If you want to grow your business, a global expansion can be one of the most effective strategies. It makes sense; businesses expanding internationally can attract new customers, diversify risk, access skilled talent, and stay ahead of the competition. Easy, right?
But, with new growth comes new expenses. Historically, expanding into different countries meant setting up a local office, establishing a legal entity, navigating complex regulatory requirements, etc.
Luckily, your international expansion growth strategy doesn't have to break the bank (or even include opening physical offices). When done right, an international expansion can be both cost-effective and a powerful growth opportunity.
Key takeaways:
- Getting buy-in at the C-level and carefully researching target markets in advance can result in time and cost savings.
- Establishing a legal entity can delay expansion efforts and drain budgets. Instead, consider hiring remote workers as a more flexible, lower-cost alternative.
- Collaborative planning, cost-efficient hiring, and scalable HR platforms can help businesses test new international markets while minimizing overhead costs and compliance risks.
The Challenges of Global Expansion
Global expansion accelerates business growth, but it's not easy.
You must navigate diverse legal, tax, and regulatory systems, plus acclimate to different cultural norms.
You'll face logistical challenges and complicated compliance requirements, creating delays and driving up costs.
On top of that, you must follow all local employment laws or face legal penalties.
You also may need to reevaluate your products' or services' market fit and make changes to your sales strategy to suit the expectations of your new customer base and ensure profitability in that region.
If you're unprepared for these hurdles and don't have a solid market entry strategy, global expansion can be expensive and resource-intensive, potentially limiting your growth and success.
6 Ways to Reduce Costs in Global Expansion Efforts
The good news? You can overcome these challenges with a clear strategy and a thorough understanding of a new market's requirements and norms.
Here are six ways to better position your business for success and reduce global expansion costs.
1. Ensure You Have Buy-in From the Leadership Team
Getting leadership buy-in for your global expansion strategy sounds pretty obvious, but it's frequently overlooked in business planning.
According to AKF Partners, 70% of organizational failures can be attributed to misalignment between teams and leadership.
You might think that leadership agrees that expansion is the right next step for your business, only to find out later that, oops, you're misaligned on strategies, priorities, timeframes, or goals. You know, basically all of the big-picture stuff.
Internal misalignment can cause delays, frustration, and wasted time and money, and investments in weak expansion strategies will likely fail to deliver results.
When you've got a clear plan in place — and know that leadership is on board — it's a lot easier to tackle challenges, skip the extra costs and delays, and make the most of new opportunities.
2. Do Your Research
You need to start with local market research to build that clearly defined plan and gain executive buy-in.
A deep dive into market conditions, customer expectations, cultural differences, and regulatory compliance requirements can help your company avoid costly mistakes and wasted investments.
As you conduct your research, you must ask yourself some key questions to help guide your strategy and planning.
- Priorities and goals: Why are you opening an international office? What do you hope to achieve?
- Go-to-market: How will you attract and retain new customers?
- Timelines and milestones: When is the right time to expand, and what milestones will form your near- and long-term plan?
- Budgets: How much money will you need to execute your expansion strategy and meet key milestones (e.g., office space, hiring, marketing, establishing a local entity, etc.)?
- Hiring plans: What roles do you need to fill to support your global expansion both now and in the future?
- Partnerships: What tasks or services can you outsource to local partners?
- Roles and responsibilities: What teams and internal resources are involved with the expansion plan?
- Expected outcomes and measurement KPIs: How will success be measured and reported to leadership?
Careful planning and due diligence will help you gain executive buy-in, pivot your strategy to sidestep unexpected costs, and prioritize milestones to avoid delays.
3. Skip the Time and Costs of Opening a Legal Entity
Traditionally, you'd first set up a legal entity to expand into a new country.
But that can be time-consuming and expensive. We're talking:
- Registering your business with local authorities
- Opening a bank account
- Investing in a physical office
- Administrative overhead
- Outsourcing professional services (like legal, accounting, and HR support)
Worse, if your efforts don't go according to plan or the global market shifts, you may face additional costs to shut the entity down.
The red tape, risks, and resources might not be worth it unless you plan on making a significant, long-term investment in the new market.
But there's a more economical and flexible approach, particularly if you're only testing out a particular region before making a bigger commitment.
Instead of setting up a local entity, test the waters by building a remote team in your target region. By hiring remote international workers, you can:
- Enter new markets faster without waiting months for approvals.
- Access specialized talent at competitive rates.
- Test market viability without a long-term commitment.
- Avoid relocation and setup costs by staying remote first.
- Build a partner network to outsource local roles and responsibilities.
- Scale at your own pace, adjusting hiring and investments based on needs.
Building a remote international team lets you focus on making your business successful in the local region without significant upfront investment.
4. Target Cost-Efficient Talent Markets
Hiring international talent can be a smart way to cut costs, especially if you focus on regions with strong talent pools where salaries, overhead, and living expenses are lower than at your local HQ.
Markets like Eastern Europe, Southeast Asia, and Latin America are known for their budget-friendly, highly skilled professionals, particularly in industries like engineering, customer support, and digital marketing.
Plus, you can skip relocation and visa costs, as well as paying for office space.
Alternatively, you can hire international contractors instead of full-time workers for short-term assignments or project-based work.
Just ensure that you're adhering to local classification rules. Misclassifying workers exposes your business to compliance risks and penalties.
Here's the bottom line: when you're open to a remote-first hiring strategy, you can often fill roles faster, access talent across time zones, reduce overhead costs, and build more diverse, resilient teams.
5. Use Scalable Tools and Tech and Consolidate Vendors
Consolidating technology and vendors simplifies business operations and saves on operational costs.
Fortunately, you can support your remote teams with powerful HR and payroll platforms without investing in dozens of different tools, providers, and systems (and dealing with the subsequent deluge of invoices and other paperwork).
These types of HR tech platforms streamline operations, reduce spend, and automate internal processes to minimize manual work, reduce errors, and save valuable time.
You can also:
- Lower total cost of ownership (TCO)
- Automate employee processes
- Integrate data across your systems
- Onboard faster and offer a smoother employee experience
- Spend less time troubleshooting and more time scaling
Plus, consolidating your employment and business data into fewer platforms helps you measure business performance to make better strategic decisions.
Employer of Record end-to-end global employment solutions, like RemoFirst, combine HR support, payroll, tax compliance, benefits, and contractor management.
6. Partner With an Employer of Record
Crafting a successful global expansion can feel overwhelming, but it's also a huge opportunity to scale your business and set it up for long-term success.
Take the pressure off by partnering with a trusted Employer of Record (EOR) who can help you hire remote talent and explore new markets.
An EOR acts as the legal employer for your global employees, making it easy to hire, pay, and manage international workers without waiting months (or longer) to establish a local entity.
From international employment laws to tax frameworks and compliance requirements, EORs help you navigate challenges and safeguard your business from financial and legal problems.
An EOR, like RemoFirst, can manage:
- Employment contracts and onboarding
- Local payroll and tax filings
- Compliance with labor laws
- Risk mitigation related to worker misclassification
- Health insurance and other employee benefits
An EOR is your trusted expert to help you manage changes to labor laws, requirements, regional expectations, and other potentially risky aspects of global expansion.
Grow Your Global Reach With RemoFirst
Whether you're testing new markets or building a fully remote international team, RemoFirst makes it cost-effective and straightforward, with prices starting at only $199 per person, per month.
We help companies hire full-time employees in 185+ countries and manage and pay independent contractors in 150+, all while complying with local employment laws, tax regulations, and benefits requirements.
With RemoFirst, you can confidently scale your team across borders without setting up local entities, overspending on legal fees, or risking compliance issues.
Schedule a demo to see how RemoFirst can simplify your global hiring so you can stay focused on growing your business.
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