In recent times, we have undoubtedly seen a
fundamental shift in how businesses, from the smallest to the largest, operate and
engage. The Internet and mobile technology explosion, as well as the endless
ways that they can be used in the business world, has seen more companies start
their global operations much earlier than possible a few years ago.
Ten years ago, it was the norm for companies to
follow the traditional growth curve from starting small with a focus on an
underserved, local market before they could grow internationally. This decision
was influenced by the fact that the companies had to depend on the local
manufacturing, supply chains, and locally known costs, making it expensive to
establish international ones right at the beginning.
However, disruptive technologies like remote
conferencing are influencing the growth model and making it much cheaper to
move international from the beginning. For example, we are experiencing many
successful startups with roots in the Bay Area, but their immediate market is
in parts of Asia or Europe. Such companies first validate their products and
services in these regions before bringing them back to the U.S.
Globally, technology is a common language and your
application should work the same way, no matter the geography, and all you have
to worry about is privacy regulations. Plus, replicating a successful
technology in one region to another one is much cheaper compared to relying on
local manufacturing and supply chain contacts.
What does early global expansion mean for your business?
Market Validation
The greatest advantage of expanding globally early is
that you gain solid validation. If you can get more people, internationally, to
use your product, the better your chances of landing a local client. Whenever I
pitch potential clients in Canada, chances of securing a deal are significantly
higher if I show them that there is a global customer using my technology. This
clearly shows the significance external validation has in winning that local
partner, especially if you are a local startup.
If you are going after direct consumers, you have to
put in place strategies to grow as fast as possible. Some markets grow faster
than others, while others are saturated. Case in point, launching a new product
in the U.S. will not generate as much validation and impact as launching it in
Denmark. The former market is already cluttered with various apps, and you
would need to invest a sizeable amount in marketing to get people to try your
product. However, in Denmark, people would be more willing to try out a new
product.
Investors
Global expansion places your company in a good
position to secure global investors before you get local ones; a huge
validation by any standard. In the second board meeting in my company, I
informed members that I was looking to expand to the United Kingdom. Out of
that decision, both Bosch and Vodafone became investors without having my
company investing in 4 million employees in Europe to start with. Suddenly,
Canadian investors started taking us seriously.
If you do not have the benefit of having a local
investor due to retention and costs, going global will be the most effective
means if you can employ this strategy by:
·
Managing relationships between your
company and its foreign partners and customers
·
Attracting foreign investors
Time to Go Global
Taking your business global is now easier than ever
before, thanks to technology. However, you have to be careful how you implement
the strategy. The following tips can help you ensure that your company products
and services have an impact, no matter the market.
1. Understand Your Perfect Market
Depending on your market and its size, this is the
first thing you should understand. At the beginning of your startup, you may
not have the resources, team, or an understanding of the global market to spur
your growth. Plus, if you don’t do it the right way, you are likely to burn
lots of cash. Follow these steps to figure out where you are starting from and
heading:
- Understand your market from the very beginning
- Figure out how much money you need to open up that new market
- Commit to travelling sustainably – especially if you are the key player
2. Forming Partnerships
Find reciprocal and synergistic partners who are
willing to help you grow in their market. Your partner of choice should have a
thorough understanding of the market they operate in; but, you need to show
them the mutual benefits of incorporating your own product into theirs. Such a
partner then gives you access to hundreds of their own salespeople without
having to spend a lot of money.
It is through a partnership like this with Vodafone,
that we have been able to make a large deployment in New Zealand. The decision
to partner with the company was based on:
- Vodafone has footprints in 21 countries taking our reach beyond the U.K.
- The company understands its markets
- The company’s team helps us identify markets that are mature enough for our product
3. Understand Your Talent Pool Needs
While you may have talent in Bay Area, you may
require another one from somewhere else. As you seek out talent, consider
retention, loyalty, and training. Even though you may have the cash resources
to start and build your talent pool locally, how sure are you that you can
retain it considering the competition from big players? Technology now makes it
easier and cheaper for you to maintain talent in any location, while increasing
your retention rate by 95
percent via use of video conferencing systems.
4. Build and Work with Small Autonomous Teams
Instead of focusing all your work flow system
through a local, hierarchical team, strive to build well-synchronized, smaller,
and autonomous teams in locations that matter to your business. While you will
experience some challenges in cultural and time differences, having teams
spread across regions offers you better results – especially when team members
are comfortable in their environment. Make use of resources provided by governments
through their trade commissions in consulates and embassies to find out more
about an unfamiliar market.
5. Leverage Technology
Compared to 10 or 20 years ago, global expansion
costs have drastically fallen. Today, you can schedule online meetings with
employees and partners in the West Coast, Japan, Europe, and New York within a
few hours, and still have the same desired impact from virtually anywhere on
earth. Utilize technology as an asset to spur your global growth.
A few years ago, it was virtually unthinkable to
think about taking your business global without resource muscle. Now, it is a
necessity that will keep your startup competitive and the costs are
significantly lower. From the first day you open your ‘business doors,’ start
thinking about how you can take it worldwide.
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