Ready to spread your wings? 4 ways to tell your startup should!
A clear internal and external assessment is necessary before your startup aims to expand internationally
In recent years, international expansion became easier than ever for companies across the board — particularly, for startups.
Startups that provide digital services and do not rely on logistics or a physical presence have it easier than their counterparts. And, with the internet facilitating cultural, academic and professional exchange, some of these businesses were built by international teams and stakeholders.
Born-digital, born-global startups might be a few steps closer to international expansion than their counterparts. But this does not mean that they should not have a plan.
Born-global companies still need to conduct market research and strategise for specific locales. They still need to bridge specific cultural gaps.
They still need to understand local regulations. And they still need interpreting, localisation and business translation services. Especially, if they will be looking for strategic partnerships in these new markets.
But, how do we know when a startup might be ready for international expansion? Whether your products are physical or digital, whether you sell design services or mattresses, you should look out for these four signs:
Good financial health
Expansion is costly. But, when done well, it can have an amazing ROI. Of course, doing it well demands some initial investment. If your company is just getting by capital-wise, it might not be the right time to expand.
While startups selling physical products might need to assign a larger budget to their expansion project, a digital company’s expansion budget can’t be a handful of loose change.
Expanding your product will involve adapting your code for internationalisation, exploring international payment systems, and hiring a localisation team to get your product ready for your new market.
Make sure you’re in a position where you don’t have to cut corners. And remember that recovering from a failed expansion attempt can be more expensive than assigning it enough funds to do it right.
A strong and stable team
Due to the way startups grow, job instability is very common. But, when you have found the right people, and they’ve reached and surpassed goals consistently, you might be ready to embark on bigger challenges.
Consider that, as your company grows, you will probably be in need of new hires. Especially, you will need people who understand your new market. Are you ready for that? Do you have effective and dynamic hiring processes in place? And, last but not least:
Can you afford new talent?
A solid position in your home market
International businesses thrive thanks to a certain versatility that makes it possible for them to get over the way things are done in their home market. But, if you’re not seeing good results at a local level, you are not in the place for expansion yet.
If your company is still struggling in its home market, international expansion will only make things worse. If this is the case, fix what is wrong and achieve your local goals before you strive for intentional business. Otherwise, you will be reproducing mistakes at an international and more expensive scale.
Market with growth potential
As Uber’s former Head of Product, Mina Radhakrishnan says:
“You do not turn on every corner of the world overnight. Rather, you work your way through different geographies in some priority order. I have suggested countries as the geographical unit because it is large enough to allow for expansion but small enough to be targeted — this may vary depending on your company model.”
To win at an international level, you should win locally several times. And companies win a favourable market position by understanding where they are, what customers need, what is expected of them and how to meet and surpass expectations.
You cannot do that for every country on earth, all at once. Especially because not every country on earth might have the right market conditions for you to thrive. Having local knowledge was key for Uber to grow because, as the company’s former Head of Driver Growth, Andrew Chen explains:
“Uber is ‘hit a button and a car comes,’ but from a business standpoint, it is a vast collection of hundreds of hyperlocal marketplaces in nearly 70 countries. Each marketplace is two-sided, with riders and drivers, has its own network effects driven by pickup times, coverage density, and utilisation.”
Some criteria to evaluate a company’s potential for growth in a certain market are almost universal. Set your own, depending on your specific industry and business model. Then, carefully research and assess potential target markets. Aside from general market conditions, study your competitors carefully and analyse how favourable or disfavourable your position would be, compared to theirs. What are you seeing that they are not?
To assess whether your business is ready for expansion, make sure you have a strong and stable team, capacity to hire specialists and enough funding. You should also consider whether your company might have internal problems to solve before going internationally and if it is serving the local market properly.
A foreign market with growth potential and a clear need for your product is an international expansion essential. Do not skip in-depth market intelligence and craft a holistic, data-driven strategy.