Every fast-growing start-up has global aspirations. In fact, global domination is often part of a company's mission and is a core reason why investors are attracted to a business. But 'going global' is harder than it sounds as many companies eventually discover. Having an international presence is not just about putting up an online sales channel and investing in marketing - there are significant issues that every CEO needs to address first.
1. Expand globally only when you have product-market fit
Product-market fit is when you have predictable sales because you have created a useful product with real customers who continually use or purchase your product and advocate what you do. This is probably the most important thing you do in your new business, well before you enter into a new market. Opening a new office, finding a great team in a foreign country and executing is hard enough with a market ready product - so going global without product-market fit makes everything a thousand times harder.
2. View every new office as a risk as much as it is an opportunity
While it is easy to get carried away with forecast models that produce beautiful hockey stick growth curves due to international expansion, remember that every new office you open presents operational risk. That is, it always takes longer than you think it will to establish, there will be costs associated that can be surprising and, it will be more expensive than anticipated. But most importantly, your international office's success pivots around finding and keeping a great team. Engaging staff in a satellite office is a difficult proposition, especially if there are only a few team members when you start out. At IntelligenceBank when we expand to new markets, we relocate a senior staff member from headquarters to open the new office to ensure that product knowledge and culture are firmly established in the new location.
3. Do your research
Before considering a new market, you must understand the market opportunity and also market vulnerability - that is - how can you financially quantify the new market as it relates to your product, and how ready is the new market for your service? Also, it is important to keep in mind that the same amount of start-up and infrastructure costs are required whether it's a big market or a small one, so consider market size and eventual payback when selecting international markets.
4. Know your competition
When you expand to a new country, you will have new competitors you probably never heard of before, especially if you are launching in a larger market. With opportunity comes more competition, and with more competition comes more sophisticated buyers. As such, your sales and marketing strategy, along with your product roadmap will most certainly need to evolve.
5. Understand that global expansion is about operational structure
With transactional websites, it's relatively easy to attract customers from international markets, without having an 'on the ground' presence. But to achieve scale internationally (vs. having a handful of clients spread across the globe), you need operational support such as: global servers and IT infrastructure, global tax, regulatory and legal advisors, and a team who can provide sales, customer and technical support 24/7. This means you need to choose international markets carefully, and when you enter a market, be prepared to properly support your customers.
While going global has its clear benefits, successful global expansion needs to be well-funded and your board and management team must be fully committed to the strategy, as there will be unexpected surprises along the way. A new satellite office is a fragile entity that needs constant support and attention and head-office must be 'all in' to make it work.
Tessa Court, is the CEO and co-founder of IntelligenceBank, an award-winning SaaS platform, that helps teams better manage business processes online with its board portal, governance/compliance and digital asset management software apps. IntelligenceBank is headquartered in Melbourne, Australia, and has an office in San Diego, CA. www.intelligencebank.com