Operating a business outside your home country sounds appealing, and can in fact be an excellent way to take your organization to the next level. But, in addition to ensuring that you've perfected current processes first, expanding to foreign markets requires substantial time and resources and careful consideration of several factors.
Haithem Elembaby is a startup founder with multiple exits, and is now an SVP at Harbinger, a firm that helps foreign startups gain sales traction in the U.S. market.
“An initial step is understanding where your value proposition will be most compelling. Sometimes, carving a niche that your competition has avoided is a much easier strategy than going head to head," he says.
But before you embark on that strategy, consider the following advice to help lay the groundwork for success abroad.
1. Join forces with the locals.
Certain markets may require collaboration with a local partner.
“Make sure you assess local regulations and expectations from new market entrants when determining which foreign markets to pursue," suggests Elembaby.
Tim McHugh, CEO of global book publisher Saddleback Educational Publishing, agrees, citing the example of Starbucks. “For years, Starbucks didn't know how to enter India as coffee is not as big as tea in India," McHugh says, "but recently [they] partnered with a local company, Tata Beverages, to have a better chance of success."
When considering foreign markets, it helps to learn the nuances of how your new audience makes purchases.
—Tim McHugh, CEO, Saddleback Educational Publishing
“Map the key stakeholders and understand how to interact with them," says Elembaby. “For example, does the culture value directness or is relationship building more important? What works in New York will not necessarily work in London, let alone Beijing."
You should also think through the economic and political stability of the region you're targeting.
“It's important not to overlook this, since macrotrends can often present unforeseen challenges," Elembaby says.
2. Plan for potential holdups.
Speaking of challenges, it's helpful to know which ones foreign markets might throw your way.
“The logistics of getting goods to market can be a hassle," says McHugh. "Some product categories are restricted in certain countries. Advance research will prevent your containers from sitting on a dock for months waiting to clear customs.
“Also," he continues, "just because you own the rights to intellectual property in the U.S. doesn't mean you own them in Russia or Brazil. Laws vary a lot, so talk to an IP attorney first."
You may want to give your transcontinental expansion lots of leeway.
“Assume it will take twice as long to break into a new market as you think," says Elembaby. “You might get lucky, but in case you don't, make sure you're covered."
3. Know who to consult.
To examine foreign markets thoroughly, you can take advantage of resources designed to help you.
“Many governments have trade entities focused on bringing foreign businesses to their country, and there are a variety of accelerators and service providers that conduct trade missions and allow entrepreneurs to spend time in a new market," says Elembaby. “Companies like the U.K.-based Excelerate360 assist organizations in building their sales teams and other local operations."
Furthermore, the U.S. Commercial Service has experts at embassies around the world.
“They can provide guidance on local customs and laws that might affect your business," McHugh says.
Before moving forward, don't forget to talk to peers who have been there before.
“Learn as much as you can from others who have worked in your industry—in the foreign markets you're considering—so you don't repeat their mistakes," McHugh says.
Investigating foreign markets might be an appropriate next move for your business. And with the right preparation, your expansion efforts could be successful.
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