5 reasons startups should expand their business abroad

As a result, Times could be better for businesses. Still reeling from the pandemic and other issues, many countries are now facing the prospect of recession. The instinct for business owners at this point is to batten down the hatches, and limit the economic damage. Logic and experience suggest that this is the time to play things safe, not expand abroad.

But what if you did the opposite? What if, instead of reining in investment and scaling back your plans, you took the opportunity to grow? Sailing into the economic storm isn’t without risks, but it does present opportunities for savvy startups. Here are some reasons why – with the right preparation – now could be the time to expand your business abroad.

Weaker competition">Weaker competition

An economic period as difficult as the one we’re currently in doesn’t discriminate. If business is tough for you, it’s tough for everyone else. Indeed, it may well be worse where you’re looking to expand. That shouldn’t be a cause for concern, though, but one for optimism. If you can afford to expand abroad right now, you can capitalise on rivals’ issues – growing your influence while they lack the resources to react.

As your competitors are scaling back their marketing efforts, you can invest in yours. While they consolidate their output around proven products and services, you can launch new ones. When they’re sticking to only what is safe and reliable, you can take risks, and be bold in how you court and retain customers. A strong enough launch can put you on a footing to carve a permanent niche in a market. With competitors lacking funds and not expecting the challenge, they’ll struggle to address your arrival.

Cheap office space">Cheap office space

One of the more difficult aspects of expanding your business abroad is the need for office space. Starting a business in most countries will require a registered address, as will opening a business bank account, another common step in the formation process. While residents in a country might use their home address, a foreign business owner won’t always have that luxury. And though an office may not always be necessary to expand abroad, it does give you greater legitimacy.

While you can save money with a serviced or virtual office, the aftershocks of the pandemic are still affecting rentals. Thanks to the rise in remote working, many businesses have chosen to downsize, or even move to a fully remote model. On top of this, new rental apps and platforms have made office space easier to rent or buy than ever, minimising the need to deal with agents in a foreign language. This means a surplus of affordable office space in many countries – a boon for businesses looking to establish themselves internationally.

Investment in innovation">Investment in innovation

Paradoxical as it might seem, an economic downturn can actually incentivise investment. As listed companies tend to perform poorly in recessions, diminishing the value of your average stock portfolio, smaller and more innovative businesses can represent sound investments. While this won’t fit every form of business expansion, a rising startup that’s looking to expand into new markets could find it easier to secure the requisite funding.

Innovative startups looking to expand abroad can cause disruption in tumultuous markets, and – with the right approach – establish themselves more quickly than would be possible in a more stable period. As well as providing both immediate and long-term returns for investors, innovative businesses can also benefit from falls in interest rates. These are designed to incentivise consumer spending – something that could help shift your leading-edge products and services.

Valuable currency shifts">Valuable currency shifts

One of the symptoms of the current economic climate is the fluctuation in major currencies. While the US dollar has fallen a little, it’s in rude health compared to the euro, pound sterling and yen. Expanding from the US into one of these currency areas not only gives you access to dozens of different markets, but also allows you to harness this difference in values, reducing your initial expenditure.

These weaker currencies will reduce your initial income, at least as long as they remain weak. But sticking to these stable key currencies will reduce the chance of your investment being suddenly devalued. And the most difficult and risky part of expansion – the initial capital investment in premises, equipment and supplies – will make establishing yourself easier than it would have been.

Keen countries">Keen countries

An economic downturn is bad news for everyone, but it’s particularly problematic for governments. High inflation means lower consumer spending, meaning less money for businesses, meaning less tax revenue. This means less money for governments who have already had to prop up businesses through the pandemic, and now have to look at cutting their budgets across the board.

The consequence of this is that countries are more desperate than ever to attract foreign investment. This is happening even when it clashes with a stated desire to lower immigration. As a result, many countries across Europe and the rest of the world are now seeking to improve their investor visas.

New visa options in Europe include expanding tech visas, lowering investment capital requirements, and reducing wage requirements, as well as other restrictions on worker visas. All of these are designed to plug skills gaps and make up for immigration shortfalls. This is great news for expanding businesses, giving you a wealth of great destinations to choose from.

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Expanding your business abroad during a recession goes against most business instincts, but fortune favours the brave. While there is no guarantee that any business venture will work out, let alone one in this period, the current economic difficulties present a number of opportunities for businesses and entrepreneurs who are available to capitalise.

As established companies steel themselves against economic shockwaves, you can surf them in. By taking advantage of investment opportunities, being bold where others shy away, and filling the void of disappearing competitors, your business could gain a foothold abroad that establishes a global empire.