How to expand your business to new markets

Thinking about expanding your business internationally? If you’re not sure where to start, this primer can set you on the right path.

The first step involves building up your own global trade expertise. After all, you wouldn’t dream of running your company without professional legal counsel and accounting experts. The same holds true for international trade proficiency. This article shows you how to start developing those skills.

“Of course, the best time to diversify was years ago, but the second-best time is now,” says Lora Rigutto, the partnerships and community lead at the Forum for International Trade Training (FITT).

She’s referring to the uncertainty of global trade in the current economic climate, stressing the importance of Canadian businesses expanding into markets beyond the United States.

If you need proof of the benefits of diversification, consider this: There wouldn’t be global brands, if going global didn’t pay off. If you become intimidated by the stature of these international behemoths, remember, they all started out as domestic companies and began their expansion, typically, one market at a time. You can, too.

“When I think of the most successful Canadian companies we work with—from small to medium to large—they’re all doing business in multiple international markets. Interestingly enough, they’re all in search of their next market and they all say the same thing: ‘We wouldn’t exist today if we didn’t export,’” says Someyita Bictogo, a senior relationship manager with Export Development Canada (EDC).

Bictogo shared this and other frontline experiences in EDC’s May webinar, Planning for expansion in a changing global market.

According to Rigutto, there are three key questions that business owners need to answer to assess their ability to expand globally:

1.  Are you committed to the concept of market diversification, or more specifically, are you going to be strategic about your global expansion?

She warns that amid all the trade tensions and tariff uncertainties many Canadian companies are having a knee-jerk reaction to going global. But market diversification isn’t a quick fix; it requires time to screen new potential markets, assess the feasibility of expansion and develop relationships over time. None of that will happen without buy-in from the top.

Be sure your C-suite has developed a global mindset and that your key stakeholders support your company’s export vision. International expansion has a way of trickling through and affecting all aspects of your operations—from product development through to after-sales support. You’ll need all divisions working together for your growth plan to go from vision to reality.

2.  Do you have the resources to expand into overseas markets?

You’re going to need financial capital to expand operations to new regions, which for some companies is a major barrier to growth. Leaning on an export credit agency, like EDC, can be a way to bridge any financing gaps.

“Access to working capital is often the tipping point between a company staying local or going global,” says Bictogo.

“We work closely with businesses and their commercial bank to tailor financial solutions that support their growth ambitions while managing the risks of international expansion.”

Rigutto added that it’s also important in the planning stages not to neglect the necessity of human capital. Personnel planning is just as important as financial and legal planning.

3.  Do you have the capacity to expand and scale?

It’s a case of “be careful what you wish for.” Performing a readiness assessment is critical to determining if you’re truly capable of exporting beyond North America. “Before entering a new market, it’s essential to assess not just your product-market fit, but your operational readiness,” says Rigutto.

“We often advise professionals to think beyond the first sale. Can you deliver consistently, meet local expectations and scale sustainably?”

For example, the business opportunities in the Indo-Pacific are almost limitless. But if you can’t deliver that massive order while doing business in Malaysia, you’ll never get a second chance.

If you’ve answered ‘yes’ to the preceding questions, then you’re likely casting your eye towards your existing business development (BD) team as a ready source of human capital needed to usher in your international growth.

But just because you have an incredible domestic BD department, doesn’t mean they have the requisite skills to help you penetrate markets beyond North America. What works at home doesn’t always work elsewhere.

If your budget allows, you may want to engage an international market research and consulting firm to lead your global growth planning and execution. For smaller and mid-sized companies, hiring a Certified International Trade Professional (CITP) consultant is a considerably more affordable alternative. You can search the FITT Membership Directory to connect with international trade professionals from across Canada, the U.S. and around the world.

If you’re leaning towards building this competency internally, start by identifying an individual or team to spearhead your market expansion efforts. You’ll need a project manager who has the capacity to investigate and navigate myriad trade complexities—from different business cultures to logistics and regulatory regimes. There’s a lot to learn, so choose someone who’s proven to be nimble in the past and has the ability to connect all the dots, then support their learning path.

Through its Learning Centre, FITT offers a variety of courses and workshops to kickstart the process. Rigutto recommends beginning with the Feasibility of International Trade online course, which can help determine whether new business opportunities are viable, and if the potential benefits outweigh the risks and costs. It’s a minimal investment with an outsized return that could be invaluable in determining your next steps.

If you’re pleased with the results of the first course, you may choose to support your project manager until they receive full CITP certification, knowing that your company will benefit throughout the process. As your international trade expert-in-training works their way through accreditation, they can put into practice what they learn, as they learn.

The main difference between being opportunistic versus being strategic boils down to research.

Being opportunistic, as the word implies, involves jumping in the direction of where the opportunities arise. For example: You receive several inquiries from a large buyer in India, and say to yourself, we need to be doing business in India. Being strategic involves diving deep into the ocean of research to determine where in the world are your best opportunities—not to simply sell, but to make the highest returns.

“Smart research is the foundation of smart exporting,” says Rigutto. “We encourage companies to use data to validate assumptions and uncover hidden opportunities, especially in emerging markets where the potential is high, but less obvious.”

It takes a lot of effort to see a foreign deal through; there better be multiple potential buyers in that market to support the upfront costs.

Which is to say, initially, you’re not looking for specific customers, but rather, narrowing down which market offers the highest net potential. According to Amber Piché, an export advisor with the British Columbia-based Export Navigator, you should break down your research into three distinct parts: Regional, industry and market.

Regional research

By regional, Piché is referring to key indicators, including:

• Population density
• Gross domestic product (GDP)
• Government stability
• Protectionism
• Localization requirements

“The bottom line: You want to determine the relative ease of doing business in a particular market or region. To do that, you need to weigh a variety of indicators against each other to see the pros and cons of a market. You’ll definitely want to know if there’s a free trade agreement in place, since that can really add to the ease of doing business,” she adds.

Industry research

From an industry standpoint, you’ll want to look at how yours is performing in a particular market. Take a look at both the import and export sides of the equation to determine how much of a particular good or service is being imported by the prospective market, and which countries are currently exporting that good or service to that market. Those figures will help you calculate raw demand and competition.

You’ll also want to look at regulations: The target market in relation to the country’s population and what types of culturalization adaptations would be appropriate.

Market research

When doing market research, you’ll need to take a more detailed look at the competition, including local, as well as international players exporting to the region. This step involves fleshing out what you learned during your “industry” investigation. Ultimately, you want to understand current market penetration, future market potential and ideally, the average revenue per user.

Piché adds that once you’ve covered these three basic lines of inquiry, you’ll want to get more granular:

• Look into the logistics of getting your product to that market;
• Determine what would be the best market entry strategy; and
• Develop pro forma financials to analyze how doing business in a prospective new market would affect your bottom line.

Once you’ve completed your own research and come up with a preliminary market expansion plan, it’s time to validate your assumptions.

Part of Canada’s trade team, the Trade Commissioner Service (TCS) has more than 1,000 trade experts operating in 160-plus cities around the globe. Collectively, it’s their job to help Canadian companies do business globally.

This starts closer to home in the TCS regional offices located across Canada. If you have a draft export plan and would like it reviewed, reach out to the TCS regional office nearest you.

“They’ll help you to think critically about whether the market you’ve identified is really the best fit for your product or service. That outside perspective can save you an enormous amount of time and money. Once the conversation starts in Canada, they’ll loop in folks like me, the people on the ground in the markets you’re targeting,” says Anouk Bergeron, consul and senior trade commissioner for Brazil.

It's the ability to access these “people on the ground” that can make all the difference to Canadian companies venturing into a new market. Bergeron and her sector-focused team work out of the Consulate General of Canada in São Paulo, where they’re totally immersed in the local business landscape.

They have the expertise to pinpoint where the real opportunities are and how to avoid common pitfalls. Most importantly, they can connect you with buyers, suppliers, distributors, agents, legal advisors, logistics providers and others—literally every player, you’ll need to tackle your new market.

As Bergeron points out, the TCS is able to open doors that would otherwise take months—if not years—to access. Best of all, their services are free.

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This content was partially created using generative artificial intelligence (GenAI).