Strategic advice | May 2024 Market expansion: Tips to take your business into new geographies

Before expanding into new markets, it’s important to take stock of your company and where you are in the business lifecycle. You may need to focus on improving performance in your current market first. But if you meet these criteria, you’re likely in a good position for geographic expansion.

• You’re meeting key business goals. You have a robust base of loyal customers, consistently increasing revenue, and positive cash flow.
• There’s demand in other markets for your product or service. You’re receiving inquiries or orders from customers outside your current region, or customers are traveling long distances to get to you.
• You have the capital to make it happen. You either have the cash reserves to fund the additional infrastructure needed for expansion or you have access to credit.
• You have a solid team in place. You trust your staff to keep operations running smoothly while you shift focus to expansion plans. You also trust their skills and adaptability when handling new challenges.

Your industry is on the upswing. Key indicators for your industry predict continued growth, rather than stagnation or decline. 

Research is crucial to deciding where to expand. Rhodes encourages business leaders to use market data to analyze a location’s potential.

“What needs could you fill for customers there? What local competition will you face? Are there barriers like language or lagging infrastructure—and is your company equipped to handle them? All these factors can play into whether a market is right for you,” says Rhodes.

Social media can be another source of data to analyze. Your marketing team or a third-party vendor can track customer demand by monitoring comments from your company’s followers. Trends in requests for locations closer to certain places can give you an idea of where to look. But regardless of what you discover during the research phase, Rhodes says it’s a good idea to move gradually.

“Say you’re a manufacturer of windows and doors that you sell to residential builders in the Southeast, but you’d like to reach all 50 states. You might start by adding shipping or manufacturing in a neighboring region, like the Mid-Atlantic, before expanding nationally,” says Rhodes. “Or you may want to take a national grocery store chain global by opening stores in Canada or Mexico before heading overseas.”

Overcoming the obstacles that often go along with expanding into new markets could mean adjusting your operations, logistics, compliance practices, or other tactics. Your Truist relationship manager is a good resource for helping you find proactive solutions to issues like these.

Understanding the local hiring context – Labor laws and hiring practices can differ from state to state and even more so from country to country. It’s crucial to become fully versed in the region’s rules and customs surrounding areas like compensation and benefits, taxes, data privacy compliance, and onboarding and training.

“It’s also a good idea to research the local talent pool as you’re deciding whether to enter a new market,” says Rhodes. “Is the local economy robust enough to support workers with the skills you need? Or is there a pipeline with a local university that you could tap into? Consider, too, whether remote workers are right for your project. If so, you potentially have a global pool to choose from.”

Adapting your supply chain – Opening up operations in new markets means reevaluating your supply chain strategy. Can your current suppliers serve these new areas, or will you need to find new local suppliers? What about transportation? Even if trucking serves your purposes now, will you need rail or air options to reach new markets? And if you’re going global, you’ll face a new set of considerations, including international import and export requirements, such as tariffs, duties, and customs procedures.

Anticipating new regulations – Bringing your products to new states or countries could mean changes to labeling and packaging, safety protocols, environmental practices, and more. Each U.S. state has its own compliance standards for items ranging from mattresses to lead-acid batteries to skin care products. Colorado, for example, bans companies from selling cleansers, moisturizers, and other products that contain plastic microbeads.¹ Regulations will vary even more outside the United States. Doing your homework now can help you avoid fines or legal repercussions later.

Meeting local preferences – Successful geographic expansion (especially global expansion) often means adapting your product or service to appeal to local tastes, preferences, and cultural differences.

“For example, you may need to create new product packaging with appropriate language translations and hire multilingual customer service representatives,” says Rhodes. “It’s also a good idea to research cultural beliefs and traditions to ensure advertising and packaging don’t unintentionally offend. One example is the number four. In some East Asian countries, it’s considered unlucky because it’s pronounced very similarly to the word for death.”

You might also consider cultural sensitivity training for current staff as you hire additional employees in the new market.

Dealing with competition – Breaking into a new market can mean facing competition from brands that already have a local history and following. Differentiating your company may involve conducting deep market research to understand what you’re up against and what’s trending in the market. Then look inward to identify the characteristics that make your company stand out and use that differentiated value proposition to craft marketing and advertising targeting that area’s customers.

“Once you’ve built a local presence, you can begin measuring results and evaluating where you want to go next,” says Rhodes. “That’s the fun part of being in the growth stage. There are so many possibilities open to you.”