Find Opportunities on the Other Side of the Horizon: 4 Expert Tips to Internationalize Your New Business The COVID-19 crisis has proven that there is even greater scope for small ventures to successfully branch into new markets
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Internationalization is an ambitious but attainable step in any startup's lifecycle. Once considered to be at the tail-end of a business journey, companies nowadays have the luxury of being able to internationalize relatively soon after they launch. The internet has been the biggest accelerator of startups establishing an overseas presence faster, while the recent COVID-19 crisis has proven that there is even greater scope for small ventures to successfully branch into new markets.
According to a survey from Wells Fargo, 87 percent of US companies are optimistic about expanding internationally for long-term growth. However, having the tools to expand, and knowing how to do it properly—without falling into legal trouble, failing to understand consumer culture or ignoring technological differences—are two separate things. If you rush into foreign waters unprepared and insensitively, you could jeopardize your existing success and reputation.
Here's how to internationalize your startup, with insights from founders who have done just that:
1. Size up your home market.
First things first: Assess when to enact your internationalization strategy.
Conventional wisdom says you need to dominate your home market before you consider establishing a presence elsewhere. Previously, most investors considering funding your international expansion would first ask you to prove that your company was successful in its current location. If you couldn't, you'd struggle to get the funds.
Nowadays, there is no longer a standard linear format to internationalizing. There are a number of startup hotspot countries and cities that make it easier to take a leap without necessarily dominating your domestic market beforehand.
Oswaldo Trava, Founder of InstaFit, notes that a key step is to "identify the largest, ripest market." This especially rings true for founders from smaller local markets, like Israel or Sweden. Because the population size is relatively low and therefore limited, it can be worthwhile focusing on European or U.S. markets from the get-go. It essentially comes down to momentum—if you can get enough traction where you are now, focus on domestic growth. If where you're operating is too contained to make a big enough splash, consider going international from day one.
2. Get your legal, language, and logistics in order.
Some of the most common pitfalls when internationalizing are also some of the easiest to avoid.
On a practical level, you have to have a sound legal framework set up. Compliance should be one of your top priorities: you need to know and adhere to the local tax, data handling, and labor laws to ensure you don't face heavy penalties further down the line. There are plenty of useful online resources like Remote that can help you prepare for the legal regulations as you internationalize, however, speaking with a legal professional is most effective. The initial fee may dip into your startup's internationalization funds more than you'd like, but it's worthwhile to guarantee that you're growing a business on a secure foundation.
Gabe Zichermann, chief executive of Failosophy, notes that almost every country has a foreign trade investment arm where foreigners can get extremely useful about internationalizing. These arms can be part of the consulate or a separate institute, and may have a number of locations. A quick search online should reveal the closest relevant arm to you.
To listen in to Gabe Zichermann and Oswaldo Trava discuss how to internationalize your business sign up for a risk-free trial of the Start Your Own Business course and check out our live webinar on 09//20 at 3 pm ET.
Another consideration is language. English is the dominant language when internationalizing, but of course, this can vary according to your majority audience. Whichever language you will be working in, you have to be extra sensitive about using native speakers to write your product or service description, UX, copy, onboarding, and general messaging. More than ever, users are hyper-sensitive to grammatical errors and if you merely copy and paste your content from Google translate, you risk losing customers who may think that your brand is a scam. In fact, poorly-written websites and emails are known signs of cybersecurity threats.
Beyond legality and language, you also need to scope out the infrastructure of your new market. Assess what internet penetration is like, the level of digital literacy, and have a firm grasp of online user behavior in the country. For example, if you try to launch a video conferencing startup, you need to be certain that as you internationalize, your servers can support the surge of additional customers.
3. Match your pricing and payment options to your markets.
A big part of internationalizing is recognizing patterns in markets and accommodating them. Having a customer base and a valuable offering can only be successful if you pave the way for people to seamlessly pay for your product. As Zichermann, puts it, "people have different levels of ability and willingness to pay for things in different countries."
Your pricing strategy has to therefore account for two things - appropriate pricing and appropriate modes of payment. While some markets may think $10 per month for a service is reasonable, other markets will find it too expensive. Zichermann recommends using the purchasing power parity (PPP) tool to judge how amounts translate in other countries and understand, for example, what a basket of goods costs in the United States compared to Mexico.
Likewise, modes of payment should be dependent on what your target market is already familiar using. For instance, Latin America is predominantly cash-driven, China prefers Alipay and WeChat, the United States opts for credit cards, and Europe is weighted towards debit and credit cards. If you're serving small, niche groups, it'll be easier to tailor payment solutions to them, but if you're focusing on larger segments of the population, following local payment customs will remove possible friction at an especially crucial point in your user journey.
4. Internationalize your team.
Building an internationally-renowned business starts at home. If you want to make a brilliant impression as you grow, you need people on your team who are from a variety of backgrounds, with a variety of skills and local knowledge. These people don't have to be solely responsible for your internationalization strategy, but they can support your cultural bridge into new markets.
Ideally, bring people on board who are culturally competent in the places you're targeting - meaning, they speak the language, have worked in the location, and know local practices inside and out. For customer service roles in particular, these qualities will establish positive customer interactions and contribute to longer-term relationships because people feel that they are being understood. If you're a small venture with a restricted budget, internationalize your team using freelancers from LinkedIn and Upwork. These platforms are actually great to pin down people in your preferred markets, and if they prove to be valuable, they can become full-time employees at a later date.
Internationalizing your team should foster a more diverse culture in your startup, and encourage you to recognize different norms and national celebrations from around the world. This type of openness not only increases your creative and innovative potential, it also puts your company in a stronger position to attract diverse talent and business partners, and continue growing across the globe.
A huge part of internationalizing is earning the trust of customers in new markets. Every location you enter should be treated as a separate and unique challenge, and you should be prepared to reset your business clock every time you branch into a different area. What went well in a previous market won't necessarily jibe for another, but researching and reacting to those variations will make you a multi-faceted, successful brand.