Plans to Navigate Regulatory Challenges in New Markets

Understanding the Terrain Before Entering a New Market

Expanding into a new market is exciting, but it is rarely straightforward. Whether a business is entering a new state or crossing international borders, regulatory challenges can create serious roadblocks. These challenges can range from data privacy laws and labor regulations to foreign investment restrictions and licensing requirements. Navigating this complex environment requires more than a strong product or competitive pricing—it calls for a well-informed strategy that prioritizes compliance and adaptability.

A misstep on the regulatory front can result in delayed launches, financial penalties, reputational damage, or even a complete withdrawal from the market. This is why businesses of all sizes—especially those in high-growth or regulated industries—need a proactive approach when entering new territory.

The Importance of Local Knowledge

No amount of market research can substitute for an understanding of the local regulatory framework. Rules governing operations, employment, advertising, and product standards often vary dramatically from one region to another. Companies that fail to study these variations closely often find themselves on the wrong side of regulators.

To illustrate, Redbubble, an online marketplace for independent artists, ran into legal issues in multiple countries due to user-generated content violating local laws. Rather than scaling back, Redbubble took the time to better understand local intellectual property concerns and built more robust content moderation systems tailored to specific jurisdictions. This adaptation allowed them to maintain growth while addressing compliance risk.

Engaging local experts—legal counsel, consultants, and trade advisors—can be one of the smartest early investments. These professionals often offer a perspective that online research or internal teams cannot match. Their input can help decode opaque rules, identify hidden risks, and suggest safer operational structures.

Building Compliance Into the Business Model

Treating compliance as an afterthought can be costly. Instead, it is far more effective to design operations with local regulations in mind from the start. This includes everything from product labeling and data management protocols to employee classification and contractual obligations.

For instance, when TransferWise (now Wise) began scaling globally, its leadership recognized that every country had different anti-money laundering (AML) and financial conduct regulations. Instead of deploying a one-size-fits-all model, Wise built regional compliance frameworks from the ground up—tailoring their technology stack to accommodate country-specific reporting and documentation requirements. This approach not only smoothed the path with regulators but also helped build trust with customers in each market.

Embedding compliance into the DNA of the business also encourages better alignment across departments. It allows marketing, product development, legal, and HR to collaborate in ways that support local requirements without constantly playing catch-up.

Taking a Phased Approach to Expansion

Moving into a new market is rarely all-or-nothing. A phased strategy often makes more sense, especially when regulatory compliance is uncertain or when the rules are still evolving. Starting with a soft launch or pilot program allows businesses to test both customer demand and regulatory alignment without committing too many resources upfront.

Consider Glovo, the Spain-based delivery service. When entering new countries, Glovo often starts with a limited rollout in one city, focusing on partnerships and regulatory conversations before expanding more broadly. This gradual approach allows them to build relationships with regulators, gather operational insights, and make adjustments before scaling.

Phased rollouts also make it easier to identify regulatory gray areas early. Companies can address these proactively instead of facing expensive adjustments later on when the brand is already fully entrenched in the market.

Adapting to Shifting Political and Legal Landscapes

One of the realities of international business is that regulations are rarely static. Governments change, enforcement priorities shift, and new laws are passed that can affect the business model almost overnight. Companies that are too rigid in their operations risk being blindsided.

This is especially true in industries like financial technology, where rules about data security, lending, or digital currencies can evolve rapidly. A startup like Nium, which provides cross-border payment infrastructure, knows that staying compliant means more than meeting today’s requirements. They maintain active dialogue with regulators and industry bodies in every country where they operate, allowing them to adapt quickly when the rules shift.

Building in operational flexibility—such as modular technology systems or scalable HR policies—makes it easier to pivot when necessary. Companies should also assign internal teams or external advisors to monitor legal developments in key markets and flag potential risks before they become liabilities.

Navigating Trade Policies, Tariffs, and Supply Chain Rules

For businesses entering markets where physical goods are moved across borders, regulatory challenges expand beyond compliance paperwork. Customs classifications, tariffs, country-of-origin labeling, and environmental standards can all affect the viability of a product in a new region.

Allbirds, a footwear brand known for sustainability, faced challenges shipping their wool-based products into certain countries due to import restrictions on animal-based textiles. Rather than retreating, they re-evaluated sourcing and worked with customs brokers to reclassify products under codes that aligned with local definitions—turning a compliance challenge into an operational adjustment.

Companies should conduct detailed reviews of supply chain policies in the target region before committing to distribution models. This includes understanding trade agreements, anti-dumping rules, and inspection processes that might delay product entry. A strong logistics partner with regional experience can also be invaluable in minimizing delays and hidden costs.

Localizing Employee Policies and Corporate Governance

One of the most overlooked aspects of entering a new market is the regulatory framework around employment and corporate governance. Issues like termination laws, benefit requirements, workplace safety, union regulations, and executive responsibilities can vary significantly across jurisdictions.

In Germany, for example, co-determination laws require that employee representatives sit on the boards of larger companies. U.S.-based companies such as Salesforce have adapted to these expectations when growing their operations in Europe. They actively engage with local works councils and align HR practices with national labor codes to maintain goodwill and compliance.

Companies that expand without localizing these elements may be vulnerable to labor disputes, reputational damage, or investigations. A localized HR approach that incorporates regional rules from day one can help avoid misalignment with regulators and improve internal morale.

Building Relationships with Regulatory Bodies

A purely reactive posture toward regulation often leads to friction and delays. Instead, businesses can benefit from engaging constructively with regulators. This might involve requesting pre-clearance meetings, joining trade associations, or participating in regulatory sandbox programs designed for startups and innovators.

In Singapore, for instance, the government offers regulatory sandboxes through the Monetary Authority of Singapore to help fintech companies test products in a controlled environment. Companies such as Validus have used this program to gain early-stage feedback, build regulatory trust, and accelerate market entry.

Taking time to build these relationships does more than speed up compliance. It can also help influence future policies and demonstrate the company’s willingness to operate responsibly in a new jurisdiction.

Risk Mitigation and Scenario Planning

Even with the best strategy, risk cannot be eliminated entirely. That is why scenario planning is so important when moving into new regulatory environments. Leaders should think in terms of “what if” questions: What if a key regulation changes next year? What if product approval is delayed by six months? What if a compliance issue triggers a fine or suspension?

Proactively identifying these scenarios allows companies to develop fallback strategies. This could include alternative distribution models, revised pricing, or revised marketing approaches based on new rules. It also reassures investors, employees, and partners that the business has thought through potential disruptions and is ready to pivot when necessary.

Scenario planning also supports broader risk management frameworks, especially for companies operating in multiple geographies. It helps teams maintain operational consistency even as legal landscapes fluctuate.

Final Thoughts

Entering a new market brings opportunity, but not without complexity. Regulatory challenges are part of the equation and can become significant barriers if not anticipated and managed carefully. Businesses that prioritize early engagement with legal frameworks, localize their operational models, and remain adaptable in the face of legal shifts tend to fare better in unfamiliar environments. It is not only about staying compliant—it is about making compliance a strategic advantage. With the right mindset and resources, regulatory hurdles can become stepping stones toward lasting growth.