Global expansion used to be a strategic move that entailed the alignment of various pieces — working with local partners, market testing, product testing, contracting with suppliers, outsourcing, etc. At the very least, it was a major goal to reach in the pursuit of total brand domination.
In other words, there was a certain kind of maturity one’s business would have to attain in order to then turn one’s sights upon international markets.
Not so in the digital age. In our digital landscape, international business expansion is not a ‘someday’ milestone but a ‘right now’ reality. Thanks to the sheer reach of digital marketing, businesses are able to break global barriers in a single bound.
With online entrepreneurship, it’s easier than ever to test products, find the right buyers and audience and sell internationally — all at scale.
And if you’re in a smaller country (such as Ireland), your chances at success are even better: According to research by Atomico, European entrepreneurs are scaling globally in ‘record time’ and startups from countries with less than 50 million go international twice as fast as those from countries with more than 50 million.
But, Atomico reports, timing still matters: 89% of companies go global first, before hitting their first billion in valuation, compared to the 11% who expand globally.
So: Could global expansion actually be the key to billion-dollar growth? And how can you map out your startup’s international business expansion plan so that you’re part of the 89%?
We breakdown what you’ll need to do to expand your business and choose the right market for your needs.
5 Key Steps to expanding your business internationally
Expanding your startup’s operation is a multi-step process that requires a step-by-step undertaking. Here are five key steps to beginning that journey towards expansion.
1) Start by Building Relationships with Influencers in Foreign Markets
In today’s digital environment, the first thing you’ll need to start doing is looking for and then building relationships with influencers already in the market you’re looking to take over. It’s not only for social media presence and brand awareness.
Building relationships with influencers can be a valuable source of ideas at a critical stage of growth. Connecting with and rolling out the product through influencers helps you test audience readiness and actually use the feedback to build a better, smarter product.
2) Perform Baseline Assessment of your Capital
What is the business’s financial state right now and what are the legal requirements and tax compliance issues that are already present in the country (or markets) you’re planning to expand into?
Setting up a long-term financial plan is one of the big keys to being expansion-ready. You’ll need to consider where you’ll be getting the capital for your initial investment since you can’t always expect to turn a profit right away. As time-consuming as it is to get into the overseas market, that’s how costly and tricky it is to ‘get out’. So make sure to do your due diligence — on yourself!
3) Understand the Culture
It’s astounding how much culture makes a difference in product choice, marketing, consumer preferences — in short, whether your product is going to sell or not. When entering foreign markets, there are a whole score of marketing and branding decisions you’ll have to make when positioning your product.
For example, what may be considered comical in the United States may be considered an unpolluted affront or an insult, at worst, in Japanese culture.
And it doesn’t stop at your product — if you’re planning to have on-the-ground operations, hiring locally, you’ll need to consider the differences in your workplace culture, your employees’ expectations and the work-life balance that each country implicitly has.
4) Establish a Local Team
Yes, you’re a startup and being lean is your thing. But without on-the-ground guidance and advice, it’s hard to launch successfully. Take it from the pros: global companies first use a local team, with local knowledge and expertise, to hit the ground running, validate their ‘Minimum Viable Product’ and then continue to put together the senior management team.
5) Ask the Right Product-Focused Questions
One of the key aspects of your expansion should be (and will be!) product focused.
You’ll need to review government and industry regulations of the country you’re expanding into. You’ll also need to focus on localization of product, with particular attention to the translation (think cultural gaps!).
Next, you’ll need to initiate a patent and trademark review, before moving into testing and quality assurance. And, finally, consider distribution: How will you be getting your product into the hands of willing customers?
How to Choose the Right Market/Country for my Startup
You’ve got the right strategy — but do you have the right business climate? Every country provides its own attractive perks for different formats of business. Some companies choose a country specifically for their manpower while others choose an area for their labor and real estate costs.
Austin, Texas
Yes, Austin, Texas is first up on our list — and it’s not just the weather.
Texas has very favorable conditions for business and its labor participation rate has been steadily increasing at a very healthy rate. The business tax, known as franchise tax in Texas, is just one percent of the taxable margins. Moreover, from 2011 to2014, Austin’s gross metropolitan product rose 18.2%.
You’ll also be in great company: Not only was Austin named the number one place in America to start a business, global companies including Apple, Hewlett-Packard, Google, Facebook, and Intel already have a presence in the area.
Dublin, Ireland
Ireland’s competitive tax rate of 12.5% may be precisely why Google established an arm of their business in the country, especially when compared to other EU country capitals.
The country’s taxes are on a territorial basis which means that companies that choose Ireland to expand into pay the local rate on profits generated in foreign subsidiaries. It’s all poised to make the climate attractive to foreign investment.
Another draw for startup businesses looking to expand will also likely be the population: employees are likely to be an average of 34 years, as Ireland has the youngest population in the EU.
This is precisely why Ireland is so attractive to technology and SaaS companies. A young and educated, tech-savvy workforce of digital natives has already managed to attract tech behemoths like Google, Facebook, and several smaller startups and tech agencies. It’s the Silicon Docks and we’re just expanding into it.
There is definitely a formula and a strategy involved with even startup level expansion. It takes time, careful planning, due diligence, testing and strong, overseas partnerships. You’ll need to make sure you’re doing constant vetting and that you have the appropriate marketing partners alongside you as you roll out your launch. However, this multi-step approach will allow you to undertake growth sustainably but rise just as quickly.
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