Whether you’re planning to expand your business to another state, cross-border, or across the ocean, the business expansion process and all the potential unknowns can be rather unnerving. If you’ve managed to steer clear of being one of the 8 or 9 out of 10 businesses that fail, the last thing you want to do is kill that which you’ve built by not planning properly before expanding to new territories or countries.

The following roadblocks will hit you squarely where it hurts (i.e., the bank) if you jump into an expansion of your company without knowing all the parameters that might be standing in your way:

Detour

1. Culture gaps

Walk a block or two in any city and you’ll encounter a new culture. It should then be obvious to most businesses that the culture will change as they set up a new shop elsewhere. Forget to say sorry to a Canadian and you’ll forever be in their bad graces. Take the Lord’s name in vain anywhere in the world it’s not acceptable to do so and you’re out of business.

Understanding the culture comes from learning. And learning requires you to ask the people who know more than you do (ie., locals). Be ready and willing to learn; consider paying for a local consultant to make sure you have all the eyez dotted and tees crossed.

2. Money (lack of it)

It takes money to make money wherever you go. If you don’t have enough funds, likely due to a poorly-formed or executed budget, you’re in trouble before you even get started. Expansion requires money, and usually lots of it.

If you don’t have the cash or credit, you better have a backup plan, such as a ready and willing angel investor that you can call on for financial help when you get stuck.

3. Failing to market test the product

You’ll find stands where you can buy any manner of edible creepy crawlies almost anywhere throughout Asia. In Europe, the UK or America, you’d have to look really hard and perhaps drive several miles to find a bug stand or store.

This is because things are different wherever you go. A little market research, as they say “can go a long way.” In the case of a fledgling expansion effort, it can mean the difference between a cold or lukewarm welcome to your product and a hot-sizzling-profitable one. Make sure you know everything about the cultural, financial, legal and regulatory nuances of the market you’re considering to enter before moving forward.

4. Assembling an inappropriate team

There are so many ways this one can go wrong. From promoting existing employees to oversee operations in a new cultural situation, to failing to properly vet local employees at the new location.

Different business directions

There’s no right or wrong. You just have to recognize when limitations will crop up: mostly with language and cultural differences. Take your time and hire the right people; even if it requires delaying launch so you can get to know and trust locals who can get the job done best for the company.

5. Poor management structure

How often have you experienced situations where management actually got in the way more than it helped? If you’re like 99.9999% of us in the working world, probably several times – perhaps so many you can’t even count them all.

Give your team in the location the power to manage the business themselves, with only the most important of predesignated issues and permission requests to be brought to your head office’s attention. Upper management oversight is a huge roadblock to expansion success, particularly if it isn’t knowledgeable about the market and does nothing more than to impede basic day-to-day decision making.

6. Legal problems

This is most common with SMEs who feel they can jump into the national or international business ring without hiring lawyers experienced in the laws of doing business in their new area of business operations.

While many experts will tell you to study the regulations for a certain area on your own, the smart experts will tell you that a lawyer or other highly recommended expert (i.e., someone experienced in doing business where you’re setting up shop) is the only way to go if you want to save yourself time, money and heartache in the long run.

Now over to you…

Have you experienced other expansion hurdles that aren’t listed above? Leave a comment and let’s get a discussion going.