Today, the world is remarkably small.
500 years ago—give or take—it took Magellan three long years before he became the first person to successfully circumnavigate the globe. It claimed the lives of hundreds of people, ravaged many with disease, and by all accounts was a tad complicated.
By comparison, in today’s digital age, we can sit down with our laptops, buy something from the other side of the world, and have it arrive on our doorstep within 72 hours.
Going global with a startup or business is easier than it has ever been (although it still has its challenges), and for many winning entrepreneurs, their success has been attributed to their consideration toward international expansion right from the very start.
While many startups have stated an intention to “someday” expand their business overseas, without going through the process before it can seem like an incredibly daunting task. New markets, unfamiliar cultures, administrative procedures, visas, sales, and potential language barriers are enough to deter any Magellan-esque ambition.
For all those entrepreneurs that are overwhelmed with the task of international expansion, here are some tips that can help make the process a little bit easier. Often the process isn’t as complicated as first imagined.
This guide will walk you through the things you need to consider if you want to “go global.” It also includes a number of techniques you can use to research your target audience, as well as advice on important things to consider.
Research in many forms is important before you make the decision to expand overseas, but it can be difficult to know where to start. Most people are aware of the free Google Analytics tracking code you can simply copy and paste onto a website. What you may not have seen is the geographical information that tells you how many visits and conversions you’ve had from anywhere in the world.
For example, if you’re an eCommerce site in the U.K. and are getting a lot of traffic and conversions from China, it may be worth looking into why this is happening.
An example of where you can find this information from within Google Analytics.
Is it that your product has minimal competition or is cheaper than competitors? Are there greater opportunities for higher rankings in the search engines, or is the design of your website helping or hindering you? (Red text in China can be offensive to readers as it indicates you’re ending a relationship with them).
By examining where your products and services are naturally generating interest, you will gain greater insight into potential overseas opportunities.
It’s unlikely that any business actually enjoys paying tax, but with rates varying dramatically throughout the world, there can be a temptation to base the location of your new business in a place where taxes are lower or non-existent.
However, there may be other factors that if not fully considered could be more damaging to your business than the gains you’ll receive from favorable taxation.
The infrastructure, minimum capital investment required to set up a company, local workforce, available customer base, and type of company you’re looking to create can all play an important role.
It may help to plan what your business requirements are first before finding which countries best suit your needs, rather than selecting your choice of location first. Seeking help from those experienced in international tax advice can ensure that you keep profits as high as possible.
A detailed business plan should be prepared at the beginning of the new venture even if there are no funding requirements. “Fail to plan, plan to fail” is a cliché, but it’s still an integral part of international expansion. It can help you consider areas you may not have thought of and the vast majority of overseas banks will require a business plan before they approve an overseas bank account.
While there are a number of posts that cover the topic of writing a business plan in detail, some of the areas to consider will be:
Every entrepreneur will know to research the competition before entering a new market, but it’s important not to just focus on those who have been successful, but those who have tried and failed. There can be a lot to learn from past mistakes and you can put measures in place to make sure they aren’t repeated.
Having a good grasp of the local culture can not only help develop your understanding of local customers and customs but can help avoid any embarrassing or potentially damaging mistakes when dealing with partners and suppliers.
It can also help you avoid any embarrassing or insensitive pitfalls. There’s nothing quite like a good reminder to keep you on track.
Recently, hair company Clairol promoted their “Mist Stick” to the German market. Unfortunately, they hadn’t taken the time to find a translator that could actually pinpoint a big flaw. The word “mist,” in German, may be directly translated as “manure.” As you can imagine, the product didn’t perform too well. After all, who wants to buy a “manure stick” for their hair?
Having an employee with a pre-existing network of local connections can help speed up the process of winning new business via referrals. If a local employee has a vested interest in the company, they are arguably more inclined to assist with introductions than they are likely to hire a translator. The recruitment process will be key in determining whether or not this strategy is viable.
Online tools like LinkedIn also offer great opportunities to reach out to connections and to get introductions to people who may be able to help.
There’s an added bonus too: If your colleagues and business partners are LinkedIn “power users” (and many people are these days), you may even get a personal recommendation out of the process, something you can display to the public and use as both a sales tool and a validation of the work you do. There are also a number of Meetup groups where you can reach out to local business networks in the country you’re looking to expand into.
Since the global recession, many governments have set up incentive schemes and financial support measures to not only help grow the domestic economy but also to encourage entrepreneurs and startups to come to their country.
For example, Germany offers governmental loans and grants of up to 50 percent for startups, particularly in economically disadvantaged areas where the growth of the startup community will help with local employment. Understanding all the schemes available can be time-consuming, but partnering with someone who has experience in these areas can ultimately help.
Many businesses throughout the world are struggling to protect their ideas and intellectual property (IP) rights, particularly when expanding into international markets.
One of the most high profile cases is Trunki, the maker of the popular children’s ride-on suitcases. After rivals in the Chinese market copied their product, they posted a loss of £1.5m compared to a profit of £720,000 the year before.
The interesting regulations surrounding protecting IP is that unlike physical assets that have a defined location, IP isn’t bound by geographical constraints and can be moved between countries, each with their own unique tax systems. The choice of where to base your IP holding company has become a key strategic decision for a company’s board of directors.
There are a number of options available with many businesses historically choosing Cyprus, a country that has some of the lowest rates throughout the EU. The scheme (commonly referred to as the IP Box) is, however, going through new legislation and businesses have until mid-June 2016 before new entrants will no longer be permitted.
With good planning, research and help from those with the necessary experience, you can start to consider international expansion right from the outset. Unlike Magellan, it shouldn’t take three years…and you probably won’t get scurvy.