Considering an Overseas Expansion? Avoid These 3 Mistakes. Global expansion can seem like a good idea for business, but only if you avoid these common mistakes.
By Cristobal Viedma Edited by Chelsea Brown
Opinions expressed by Entrepreneur contributors are their own.
The idea for my company, Lingokids, came about because of my niece. I wanted to give her a fun and engaging way to learn English. At the time, the options on the market were lacking, especially for a product that was safe and educational while also letting children just play and have fun. It didn't take long to realize that other families were experiencing the exact same problem — not only in Spain, where the platform was originally only available — but across the globe as well.
Years later, we've now expanded all over the world. With our unique "playlearning" approach, we help kids who speak a variety of different languages learn while they play. Play, as you know if you have children, is an important component of learning; it helps shape cognitive, social and emotional wellbeing. But the lack of fun, educational options in the market didn't make the expansion process any less complicated. It required careful planning, with all the right research, resources and readiness to move into foreign markets.
When we ventured into a new market, concerns were always present. Safety, for one, is a huge priority, and each region has different laws and regulations that we must follow. It was essential to work with every region during our expansion to ensure we were abiding by their rules. Even then, other factors had to be considered. With our target users being kids, but parents being the gatekeepers, cultural norms were always in the back of our minds. Do we fully understand their challenges? What about their buying patterns? Do our communications resonate culturally?
As a business owner who's gone through an expansion, I can attest to the complexities involved in such an endeavor. Due to these complexities, it's easy to make more than a few mistakes along the way. Guidant reported that 41% of business owners were looking to expand or remodel their businesses in 2022. If you're among that number, avoid the following mistakes during your company's global expansion:
Related: Considering Global Expansion? Now Might Be Your Best Opportunity.
1. Jumping into too many markets too quickly
It's tempting to try to take advantage of every possible opportunity when expanding into an overseas market. You want to make sure you're doing everything you can to guarantee business growth. The only problem with this approach really comes down to the execution. Trying to do too much at once often leads to doing nothing all that well.
Instead of going 100% global, it's a much better option to enter market by market. Think of it as testing the waters before diving in. That way, you can create the critical mass needed to unlock word of mouth, organic traffic and those other business elements that can help keep your venture economically viable.
Because our product was geared toward learning English, it could have flopped in traditionally English-speaking markets. However, because we took the time to test, capture results and iterate, the U.S. is now among our top markets.
2. Failing to understand the geo-specific audience nuances
Understanding the differences between your home market and a foreign market is key to presenting your brand, product and value proposition successfully. This will also prepare you to adapt your offering, pricing, messaging, distribution channels and even business practices, as the location's regulations might require as much.
No doubt, you've done general market research prior to an expansion decision. But each market — if not the customer personas themselves — has its own nuances, norms and needs to consider.
Home Depot certainly felt confident when expanding into the Chinese market. In fact, the company took time with the decision. However, a lack of social understanding besieged the plan anyway. The company didn't realize that although people tend to move to the suburbs as they gain wealth in the U.S., people in China often buy or rent condos and apartments in the cities as they become wealthier.
The problem here is twofold: Though condos and apartments go through renovations, that's not the norm. Nor are these renovations as extensive as those seen in homes. Also, the decision to locate many of its stores in the suburbs wasn't sound, as wealth is rarely located outside the cities. As a result, Home Depot left China within six years.
Failing to align your brand with the geo-specific audience needs can leave things lost in translation, so to speak. You need to get to know the culture and adopt the language (slang included).
Related: Resist the Urge to Over-Americanize When You Decide to Expand Globally
3. Not involving the local workforce
Growth might be the goal with global expansion, but it comes with a particularly high hurdle around talent. It can be difficult to hire experienced candidates at the pace necessary to meet the needs of an overseas expansion.
For example, trying to run PR, partnerships, brand campaigns and other non-performance marketing from abroad is quite difficult. A local team is much better. They'll have a greater understanding of what customers want. They'll also be in a much better position to understand customers' needs and speak to them accordingly.
If you choose to keep your marketing in-house, approach it as you would any new initiative. Test the market, and invest where you see the most efficiency between marketing costs and volume/quality of acquisition.
Collaborating with local users can also be beneficial. For example, after surveying local parents, our company found that many kids had been missing out on critical skills over the last year. So, we began developing activities related to STEM, as well as practical life skills (e.g., emotional intelligence, empathy, critical thinking and so on) to add to our library of content.
Mistakes are inevitable during an expansion, especially one involving an overseas market. The best-laid plans, as they say, often go awry. Go into an expansion with realistic expectations, and do everything possible to ensure the move goes off without a hitch. Even seemingly minor mistakes could lead to exiting that new market before you see any sort of success.
