Richard Goold of EY explores some important considerations when embarking on a journey to scale your business and launch in a new country. Here are some points you need to think about before you start:
1. Is international expansion the right answer?
Scaling overseas is rarely easy - even when you have overcome hurdles related to regulation, tax registration, legal structure, hiring staff, securing office space, and finding new customers, the day-to-day pressures and workload for your leadership team managing multiple locations will be dialled up - especially if they are now spending time travelling between offices. If you can achieve these same objectives in your home market, it is often easier to fix product errors, refine the customer proposition and grow revenues in the market you know before adding complexity from international operations.
2. Which markets should I launch in first?
Launching in a new market, only to pull out later can be an expensive experiment. So, being deliberate about where to expand into is important. Many start-ups underestimate what it takes to be successful in a new country. Costs can be high and there can be cultural differences, customer buying behaviours, regulations, taxes, employment laws and other factors that make doing business harder. When you are ready to expand, properly evaluate and prioritise markets not on size of the opportunity alone.
3. Is my business ready for scale?
If you are clear on the reasons for expansion, and have determined where and when to launch, the next consideration is how robust is my business? Running an international operation is very different to running a domestic business. Basic capabilities like finance, treasury, payroll, legal and contract management will need to be mature enough to handle increased volumes and complexity. From a product and systems perspective, aside from localisations for language and currency, you may need to upgrade your server capacity and processing power. Determine where you are now versus where you need to be, prioritise the gaps that need to be closed first and develop a mini plan to work through these. Documenting ways of working is a useful technique to highlight where current processes can be improved, whilst also a useful guide for team members as they come on board in new countries.
4. How long will it take?
The most common reason start-ups falter and take a long time to get operations launched overseas is their ability to navigate the local regulatory environment. There are countless examples of businesses that have hired teams, secured premises, imported products, and even identified customers, only to wait weeks and months for the right local permit to operate. Getting legal and tax involved early in the process is critical. Find an experienced firm with local knowledge, which has helped similar companies enter the market. Make sure you understand the process and realistic timeline. Then sequence your launch activities (hiring, marketing, etc.) around the steps on the critical path, which will avoid spending money too soon, and waiting for licences.
5. What about hiring a local team?
Hiring the right local team is one of the most important factors to influence success overseas. but often one of the hardest things to get right. Linked to the point on timing above, start by planning what roles you need. If you are hiring local sales teams, will you also need local customer service teams? In what order and when you need them to start? Recruiting too early can mean paying for talented people with nothing to do and be demotivating. Remember it is not just about skills, but finding individuals that fit your culture and you trust to run your business for you when you are away. Re-locating members of your leadership team can be a good way to vet and on-board local team members, but only if you can effectively cover the gap they leave behind at home.
Scaling a business is an exciting challenge – but something not to be trivialised. Even though some of the considerations listed above sound simple, keeping these in mind along with a systematic and realistic plan will help increase the likelihood of successful and sustainable growth as you expand.
The opinions expressed by third parties are their own are not necessarily shared by St. James’s Place Wealth Management. This article originally appeared on the UK Tech website and was written by EY.