Expanding into international markets is a natural progression for many ambitious startups. It’s also a hot topic for investors, whose main priority is assessing the scalability of young businesses.
For startups from smaller countries, the journey into international markets may be quicker as it provides an obvious route to expanding their customer base. It’s interesting to see that trend in the startups we work with in Belgium.
Research suggests that it's a common experience. Startups from countries with a population of less than 50 million go international faster, taking 1.4 years on average, compared to 2.8 years in bigger countries.
But that doesn’t mean startups from larger countries can’t benefit from international expansion too. As a founder, you will have different drivers depending on the starting point, so it’s important to be clear about why you’re doing it.
Common reasons for startups to go international include:
- Boosting global brand awareness
- Increasing customer base by reaching new markets
- Developing a global talent pool
Timing is everything when you expand internationally. Move too early and you could be unprepared; wait too long and you miss the moment to the competition. So, how can you optimise your chances of success? Here are the five things founders should ask before taking the leap.
Have you identified the main markets to target?
Start with a set of priorities of the countries and regions you want to tackle. Many founders think they can reach all over the world, but you need a clear focus.
Identify no more than ten countries or regions and research them by asking:
- What’s the competitive landscape?
- Who are my potential clients?
- What’s the bigger picture in terms of governance, language and culture?
- What contacts or traction do we already have there?
- What are the logistics of operating there?
- What’s the currency and how can I protect the business from any currency related risks?
If you have naturally moved into certain international markets already, this can be a great indicator that there’s potential for growth. But don’t cut corners. Rigorous research is still needed before investing in a full expansion programme.
Can you build a repeatable scalable sales process?
Your product may be easy to scale, but the real challenge is often around making the sales process scaleable. This is often because the process hasn’t been properly developed or codified yet.
In the early days of startups, the CEO is usually managing most of the sales. But to move internationally, you need a clear structure around your pipeline management, from the initial conversation to finalising the sale.
As your business grows, look to recruit a sales team with a range of profiles that cover all the different parts of the sales process. Identify who is responsible for each stage, and how these are affected in international markets, including negotiating, pitching, creating interest and developing your buyer personas.
Do you understand the cultural landscape?
Taking your business to another country isn’t just a logistical operation. The startups that succeed are those that take time to consider the full context of operating in another country.
This includes traditions and customs, the political and economic backdrop and language. Just for starter’s this requires an understanding of accepted business greetings, adapting to international time zones and being ready to translate into their language.
It’s vital that you have someone on your team with an insider knowledge of the market you’re entering. You might choose to recruit an account manager from the country itself, or work with a coach from each specific country to guide you.
It might even be necessary for one of the founding team to move to the country while you get established there. This is especially important if you’re looking to move into the US, and a move which a number of the Belgian unicorns undertook.
Have you built the right team?
As your business grows abroad, you’ll start to recruit teams in those places. Be aware that it can be very different to hire in one country compared to another.
To attract the best candidates, think carefully about the regulatory environments in terms of recruitment, pay, providing benefits and developing an appealing working environment.
No one size fits all, but it’s always recommended to have one co-founder who’s sales minded. If that’s not possible, look for sales acumen in an early hire and surround yourself with people who understand sales.
Have you got the right support?
To make a smooth transition into a new market you need to be ready logistically, but also financially. For many startups that means one thing: raising investment.
Getting ready to pitch for funding isn’t a quick process. You may need to go back to square one when it comes to sales and marketing strategies and financial models that will work in a different country. Then you’ll need to rethink your pitch deck with international expansion in mind.
There are no quick wins here, but getting the right support will help you focus on what’s important and enable you to reach out to your network of investors with confidence. Find out more about how PwC Belgium helps startups to scale up, from building a team and complying with laws and regulations to managing finances and funding your growth.
Get in touch if you’d like to discuss further or, if you are going to Slush, register for our workshop.
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