeed in the new market.

5. Never understanding the local competition

Failing to research the competition is one of the most detrimental mistakes a company can make as they enter a new market. Many forget that the competition they’re up against in their headquarters’ market can look drastically different and require entirely new strategies in their new market.

It’s crucial that companies analyze their new competitors, including their brand image and mission, their product or service, and their competitive advantage. This will provide a realistic overview of their position in the market and help determine which market will be the most lucrative prior to move-in.

6. Failing to adapt products or service

Many companies that have already succeeded in their current market fail to realize the importance of adapting their product to their new market. Consumers are diverse, competition varies, and prices can change drastically, requiring significant updates to core operations and the product or service itself.

7. Letting top talent pass you by

Many companies assume that it's best to either relocate an existing employee to the new country or limit their recruitment strategy to that new location. Nowadays, with the right partner, companies can hire anyone, anywhere in just days, so they can be sure they're securing their ideal candidates, regardless of location. Organizations that fail to leverage the global talent pool may find themselves missing out on some of the world’s leading professionals.

It's also important to take into account that what high-caliber professionals consider competitive as far as benefits and compensation go will vary country by country. Adjusting offerings to align with these expectations and cultural norms will ensure companies are better able to attract and retain local talent.

8. Misclassifying workers

Another common mistake companies make is misclassifying their workers.
Classifying full- or part-time employees as contractors, and vice versa, can lead to hefty fines and legal consequences. It is fundamental to properly classify employees based on the country’s tax and labor laws to ensure compliance.

Before each new hire, companies should carefully consider the advantages and disadvantages of hiring employees versus contractors. By first understanding what is best for them in the long run, they will mitigate misclassification risk.

9. Underestimating complexity of global payroll management

Payroll management is one of the most complex aspects of international growth. Therefore, it is vital to ensure you are fully prepared to compliantly run payroll in the new country, especially before moving forward with any potential candidates.

Factors such as country-specific currency, taxes, and withholdings are essential to consider as it is the employer’s responsibility to pay their teams accurately and on time.

10. Overlooking the importance of cross-cultural communication

Cross-cultural communication is one of the biggest challenges for companies expanding internationally. They must consider that communication styles differ across countries and cultures. Therefore, it is critical to invest time in understanding these varying cultural norms.

Leveraging technology, such as platforms like Zoom and Slack, will help ensure regular and clear communication and build successful connections and relationships across cultures and teams.

Expanding internationally can be an incredibly rewarding and game-changing stage for businesses. However, getting started without the right planning and expertise will cause organizations to make mistakes like these.

With nearly a decade of experience helping companies expand across the world, we’ve seen the challenges that companies are up against. That’s why our teams at G-P are here to handle the costly and time-consuming processes that often make global expansion a headache. We’ve backed our fully automated Global Employment Platform™ with our robust team of experts to guide you, every step of the way.

About G-P

G-P ensures companies avoid common mistakes when expanding globally. Through our industry-leading SaaS-based Global Employment Platform™, we help find, hire, pay, and manage team members, quickly and compliantly — no subsidiary or branch office setup required.

10 International Expansion Mistakes to Avoid