Thinking of Going National? Follow These 5 Tips. It's imperative to get your ducks in a row before taking your company from a local to a national market.

By Mike Kalis

Opinions expressed by Entrepreneur contributors are their own.

When a startup gains a firm local footing, entrepreneurs often feel the urge to expand. But taking a company national isn't something you can blindly jump into -- it's an important and tough decision to ponder.

I'm familiar with the challenges -- and benefits -- of doing so. My company, Marketplace Homes, began as a local startup and eventually spread into more than 20 states. But we realized that we had expanded too fast, so we pruned things back. Today, we've got our ducks in a row, and we're shifting back into the growth mindset.

Related: How to Successfully Expand Your Business

Why you should go big, not stay home.

One of the perks of going national is giving your startup the opportunity to diversify its market. There was some scary, volatile stuff going on in Detroit when my company launched there. We knew it would be wise to branch out and not rely so heavily on this fluctuating market, but because we weren't looking to physically relocate our operation, we had to find a way to offer our services from afar.

We created an app called Zip Tours that allows us to video chat with prospective homebuyers as they tour any property, anywhere. We showed the app to builders and property managers across the country, and once these partnerships fell into place, we had ourselves a national business.

5 tips for going national

Making sure your product can cross state lines is important, but it's not all you have to do. Here are five tips to keep in mind throughout the process:

1. Don't jump the gun. Don't step onto the national stage before you've moved the needle of your local market. Webvan did just that when it decided to open $30 million warehouses in 26 new cities without thoroughly analyzing its local success beforehand. The company lost more than $800 million dollars and shut its doors later that year.

Take a look at your sales and weigh them against your local competitors' to see how dominant you truly are. Once my company was working with 10 percent of all new construction in the Detroit metro area, we knew we were ready to expand.

2. Identify a real need. You need to make sure there are actually other markets out there that crave what you offer. In our case, by studying demographics and the number of building permits being issued across the U.S., we discovered that Atlanta, Chicago and Florida were building homes at a much faster rate than Detroit was -- and those three areas are now our biggest markets.

Related: 9 Questions to Ask When Assessing a Market

3. Prepare to lead a larger organization. It takes guts to go national, and you need to be ready to hire and oversee a larger team. Be prepared to delegate and ask your employees to delegate among themselves -- something only half of all companies feel confident doing. Boosting this ability involves a combination of hiring self-starters with proven track records of leadership and empowering your existing staff to become leaders themselves.

4. Boost your financial competence. You're no longer asking for $100,000 to open a local business -- now, you're looking for millions. When moving to this stage, hire a top-tier accounting crew that's experienced in catering to large institutional investors and ensuring that a thriving business remains financially accountable. Nearly half of all startups fold because of some type of financial incompetence.

5. Study up on local quirks. When eyeing other markets, you'll learn about local customs, laws and regulations you never knew existed. Last summer, Uber was fined $7.3 million by the state of California for failing to comply with reporting requirements. Even if your company is worth billions, no one wants to face that big of a fine.

My company discovered that real estate regulations and sales commissions are slightly different in every state we operate in. Staying on top of all the rules has kept us out of hot water.

The benefits of going national are simple enough to understand, but actually doing it is anything but easy. Keeping these five tips in mind, however, will help you overcome the challenges and become the national powerhouse you've always dreamed of being.

Related: 5 Reasons Startups Should Consider Expanding to Canada

Mike Kalis

CEO of Marketplace Homes

Mike Kalis is the CEO of Marketplace Homes and one of Crain’s Detroit Business’s “Top 20 in Their 20s.” 

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