Depending on which statistics you think, exists Over 150 million Startups in the world today and about 50 million new, began every 12 months. But the harsh reality is that about 90% of them fail, without going very far. One of the major reasons is premature scaling. This includes the extension to new markets before you – and your company – are ready.
I used to be there. As the founding father of the company based in Estonia, we successfully expanded to Armenia and Spain. But this didn’t occur overnight and it definitely didn’t turn out to be accident and happiness.
In this text, I would really like to share some of the lessons that we learned along the way, in addition to what I think, every founder should think before chasing after international development.
Not every startup must develop
Let’s explain one thing immediately, geographical expansion is not a need for business success. There are many ways to extend revenues: widening product line, improving customer retention, increasing prices – the point is that you simply have options. The branch to new regions is only one of them.
But if you are determined to look at new boundaries, time will probably be crucial. Just because you, as a founder, you possibly can be excited and ready for load, does not mean that your company is. In fact, I saw many founders (including me) who were caught in early victories and pressed the expansion too early. Investors’ expectations may play a role here, causing you to attain the profitability they wish to see.
But the biggest obstacle that it’s essential to overcome before scaling comes all the way down to whether you have the right people and strong enough processes to survive this transformation. Trying to withstand the vibrating foundation, he simply risks to lower the entire structure.
How do you know you are ready?
In my experience, a few green flags needs to be sought.
First of all, it’s essential to have proven the product of the product market on your current market.
Secondly, as I have already mentioned, your processes have to be stable and automated, so that you may afford to appreciate a a part of your team towards expansion without the morning of the major activity.
Finally, it’s essential to have a financial buffer. Entering new markets is all the time dearer and slower than you expect, so it is all the time higher to have more money for this sort of experiments. Don’t play with what you possibly can’t afford.
If you do not check all these fields, it might be higher to attend and prepare further as an alternative of jumping from the gun.
Practical suggestions on the extension to new markets
On the other hand, if you are feeling ready, here are some suggestions that helped my company successfully go.
Hire people with local experience: it might sound obvious, but local observations are too vital to disregard them. Bring consultants who understand each the business environment and cultural nuances. This knowledge can affect all the things, from price strategies to preferred payment methods and easy methods to communicate with local recipients.
Do not assume that your product will work in the same way: only because something works at home does not mean that it should do the same elsewhere. Talk to local users, conduct tests early to envision the demand and be ready to enhance values.
Do not stretch your team too thin: expand only when you have enough staff to assign a dedicated team to cover the new market. If the extension becomes everyone’s side work, it should fail.
Performing market profitability: expansion is a long -term game. Remember to plan properly. Is the market size large enough? Will the returns justify the cost of the entry? Are there local players so that you may compete? What about the recipes? Compliance can turn out to be a nightmare if you are not prepared.
All the things it is advisable to consider. The extension to new markets might be absolutely a growth accelerator – but only if you do it. Don’t let your enthusiasm push you quicker than your company can follow.