We live in a world of globalization and unprecedented technological advancement. Amidst the constant transmission of information worldwide and expanding business opportunities, you might be asking yourself, ‘How do I take advantage of these opportunities? Is this the right time to take my business global?’
IS IT TIME TO CONSIDER INTERNATIONAL EXPANSION?
Going global involves building relationships and maintaining an ongoing business presence, and it’s very difficult, time consuming, and draining on resources, which means it costs money that could otherwise have gone into your incumbent market’s products. Therefore, timing plays a big factor.
Typically, if you see product market fit and success in your own region, smaller-point solution startups will emerge in other countries with the hope that a bigger international player will one day swoop in and acquire them. There is a time and a place for that.
However, buying revenues and a team abroad comes with its own complexities. Merging two disparate cultures and technologies is no easy feat. Consider leveraging your existing assets, such as global clients, to gain an easier start for your business abroad.
Yes, the investment in owned and operated employees is a deeper dive for the pearl, but it’s well worth it with the right team. In other words, sometimes acquiring a company in a new market is just the lazy route and a waste of money.
THE NATURAL EVOLUTIONARY REASONS TO INVEST ABROAD
You may currently have a roster of global clients who are serviced through a home office, but it’s likely that as your relationships grow, they will need more.
However, they have grown accustomed to your high levels of customer support and best-in-class product. While your current clients who require your services elsewhere may be the trigger, imagine not having the localized products and support necessary to finalize the deal and provide the level of service that they’ve learned to count on.
It all comes back to prioritization of investments.
A good signal that it may be time to go global may be if channel partners are also expanding and you want to leverage your integration abroad. It’s wise to take advantage of synergies from partners that are already promoting your product usage globally.
This is a good step in testing international revenue building without a large upfront investment, but it will only get you so far before you need to establish a more independent presence.
A global shift may seem natural for some, but research and planning can help navigate foreign waters so you aren’t faced with a big surprise well into the process.
WHAT TO KEEP IN MIND WHEN PURSUING INTERNATIONALIZATION
Do your homework.
Identify and investigate target markets. As with starting a business in the U.S., you need to find a market that is hungry for what you have to offer.
‘Think global, act local’
Every culture has a different set of rules for doing business. Language is just one of the many barriers to adoption, and realistically it is the least of your worries.
Don’t execute the business plan you’re accustomed to in Germany and just assume it will work because it worked in the U.S. or the U.K. It won’t–every country has its set of nuances to consider.
Be aware of specialization.
Locals are more willing to embrace a product catered to them. Many U.S. companies try and fail to get into Japan, Germany, and other markets that historically are more conservative and weary of whether their risk will be rewarded with product road map influence.
Again: The investment will take time and resources that include big changes and enhancements to your ‘all-star perfected product‘ back home.
Do not over-promise and under-deliver.
Whether it’s Japan or Germany, make sure your product does what it claims and service levels are better than any competitor. There is always a local point solution company around the corner. Quality is key.
On this same note, make sure you have the backing of your board and manage expectations. Overpromising on revenues in year one in a new market because things are booming at home or claiming it’s a ‘low cost investment’ will only set you back. It can take over a year in new markets before you see a dime from the investment.
Go big or go home.
Once you are beyond testing markets with consultants and reseller partnerships, you will find that money talks. Although you may be able to save by piggybacking on existing channel integrations, it’s smarter to invest thoroughly in order to succeed. It’s not easy when clients are demanding your presence in every market they are selling in.
Investing poorly in several markets versus efficiently in one market will likely cause you to lose money. Invest wisely, treating each market as a methodical product launch.
It’s okay to start small.
You may be thinking, ‘I’m small and my competitor is huge, developed in every region, and I may lose a marquee client due to perceived limited resources.’ I get it. Don’t be deterred–it’s common to start small and expand strategically.
It may not be a slam-dunk the first time around, but you’ll need to try again.
Develop and execute a well-thought-out strategy. Know what your needs are and how you will fulfill them. Be prepared to fail and re-think your strategy. If you fail, it’s not an indicator that the opportunity is not valid, only that you didn’t go about it the right way.
Debrief, re-evaluate, and try again. We did that with Japan. We entered with a beta product and never overpromised, but our product was not fully localized and ready for launch.
So, we took a step back and are re-entering a year later but ten times stronger with a much better product and partnerships. Oftentimes, it’s worth the investment to get it right and start from the beginning versus tarnishing your brand equity in a new market.
Going global can be exciting and beneficial if planned right. It can open doors to more customers and dramatically increase revenue. America’s nominal GDP is approximately a quarter of the global GDP, which means that there is a lot more to be done before your business reaches its potential.
Internationalization is a tricky business and many companies make it or break it going global–make sure that you do it right!
Read more here.