How to expand your business in 3 steps? (+ Luxe Talent’s Case Study)
There's a point in every company's journey when its strategic region becomes too small to achieve business objectives. This means it could be the right time for the company to expand globally. But are you ready for this? This new phase can be stressful and risky, because of all the legal work and procedures involved. At Luxe Talent, we recommend you to approach it as a marathon rather than a sprint. This way, you can guarantee successful results when expanding your business.
Want to know how to survive the Retail game? Check this article!
1. Is your business ready to join the international league?
As the Entrepreneur recommends in its article on Global Expansion before you start planning for expansion, you should ask yourself these questions:
- Why do you want to expand your business?
If you are not thinking about long-term growth, your capabilities are limited, and you are not willing to be patient, then perhaps you are not ready for this next step. Also, it’s advisable to consider your team's opinion and commitment, otherwise, you are taking a risk.
- What is your target market for expansion?
You need to be clear about where you want to go in order to determine the best way to do it. Learn about the culture, its economic situation and behaviour, as this can help you understand whether your business will be successful there. For example, if your business sells sportswear and snow equipment, and you were thinking of expanding to Panama, it is not the best option after identifying that there's no snow, perhaps Chile or Argentina might be better options.
- Are you confident in expanding to that region?
If you don't feel comfortable with the market you are reaching, then maybe you should ask yourself if it's the right one, and look towards other options.
- Is there a chance to sell your product or service there? Will they buy it?
It would be a risk if you invest in a new market without considering the local competitor and the interest of potential customers in your product or service. If you are a fashion, cosmetics or furniture company, you need to know exactly what competitors you have and what your proposal value is in order to differentiate yourself.
- Are your potential clients aware and knowledgeable of your product or service?
If your product is totally new to the region, you need to be aware that this process will take time and money, as you need to increase brand awareness as well as knowledge of your product. You will need a very strong marketing and PR team that knows what strategies to implement to promote your brand and products. This will certainly include recruiting new professionals who are fluent in the market language.
Leave the first research process in safe hands. Have a finance, development and research team that knows how to give the right answers to your questions. This also means good recruitment. It's OK to question your decisions, and you may not be choosing the best country to grow up in. It's better to acknowledge difficulties and mistakes at the beginning than when you are fully committed.
2. Benefits of expanding your business:
The main objective of expanding your business is to improve and grow the business. It has indeed several benefits when it's executed correctly and with caution. However, we must see this as a long-term transformation.
Listed below are some advantages:
- By finding new markets and/or niches, you are increasing the lifespan of your current products or services. For example, Miin Cosmetics maintains its tradition and focuses on the Korean cosmetics niche.
- You are no longer dependent on a single market and can reduce risks.
- If you sell seasonal products or services, expanding into other regions (e.g. USA and Australia) with the opposite weather cycle will allow you to be actively selling all year round.
- You can compete with domestic companies (in that country) and even become a leader in your market. Zara, the Spanish fast-fashion brand, can be considered one of the leading international fashion brands, for example in Italy (104 shops), France (127 shops), and China (183 shops).
3. Ready, Set, Go!
After having determined where we want our new market to be and that it’s reliable to take the big step, we need to follow these 6 steps:
- Develop your international expansion strategies and campaign, which should include a business plan with your objectives and needs.
- Research and study the market you want to enter, including its regulations. Remember, each country operates differently, and you must comply with their protocol. In addition, doing this research may help you to understand the demographics, and establish an accurate purchase price for the customer.
- Define the structure of your business. This is the part where you determine how your business will operate. To select the structure, you need to identify your goals and what you need, and then you can choose the one that fits better.
- Determine your product distribution methods. Think about how you will bring your product to that region; it could be by opening a physical shop, or by contacting external distributors. Here you can negotiate with intermediaries and external services. Make sure your brand has the same essence and perception around the world.
- Seek assistance. In some countries, the government helps local companies invest abroad. Find out what the requirements for financing and insurance are, and whether you meet them. Consider that you need to have sufficient capital for long-term growth.
- Recruitment and training abroad. Remember that people always come first. You will never expand well if you don't have the right team by your side. If you are thinking of expanding, you may know that you are going to invest a large amount of money and there is no Plan B. An efficient alternative is to hire a Recruitment Consultancy to help you find the perfect team in a short time. It doesn't matter if you don't know the salaries in this region or the language, a professional recruitment consultancy will always give you the best advice on the market in which they are experts.
Once you have completed these 5 steps, and you are sure that you comply with the regulations and standards (remember that every country has different ones), you can start exporting your product to the new location. But keep in mind that people are the core of every company. Make sure you have the right employees by your side. These people should know perfectly well the peculiarities of the region you are investing in.
Successful expansion case study with Luxe Talent: the arrival of Christian Louboutin at Paseo de Gracia, Barcelona:
September 2017: The boutique’s opening is announced.
Louboutin had worked exclusively with Luxe Talent in France for several vacancies. In 2017, the brand was determined to expand its business and would open a new shop in Barcelona.
As Louboutin did not have any shop in the city, they wanted to ensure the process was done correctly by enlisting the assistance of experts. They contacted Luxe Talent as they knew the quality and the result of their work, the company has more than 10 years of expertise in the Spanish region. After contacting them, and explaining their needs and expectations, Louboutin asked for a team of 6 people (1 Store Manager, 2 Assistant Store Managers, 4 Clerks - Russian and Chinese speakers).
November / December 2017: Seeking the perfect candidates and interviews
Louboutin was very precise in the requirements and the soft skills they were looking for: a real passion for the brand (to be a "true brand ambassador").
Luxe Talent aims to work as partners of the brands (in this case Louboutin), which allows them to become an extension of the company when they are looking for their ideal team. The Luxe Talent team works with efficiency and transparency, to keep the selection process clear with the client at every step of the way.
January 2018: Contracts
Once Luxe Talent had the ideal candidates for the expansion of the brand, meet the needs and expectations, and was approved by Louboutin, the incorporation process began.
February 2018: Boutique opening
A completely new team, that represented Louboutin, opened the new store in Passeig de Gràcia, 97.
Nowadays: the same team recruited from the beginning is still working there!
Louboutin trusted in Luxe Talent and their skills to seek the perfect team, and that’s what they did. The 6 retailers in the Barcelona store continue to work there for years. The team was happy and there were no rotations, and the company was reducing costs and happy with the outcome.
We understand that expanding your business is not an easy task, and it can become time-consuming. But, that is why we are here to assist you through the process. If your company is searching for a new opportunity abroad, do not hesitate to request our service. What we did for Louboutin, we can do it for you!?
If you want more tips, follow us on our social media: LUXE TALENT on Instagram, LUXE TALENT on LinkedIn, or in our academy RETAIL ACADEMY on Instagram, RETAIL ACADEMY on LinkedIn.