#5 Question Entrepreneurs should ask Themselves while Expanding their Startup's Geographies
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Growing beyond its boundaries is every homegrown company’s dream. While few of them, such as Ola, OYO, Zomato, are creating a mark for themselves and benchmark for their competitors in the international market, some have even failed to make noise beyond their home city.
A lot of startups fail to fly outside their home market because they lack a clear strategy, a vision and more importantly a detailed plan of action along with plan B (in case if the first one fails).
Entrepreneur India shares five questions entrepreneurs should ask themselves while expanding their brand:
Do I have Hold in the Domestic Market?
Global expansion is an expensive process and requires a lot of investment.
Hence, before taking your operations abroad, Sunu Mathew from LEAP India suggests entrepreneurs to make sure that the current market’s potential is already being tapped and the business is throwing enough cash in order to support outside operations.
“One has to build a strong foothold in the domestic market before venturing into the international market. As enough cash flows are required to support the investment in international markets,” he shared.
What is the Right Market to Target?
When entrepreneurs decide to take their companies global, the opportunities are high and hence, it is recommended that they spend time talking to customers face-to-face and really understanding their pain points as there is no substitute for this.
Pushkar Mukewar, CEO & Co-Founder, Drip Capital says the best markets to target are the ones where the customers and their pain points are similar to the home market.
“This is important because little or no customization is required to sell the product or service in the new market hence making it easier to launch. Given the investment the company has to make to ensure a successful launch, it is equally important to answer other critical questions around the size of the market, the competition and local regulations which may have an impact on the company’s success,” he pointed out.
Do I know My Target Group?
While planning to expand your footprints internationally, a thorough market research is a must for every company.
Aradhya Tulsyan, Director,Peachmode.com feels as your audience can be present anywhere, it has become increasingly difficult to understand their needs, analyze and narrow down where you are getting maximum returns.
“Research about why customers are buying your products and not that of your competitors. Reasons for the same can be lower prices, better design, better quality, easier returns, better customer service, etc. Lacking areas need to be improved upon and a consistency has to be present across the domain for a better customer experience and subsequent growth,” she says.
Additionally, it also important for the company to understand how mature is the market viz a viz the product it has to offer.
Sharing an example of e-commerce sector, she adds when the players initially entered India, their campaigns were focused on educating customers while selling convenience as a benefit. Now, as consumers have familiarized themselves with the platforms, players can focus on the USPs like the product offerings.
What is the Right Operating Model to Go International?
Once you have answers to the above question, entrepreneurs should now work on chalking a strategy to suit the demand of the target market.
“Entrepreneurs should decide which functions they want to centralize and which ones they want to localize. This decision is not easy since entrepreneurs need to take into account variety of factors including the kind of product or service they are offering, the type of customers they target and the management bandwidth required for launching and operating internationally,” Mukewar from Drip Capital added.
What is the Cost of Logistics & International?
Every market has a unique demography, infrastructure and asset quality. Entrepreneurs need to assess these segment and understand whether they want to hire local talent or transfer their employee to operate the business in the new market.
A growing company also has to estimate future logistics and other requirements, which is why Tulsyan suggests understanding how the plan to scale up during a peak season and scale down post the event.
“For an online player, one has to choose between setting up a centralized warehouse or a local warehouse based on the real estate cost. Different factors play individual roles in making or breaking a supply chain. The brand has to ensure that all stakeholders of the supply chain work harmoniously to enable on-time and intact delivery of the product purchased in order to earn positive customer reviews,” Tulsyan pointed out while adding that, “The logistics model has to be foolproof which relies heavily on the overall infrastructure of the company so that the customer keeps focusing on the product instead of worrying about timely services and enquires about back-end operations. This also defines the overall price of the product for that market.”