Identifying promising growth opportunities is crucial for success when running a small or medium-sized enterprise (SME). There are multiple ways to grow a business, but one of the tried-and-true methods is to enter a new market. By joining a new market, you can offer your goods or services to a whole new group of people, expanding your customer base significantly. But how do you know which new markets to enter?
Start with Detailed Research
It is never a good idea to enter a new market on the spur of the moment. It takes significant research and planning to do it properly. You should research all your options and study how similar SMEs have succeeded—or failed—in the market you wish to enter.
After doing some initial research online, it may be useful to mine some internal information sources. Does anybody in your SME have experience in the market you’re interested in pursuing? Analyze your sales data, too. It may reveal something about the demographic or geographic information of your customers that could help you decide which markets to pursue.
Secondary market research is also key. Data from secondary research can provide a high-level summary of market opportunities. This previously collected data usually concerns industry trends, consumer demographics, and market share. When you’ve narrowed down your options, it is now time for primary research. Primary research, also called field research, consists of conducting interviews and other first-hand research, concerning your product or business. Primary research is often time-consuming, and can be costly, so plan out beforehand what information you want and ask questions in pursuit of that specific information.
Strategies for Entering Foreign Markets
There are different ways to start operations in a new, foreign market. One is simply direct exporting. With this strategy, your SME sells directly to buyers in another country. Those buyers could be customers or other businesses. Initially, you might find it beneficial to go through a middle person, such as a distributor or sales representative.
You can also rely on another corporation from your home country that already has operations in a third country. If another company is willing to promote your products through its global inventory line, you can reduce risk and expenses, but you do lose some autonomy. A turnkey project is another alternative, which usually entails striking a deal with the government. This strategy is used mainly by service-oriented SMEs.
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