Taking your company into new international markets involves plenty of pros and cons and it's important to think carefully through your strategy and the many ways such an expansion will add complexity to your business processes. That's according to Patrick Llewellyn, CEO of online graphic design marketplace 99designs, who has 100 employees split between San Francisco and Melbourne and in the last year and half launched operations in Germany, Spain, Italy, France and Latin America. Here's his advice for going global.
Where you are based is an important consideration in expanding internationally.
Llewellyn started with 99designs in Melbourne in 2009 but knew from the beginning he needed to expand off the island continent because the cloud platform could appeal to anyone in the world. His strategy? Appear to be a U.S. company, even though it wasn't until 2010 that he actually moved to San Francisco. While it wasn't ideal for Australian customers who had to pay in U.S. dollars and cough up Australian taxes and international fees, Llewellyn made the trade-off because the North American market was his priority. "[If] you're blessed to be in a market like North America, this is a big market, you can actually build a big business servicing only people locally," he says. "But if you're a European business [you] have to think international from day one because no one market is big enough typically to sustain the types of big businesses that you're looking to grow, in particular if you're taking on venture capital."
You'll need money and time.
Yes, an international expansion can jump-start growth, but it's expensive and involves a ton of work. "It's something that's not for the faint-hearted," he says. "You really need to know what your business is, what the service is that you offer, how to deliver that offering. You need to have strong cash flows or a strong balance sheet to take this on because internationalization is a significant investment and the payoff is something that comes over time."
Which countries you enter will depend on a slew of factors.
In the case of 99designs Llewellyn looks at things like GDP, broadband penetration, ecommerce trends and The Economist's Big Mac Index, which uses the price of the iconic McDonald's sandwich in various countries to determine whether currencies are under- or over-valued. "We also look at the startup scene," he says. "That for us is an indicator that there's a market of early adopters who are typically easy to market to if you've got a new service or offering that you're trying to take into a country."
Be intentional about localized service.
If you can provide your website in the language of the country you want to enter it will go a long way in boosting your conversion rate, as will having a local URL--such as ".au" for Australia or ".uk" for the U.K. --which will better entice people to click on it. Other ways to localize: Offer in-country phone service and customize payment options according to how people in a particular market like to pay. For instance, Llewellyn says Germans prefer direct deposit and debit cards over credit, whereas many Brazilians like the option of being able to pay for something over the course of a year. "It is about that trust factor," he says. "Our average transaction size is over $500 [and] that's a fairly significant amount to put on a credit card... So if you can pick up the phone and call and have someone talk you through the process you feel more comfortable [that] this is a reputable place to do business."
Operate your expansion like a startup.
Llewellyn hires a country manager--who he brings either to San Francisco or Melbourne for a couple of weeks to get a feel for the company culture--to execute marketing and PR, handle ongoing translations and run customer support. "It's a little bit of a sink or swim approach. [We] put a lot of onus on those country managers and one of the most important things is they own the metrics," he says. "Then as we start to prove out our localization strategy is working--that being in-language is improving the trajectory of the business--then we start to add additional resources."
Find tools to bridge communication gaps.
Llewellyn points to several tools the company uses, including the translation software platform Smartling, the team collaboration software Confluence by Atlassian, as well as Slack, a team communication platform founded by Flickr co-founder Stewart Butterfield, who is also an investor in 99designs. "Having those online chat tools, online organization tools and using payment providers that allow you to be flexible has been pretty important," Llewellyn says.