Your startup is loved locally, but how do you expand it globally?
Introducing a new idea into the market and turning a profit is a feat in itself. But what happens when your startup has reached its limits on a local scale, tempting you to see how far your company can really go?
If you approach the process of expansion as an almost entirely new venture, that mindset may allow you (as the hopeful entrepreneur) to take the right steps to build a successful international company.
From the beginning, a startup leaving its comfort zone and established consumer base needs to realize that a new strategy for a particular location will not necessarily work everywhere. Regardless of the scale, it is important to note that each region, city, or market will have its unique need for the same service.
Also, unless the company is a well-known household name, consumers in foreign markets tend to trust and be more aware of local brands. This awareness and trust spills over into the workforce of a company, whether they are local or outsourced — a factor that can turn customers on or off in many markets.
For these reasons, we believe that there are 4 key points that an established startup needs to take into account for preparing itself in an expansion strategy.
Design a global strategy specifically for your target country
Companies can be agile and still have a clearly defined international strategy. A plan is essential for success. Define the specifics of your new market and understand your compliance requirements on a high level. You also need to learn the culture and prepare for any potential barriers to entry.
Expanding overseas is almost like its own internal startup; too many companies get tempted by an opportunity and find themselves in a country without a clear strategy, which ultimately leads to failure.
Ask yourself these questions while creating a global strategy:
- How is the strategy internally funded?
- How long is the runway with that funding?
- How is the initiative staffed?
- How will time zone issues affect your staff? Will you be at risk of losing internal staff due to odd working hours; burnout?
- Do you use contractors, Foreign Subsidiary as a Service (FSaaS), or create a foreign subsidiary?
- What are the tax implications?
- How can you keep the initial footprint as light as possible (to reduce risk)?
- Risks vs. rewards?
- Do you have buy-in from entire team?
The final point is crucial. Without complete buy-in from the team, your process will slow down and you will face internal hurdles that can diminish overseas success.
- Hire a great team
In addition to getting buy-in from your domestic team, you also need to have a reliable team in your new country. Your local team, if they’re dedicated to your goals and strategy, will be your greatest assets. Be clear about about your objectives from day one and let them know that staying flexible is part of the plan.
Also, when you do find the right people, offer them the right compensation and benefits to prevent turnover. We find that many of our clients who end up using FSaaS or International PEO actually had contractors who were demanding to be full-time employees.
Don’t expand without a partner
One of the most effective things you can do during international expansion is find a great partner. They can help guide your strategy and show you best practices that are gathered from real-life experience.
- Measure any increase in operational costs
Finally, it’s important to understand how international expansion will impact on your businesses operational costs. After all, this is one of the main reasons why so many experts advice companies to avoid expanding overseas, as many do so without possessing the revenues to sustain organic growth.
One of the main areas of focus for product-focused brands such be logistics, expanding into new markets will increase the cost of shipping products and building effective distribution networks.
It’s definitely to partner with a courier that can deliver international parcels at competitive costs, while you’ll also need to build relationships with local service providers in targeted regions.