How to plan an international business expansion strategy (2025)

Thinking about taking your business international? It's an exciting prospect for small to medium-sized enterprises (SMEs), and for good reason! International expansion opens up a world of opportunities, from tapping into flourishing economies to navigating domestic financial crises more effectively.

But before you set sail on this exciting journey, it's essential to approach it with caution and careful planning. Going global presents its own unique set of challenges, and the risks can multiply when you step into unfamiliar territory. That's why crafting a well-thought-out growth strategy is vital for ensuring long-term sustainability and prosperity.

To help you navigate the waters of international expansion successfully, we've curated a five-step action plan that covers all the crucial aspects of going global. From devising your go-to-market strategy to figuring out the ideal local presence, recruiting, and safeguarding your profits from currency exchange fluctuations, we've got you covered! Keep reading to embark on your global growth journey with confidence.

Why international business expansion is worth exploring

Thinking about taking your business beyond borders? Smart move.

Global expansion isn't just a strategy for large corporations — it's increasingly becoming essential for SMEs looking to thrive long-term.

Yes, your home market provides a strong foundation and continued local growth is crucial. But expanding internationally can unlock additional growth potential that complements your domestic success.

Expanding internationally opens doors to opportunities you simply can't find at home, like:

• Fresh customer bases that have yet to experience your best-selling products or services
• Protection from economic downturns — while one market might be struggling, others may be booming, meaning less impact on your growth trajectory
• Competitive advantages gained from fresh perspectives and global insights
• Enhanced brand credibility that comes with having an international presence

Companies that expand globally also tend to build more resilient operations. Why? You're forced to streamline processes, improve communication systems and create flexible approaches that work across cultures and time zones.

The financial benefits are compelling too. International markets might offer lower production costs, tax incentives, specialised talent pools and economies of scale that boost your bottom line in ways you hadn't considered before.

Of course, these exciting opportunities come hand-in-hand with unique challenges that require careful navigation.

Common challenges and risks of global expansion

While the benefits of going global are enticing, they come with their fair share of challenges. When expanding your business internationally, here are just a few of the roadblocks you might face:

• Legal and regulatory hurdles: Entering different countries means different rules. Miss one important regulation and you could face fines or operational shutdowns.
• Cultural misalignments: What works brilliantly at home might fall flat abroad. Products, marketing, and even business practices often need significant adaptation.
• Entrenched competition: Local players already have customer loyalty and market knowledge you'll need to work hard to match.
• Operational complexity: Coordinating teams across time zones, languages and cultural expectations isn't just challenging — it's a whole new skill set.
• Financial volatility: Currency swings can turn profitable ventures into loss-makers overnight. Plus, pricing strategies rarely transfer perfectly between markets.
• Building trust from scratch: As the new kid on the block, you may be starting with near-zero local brand recognition or credibility.

These obstacles explain why many businesses approach international expansion cautiously, with thorough research and preparation. Understanding the specific challenges of your target markets is the first step toward navigating them successfully.

Let's explore how to tackle these challenges with a solid, step-by-step approach to international expansion.

5 steps for building your global expansion strategy

Expanding into new markets doesn't have to feel like navigating uncharted waters without a map. Success comes down to having a solid plan that guides your decisions, helps you dodge common pitfalls, and maximises your opportunities. Think of these next five steps as your compass for international growth.

1. Do your research

While it might sound obvious, many SMEs find themselves skipping this crucial step, as they are uncertain of how to proceed or fear it might burn a hole in their budget. But here's the thing: when it comes to international expansion, comprehensive research and market analysis are your secret weapons against costly mistakes and aimless endeavours. So, let's get right into what you need to ensure your new international venture thrives while keeping costs in check.

Identify the perfect target market

Evaluate international market entry barriers

Before diving in headfirst, it's crucial to anticipate and address potential market entry barriers. By doing so, you can minimise risks and maximise opportunities. Here's how to approach this essential task:

• Do your regulatory research: Explore the legal and regulatory requirements relevant to your industry and offerings in your target market or markets. Consult trade associations, government resources, or legal experts to navigate the compliance landscape successfully.

• Evaluate trade agreements and tariffs: Analyse existing trade agreements and tariffs between your home country and the target market. Understanding how they impact your import/export costs and competitiveness is vital.

• Cultivate local partnerships: Team up with local partners, distributors, or consultants who boast in-depth knowledge of the target market. Their insights will prove invaluable in navigating local business practices.

Understand the pulse and cultural differences of the local customers

Getting inside the minds of potential customers in a new market will make or break your success. Gaining a precise, at-scale understanding of their preferences and needs will be key to tailoring your products, marketing messages, and customer experiences effectively. Here's how to do it without stretching your resources thin:

• Leverage online surveys and social media: Engage your potential customers directly through online surveys and social media platforms. This cost-effective approach allows you to gather specific feedback and gauge customer preferences on a personal level.

• Analyse competitors: Study your competitors in the target market to uncover valuable information about customer behaviour and preferences. Analysing their product offerings, pricing strategies, and customer feedback will help you identify gaps and seize opportunities.

Adhere to the local regulatory and compliance landscape

Every country operates under its own complex web of legal frameworks, from basic business registration requirements to industry-specific regulations. Understanding and adhering to local laws, industry-specific regulations, and data protection requirements isn't just important when entering foreign markets — it's fundamental to your expansion success.

Different industries will face different hurdles, but here's what virtually every business should research before expanding into a new region:

• Licensing and permits: Many industries require specific authorisations to operate legally, and what you need varies wildly by country and sector.
• Data protection rules: If you handle customer information, local privacy laws (like Europe's GDPR) will dictate how you collect, store, and process that data.
• Import/export regulations: Shipping products across borders means understanding customs duties, VAT requirements, and mandatory documentation like EORI registration for EU imports.
• Tax and accounting standards: Acceptable financial reporting in your home market might not meet local requirements elsewhere, potentially requiring a restructuring of your financial reporting processes.
• Banking and payment regulations: Some countries restrict how foreign businesses can receive payments or require local banking relationships.
• Industry-specific requirements: Certain sectors face additional barriers, like China's joint venture requirements for foreign investment in automotive manufacturing, for example.

Non-compliance doesn't just risk fines or penalties — it can derail your growth plans and permanently damage your brand reputation. So invest in thorough research and compliance preparation early in your expansion planning to gain a significant competitive advantage, avoid costly delays, and ensure you build trust with local customers and partners.

2.  Develop a go-to-market (GTM) strategy for foreign markets

Now that you've laid the groundwork, you're equipped with comprehensive knowledge of your target market. The time has come to turn those precious insights into action, paving the way for success in uncharted territory with your go-to-market strategy.

Answering the following questions comprehensively will help you define an effective, localised go-to-market strategy for your international expansion:

• Goal setting: What are the specific and measurable goals you aim to achieve in the target market? How will you translate those goals into key performance indicators (KPIs) to help you track progress and measure success?

• Product and service localisation: How will you adapt your products or services to suit local preferences, regulations, and cultural norms?

• Marketing strategy: How will you tailor your messaging and value proposition to resonate with a local audience? What pricing strategy will you adopt to align with local market conditions and customer purchasing power? Which marketing channels will you use?

• Fulfilment strategy: How will you set up an efficient distribution network to ensure timely delivery to customers across the target market?

• Market entry method: Which market entry method (exporting, licensing, franchising, joint ventures, strategic alliances, local branches, or subsidiaries) is most suitable for the target market, considering competition and resources?
• Budget allocation and resource planning: How will you allocate budgets for each aspect of the go-to-market strategy, such as marketing, sales, distribution, and local team setup?
• Launch plan: Will you consider a soft launch to test the market and gather feedback before a full-scale rollout? Will you time the launch with consideration for seasonality or cultural events that may impact the market's receptiveness?

3. Establish a local presence

The next phase in your business expansion strategy involves establishing a local presence in your target market. As an SME, you have various options at your disposal, each offering unique advantages and challenges. Let's explore these avenues and find the best fit for your international venture.

Marketplaces

Selling through online marketplaces is particularly relevant for SMEs looking to establish a swift and cost-effective international presence. It's advantageous for businesses focused on rapid expansion and wanting to test the viability of their products in new markets.

Advantages of marketplaces:

• SMEs can leverage the existing infrastructure and customer base of the marketplace, saving time and resources on building these from scratch.
• Joining reputable marketplaces can enhance your brand's visibility and credibility, as customers trust these platforms for their purchases and by extension, your brand.
• Marketplace partners often offer efficient logistics and fulfilment services, ensuring timely delivery and customer satisfaction.

Disadvantages of marketplaces:

• Online marketplaces are highly competitive, with numerous sellers vying for attention. Ensure you stand out by offering unique selling points and delivering excellent customer service.
• Be mindful of the fees associated with selling through marketplaces, which can impact your profit margins. Carefully evaluate costs and pricing strategies.
  
  

Local sales representative

Opting for a local sales representative grants you flexibility, giving you time to assess your offering's viability before making significant investments. This option enables you to gain valuable insights through a trusted local partner, which may lead to a more successful hard launch down the line.

Advantages of a local sales representative:

• Local sales representatives operate as independent agents, maintaining a purely contractual relationship with your company. This provides the freedom to explore the market without establishing a physical presence.
• They take charge of prospecting, sales, and product distribution abroad, allowing you to gauge potential challenges and opportunities.
• Local representatives possess invaluable knowledge of the local market, consumer preferences, and trends.
• With established connections and networks, local representatives can open doors to potential customers, partners, and opportunities, giving your business a head start in the market.

Disadvantages of a local sales representative:

• Scaling delivery might pose challenges if demand rapidly increases.
• As local sales representatives operate independently, maintaining consistent alignment with your company's values and sales approach may be challenging, potentially impacting the overall customer experience. Establish guidelines and provide training to address this challenge.

Local branch

Considering a local branch office? It's essentially an extension of your existing company, but there are important points to consider:

Advantages of a local branch:

• A local branch provides greater control over your customer base, brand representation, and communication efforts in the new market. This level of autonomy can be crucial for maintaining consistency and aligning with your global business strategy.
• In some cases, local branches might not be subject to local taxes but rather those applied in the country of origin (be sure to check local tax policies before proceeding with this route).

Disadvantages of a local branch:

• Establishing and operating a local branch typically involves significant initial investment and ongoing overhead costs.
• The parent organisation is liable for any debts or legal problems incurred by the local branch.

Operating a local branch entails more complex internal accounting and HR processes. Managing payroll, payments, and local compliance requires expertise and careful attention.

• Your existing fintech stack may not be optimised for cross-border financial transactions, necessitating internal adaptation and change management to ensure seamless international operations.

Subsidiary

For those seeking a more significant local presence, a subsidiary is the way to go. From an accounting perspective, it is considered its own legal entity. As a result, launching a subsidiary is equivalent to setting up a local business, both administratively and fiscally.

Advantages of a subsidiary:

• A subsidiary benefits from significant resources, providing the company with the means to establish a robust and influential presence in the new market. This level of commitment showcases a long-term dedication to local customers and stakeholders.
• They are considered independent taxpaying entities, and profits are taxable in the country of operation, potentially offering fiscal advantages in tax-favourable regions.

Disadvantages of a subsidiary:

• The process of setting up a subsidiary can involve considerable upfront costs, including legal, administrative, and registration fees.
• Governance can be complex and costly, requiring increased oversight and expanded internal expertise.
• The subsidiary's financial strategy and profitability models may need adaptation based on local taxation and regulations.

Joint venture

A joint venture can be a beneficial way to tackle a challenging market. In certain jurisdictions, a joint venture becomes a necessity for foreign investors.

Advantages of a joint venture:

• Partnering with a reputable and well-established local company lends credibility to your business, enhancing your brand image and instilling confidence in your target customers.
• Your joint venture partner brings valuable insights and an established local network that can help you assert your business's presence swiftly.

Disadvantages of a joint venture:

• A joint venture involves shared decision-making between your company and the local partner, necessitating a well-defined partnership agreement to establish clear roles and prevent conflicts.
• Bridging cultural differences between partner organisations can present challenges. It requires open communication, mutual understanding, and a willingness to adapt to each other's working styles, operational infrastructures and business practices.

4. Recruit locally to gain a competitive advantage

Congratulations! By this phase, your international expansion strategy is well underway. As you establish your foundational presence in the new market, it's time to consider the crucial aspect of local recruitment. This phase is all about finding the right talent to carry out your plans and drive your success on foreign soil.

It's important to note that recruiting locally may not be necessary as it depends on the market entry approach you choose.

What you gain from local recruitment:

• Local talent brings valuable in-depth knowledge of the target market, including customer preferences, cultural nuances, and market trends. Their insights can be a goldmine for tailoring your offerings to resonate with the local audience.
• Having local staff on board adds credibility to your business, enhancing trust among customers, partners, and stakeholders. Additionally, their existing connections can open doors to potential opportunities and partnerships.
• In countries where wages are lower, hiring local staff can lead to significant cost savings. Employers' social charges or fiscal contributions may be more favourable, contributing to overall cost efficiency.

Considerations for local recruitment:

• Familiarise yourself with local labour laws and requirements to ensure compliance with employment regulations. Understanding the legal framework will help you navigate hiring, contracts, and employee benefits smoothly.
• Managing cross-border payments, including payroll for full-time, part-time, and contract workers, can be challenging. Avoid common mistakes by working with international financial experts who understand the intricacies of global transactions.

5. Have a plan for managing foreign currencies and international payments

With these five essential steps, you are now equipped with the necessary framework to confidently expand your business internationally. But hold on...Before you set sail, there's a crucial piece of the puzzle that demands your attention — handling cross-border transactions.

You might have the perfect product and a brilliant market entry strategy. But if you can't get paid by international customers or pay your overseas suppliers efficiently, your global dreams can quickly turn into a financial nightmare.

If you don't spend the time upfront finding the right provider to manage your international payments, you could be left dealing with expensive headaches like:

• Currency conversions that eat into your margins
• Payment delays that mess with your cash flow
• Confusing fee structures that make it impossible to forecast costs
• Exchange rate fluctuations that can turn a profitable deal into a loss
• The nightmare of reconciling payments across multiple currencies and accounts

Traditional banks typically charge steep fees (often 4-6% above the mid-market rate) and offer limited visibility into where your money is during transfers. For growing businesses making regular cross-border payments, this approach just doesn't cut it.

This is exactly why thousands of international SMEs are using specialised cross-border payment providers like iBanFirst — especially when expanding globally.

iBanFirst, your trusted partner to take your payments across borders

At iBanFirst, we understand the challenges that SMEs face when it comes to international payments. Navigating through a maze of red tape, prohibitive fees, slow processes, and unpredictable currency exchange rates can be overwhelming.

That's precisely where our expertise comes into play. With iBanFirst, you'll have access to:

• Multi-currency accounts that let you hold, send and receive funds in over 25 currencies
• Real-time payment tracking for international payments with timestamped updates
• Competitive exchange rates that save you money on every transaction
• Expert FX support from real humans who understand your business
• FX forward payment contracts to protect you from exchange rate swings

All of which are crucial for managing cross-border payments when expanding internationally.

Speak to one of our experts today and discover how iBanFirst can be your trusted partner in making global payments a breeze.

Commonly asked questions about international expansion

Still have questions about taking your business global? You're not alone. Here are some of the common questions we hear from companies on their international expansion journey.

How can you adapt your business model for different markets?

Different markets need different approaches, plain and simple. What works at home might flop abroad, whether it's your pricing, delivery methods, or how you package your product. Pay attention to:

• Local buying habits: Monthly subscriptions might bomb in cash-based economies
• Distribution needs: You might need local partners where you didn't before
• Pricing sensitivity: Your premium pricing might need rethinking

Start small, test what works, and be ready to pivot. The most successful companies treat each market as its own puzzle to solve, rather than simply replicating what works well domestically.

What's the best way to build trust when entering a new market?

Put simply, show up and prove you know what you're doing. Partner with respected local businesses, hire team members from the region, and adapt your marketing and sales approaches to match what local customers expect. Don't hide that you're foreign either — own it while still showing respect for local traditions. Invest in community events or industry groups rather than just dipping your toes in the water.

Customer testimonials can also help bridge the credibility gap, especially if they're from companies your new market customers respect.

How can global teams stay aligned across multiple markets?

Create clear ground rules but let local teams run their show. The tried and tested setup? A simple framework that works everywhere but leaves room for local teams to adapt. This works well because:

• Local teams know their markets best: They understand cultural nuances you may not
• Clear communication channels prevent chaos: Regular check-ins across time zones to keep everyone on the same page
• Shared goals with local flexibility balance global consistency with regional needs

Companies that nail this balance move faster in multiple countries while avoiding the headaches of micromanagement from headquarters.

Can expanding internationally help access better talent or lower costs?

Yes, going global opens doors to specialised talent pools and potential savings.

Different regions offer different expertise. For example, developers in Eastern Europe, manufacturing know-how in parts of Asia, creative pros in Europe and America, and so on.

Many countries also offer tax breaks and incentives to attract foreign businesses. These perks can seriously cut costs compared to your home market — especially for companies from high-cost regions.

Just weigh these benefits against the reality of managing remote teams. The cost savings need to outweigh the complexity of running an international operation.