By Ulrik Jørring - Danish born, venture capital (VC) provider(V and avid supporter of entrepreneurs in his heart and soul. Member of This Way Up (TWU) & CEO-Collaborative Forum, @Ulrik Jørring:
As a venture capitalist, I typically work with young companies with limited sales - and most often they have no sales outside "their own back yard". Coming from a small country in Northern Europe - with a population less people than Wisconsin - I often envy my VC colleagues in North America their much larger home markets, that allow their young portfolio companies to grow much bigger before venturing abroad.
In Denmark you have to have international aspirations to be relevant for VC funding - and you have to start selling outside Denmark quickly in order to get real traction. Unfortunately, selling outside your home market, where you do not know anybody, do not know the culture - and they do not know you - is much harder than selling at home. Over the years, I have watched many companies fail and some succeed in selling to new markets, and I find that some do's and don'ts appear again and again:
Problem #1: Assuming that customs and customers are the same everywhere
A very common mistake is to believe that potential customers face the same problems all around the world and that potential resellers of your products all think alike. Obviously, your product has to be relevant for a large international audience if you are to sell it abroad, but the reasons why people buy it, and what benefits of your product that appeal most to them may vary over time.
The same goes, and perhaps even more so, when you are setting up the right channel to market. Often it is not cost effective to sell directly, so you need to work with partners. This works best if you can find a channel that already serves the customers you want to address, but you will find that how this is set up can vary a lot from country to country.
Problem #2: Assuming that you know the competition
Not knowing the competition is another aspect of not knowing your target market well enough. If you are a startup with a new and innovative product, the world has managed quite well until now without your new offering, so "competition" should be thought broadly, i.e., how do people today solve the problem that you want to address and what alternatives do they have. Often there is a local company that you have never heard of with a large market share, and positioning yourself vis-à-vis the local players may be key to your success.
Problem #3: Having the wrong people
Having the right people is probably the most important criteria for success - and the most difficult to get right. Typically, you are much better known, and in much higher regard, on your home turf than abroad. And this leaves you with two - equally bad - choices:
- Send some of your local employees abroad and you get high-caliber people who do not know the local market, culture etc., have no experience in selling into this market, and will make many mistakes, or
- Hire local people who are willing to work for a small unknown company instead of a high-profile local brand where they are close to the action - and there is a big risk that you end up with people that are not the very best.
Perhaps the best way to overcome this is if you can find an employee at home who already understands the foreign culture - for example hire a German that knows your country - and knows you - if you want to start sales in Germany.
There are obviously many more things that can go wrong, and the top 13 are devastating, and the do's and don't vary widely depending on the type of business you are in, but thinking carefully about these problems can, I believe, make you avoid some headaches later on.