Describe your vision and objectives for your international expansion plans and identify how you will measure success.
- Vision – in describing your vision for overseas expansion, think about how you would articulate your achievements in say three years time.
- Objectives – define your short & medium term objectives for overseas expansion.
- Key metrics – specify the critical KPIs that will allow you to measure progress & success.
- Success criteria – in the early stages of market development, many normal KPIs won’t be meaningful. Think about some alternative measures and milestones to allow you to measure short term successes.
- Current status – note your current turnover and percentage of export revenues plus other key metrics like products shipped, active users etc. It’s good to context this in relation to your objectives and also start to validate your thinking about budgets for international expansion.
- Sector – think about the sectors & industries you target and whether they are B2B or B2C (or any other combination). With a clear definition, it will be easier to consider routes to market, channels and potential partnerships.
- Investment – note your investments & and grants obtained to date and think about how you will fund your international expansion. Companies often consider overseas growth as a tactical extension of domestic sales activities. This may work for short term market testing and to get early sales but you should know the cost of supporting these sales into the future and importantly, consider how your are going to fund strategic expansion plans especially setting up a local operation.
- Elevator pitch – prepare or hone your elevator pitch so that it’s relevant to your new market & the stakeholders you will engage there. You will be surprised how useful this will be in discussions with new stakeholders.
Explain both in terms of your home marketplace and the marketplace you wish to expand into, recognising that many aspects may be quite different.
- Research – it is imperative for the success of your market entry plans that you conduct market research. Sizing the opportunity, analysing trends, looking at market/product fit,
- Value proposition – explain succinctly what the business does and it’s value to your customers, thinking about how this may be subtly different in your target market given cultural & competitive influences.
- Competitive landscape – research carefully the competitive landscape to identify direct & indirect competition in your target market. Specifically note UK competition and other non-domestic competitors. Consider how successful they are and learn from their market positioning & pricing models etc. Prepare a SWOT analysis & be honest about the risks & your assumptions.
- Positioning – when selling overseas, competition can be strong and it can take a while for a new entrant to raise awareness and credibility in a new market. How you position your business, your brand, your products and services, and how you leverage your USPs and competitive advantages, will be key to establishing early credibility. Consider how you can articulate and promulgate this new positioning (in all promotional material & digital assets) so as to re-enforce your brand messaging & differentiation.
- Pricing strategy – consider the price points & pricing models of comparable products & services in your target market. Develop a realistic pricing strategy that considers the accepted norm and recognises that until you are known in the new territory, the barriers to entry are already high. Don’t forget to factor-in additional local costs related to import taxes and customs duties, sales taxes, delivery charges, and any other compliance-related fees.
- Localisation – there are many aspects of localisation to consider including website domains & SEO, product packaging, content translation, cultural & behavioural factors, & local regulatory & legislative compliance requirements.
- Segmentation – consider whether you will segment your audiences using the same parameters as in your domestic market or whether local customer behaviour dictates different segmentation. It is also worth revisiting your definition of personas to make sure these align, or there may be new personas to consider. Remember also in some countries, such as the USA, geographic segmentation at State and regional level may be desirable or essential.
- Routes to market – the choice of routes to market will be crucial in developing your market entry strategy and should be considered carefully. In some cases it can be advantageous to get early sales directly so that you have the intimate knowledge of how things differ from your home market before engaging with distributors or channel partners. Equally, for some products & services, the opposite may apply, in that an established local partner has that critical knowledge which you can leverage by working through them. Whatever your circumstances, do consider the range of possible routes to market from direct selling, via distribution, agent or representative organisation, via a channel partner, via membership bodies, trade organisations, marketplaces and so on. Note also, the mix and indeed your strategy may change over time especially as your local knowledge & experience improves. Of course your routes to market will also be driven by where your target audiences like to buy products and services and hence one reason why market research is so important.
How do you view delivering sales expansion into this new market?
- Remote: Many companies start selling overseas as a result of attending conferences and trade shows or getting sales enquiries via their online presence. Often, to progress such opportunities, it needs a face-to-face meeting in-country and many companies arrange intermittent or regular sales trips for this purpose. This works to an extent, especially in the early stages of quantifying the opportunity. However, most successful businesses, quickly learn that a permanent local presence is required. Your options then include: one of your team on secondment for a period of time; hiring a local sales person or country manager; working through a rep organisation, distributor or even channel partner, to name but a few. Each has their pros and cons and should be considered carefully in relation to the complexities and intricacies of your product or service and the sales process.
- Local Office: A local office is essential for some businesses because of the nature of their product, service and customers. However, in some geographies and cultures, it can be essential because face to face contact is the expected norm and the act of setting up an office is s strong indication of your commitment, beyond just closing the first deal or two. These and similar factors can be show-stoppers, so due consideration should be given to your strategy. Another important consideration is the location of the office. Should it be amid a cluster of similar tech companies, as an accelerator or tech cluster, or is it more important to be near your most important customers? Of course there are many other permutations to consider such as access to communication networks, availability of affordable skilled labour, local infrastructure and so on. It is possible to obtain advice & guidance from FDI organisations and overseas trade bodies etc and you can find out more in the sections below.
- Outsourced: If you are not ready to commit to your own sales office, you might consider whether sales be entrusted to a 3rd party? This could be through a channel partner, a distributor, a systems integrator or even as a JV. This is a critical question which needs careful consideration. There are big advantages to gaining the local knowledge and experience first hand which might be possible if one of your team camps out for a period of time. Equally, the right partner, is likely to have significant local knowledge and connections which could shorten the learning process and give you immediate reach. These decisions are likely to be driven by the nature of your products and services, the sales process, your customer needs etc. But remember, selecting a supplier or business partner in your domestic market is hard enough; overseas it can be even tougher.
- Customer reach: You will know whether your business is B2B or B2C/D2C and as a consequence the type of sales operation you will need. However, it is worth considering other approaches to reach your customers such as B2B2C or B2B2B. In other words, revisiting channel and distribution options which may be preferable in a new market or at least provide a stepping stone to establishing your core approach.
- Objectives – define your short & medium term objectives for overseas expansion
- Key metrics – specify the critical KPIs that will allow you to measure progress & success
- Success criteria – in the early stages of market development, many normal KPIs won’t be meaningful. Think about some alternative measures and milestones to allow you to measure success
- Online: How much of the sales effort can be supported remotely from HQ / online?
- Local Office: How important will a local physical office presence be? How close to clients will you need to be to ensure sales growth? Time zone coordination with HQ, how easy / difficult will this be?
- Outsourced: Can sales be entrusted to a 3rd party? Would this be through, channels, distributors, systems integrators or as a JV?
- Reach: is this a B2B, B2C, or a B2B/ C or D2C model?
How do you view delivering customer support into this new market?
- Online: Customer support for for many tech businesses comprises online chat, email & ticketing systems. These can be used effectively overseas but do consider time zone differences, making sure your support is accessible during local business hours, and also language requirements translation needs – not forgetting email automation content, help content and ticketing systems. Additionally, especially in service industries, account management and project management activities will need to be factored-in and this may necessitate a non-online support approach.
- Local Office: A local physical office presence is often a pre-requisite of doing business overseas for various reasons discussed throughout this guide. Importantly, from a customer support perspective, the location of your office needs careful consideration in relation to proximity to customers, local and national transportation/travel networks (airports and rail) and time zone differences given the possible need to coordinate activities with HQ. If you are selling a physical product you should also consider ease of access/supply of parts or replacement units, storage, local repairs, returns and so on. Aside from very specific customer support needs, there are a raft of other factors to consider including potential support you can obtain from economic development organisations with a FDI remit. This guide provides various details of these and other considerations.
- Outsourced: Can customer support be entrusted to a 3rd party and would this be through a channel partner, distributor, systems integrator, a local repair organisation or even a JV? The approach may be driven by local cultural needs and expectations, for example the need to have an established native-speaking business that is known in the local business community and with a good reputation. There will also be cost, process, communication and other such considerations to factor-in and you may wish to consider a phased approach, starting with remote support or using your local agent initially, to having a medium-term permanent local presence of your own.
Any market entry will require a level of regulatory and legal planning and will be driven by the specific route to market strategy your business adopts. Equally the regulatory requirements will vary depending on the business sector and on the specific geographic marketplace you are entering. Key considerations include:
- IP Protection: IP protection as a category is quite broad and not to be confused with just patents which are clearly very important for some companies. However, in many geographies and jurisdictions it is critical to protect your brand by having appropriate registered trademarks and designs, ownership of relevant online assets like social media account URLs/IDs and domains, and other protectable assets both physical and digital. Remember in some countries, copying is rife, adding to the need for protection but also, you may wish to purchase additional domains that “sound” or “look” similar in order to limit the scope of any fraudulent activity. Equally, in highly litigious countries such as the USA, you must be particularly careful not to breach another company’s registered marks etc. as this can be very costly. We recommend therefore that you obtain specific legal advice prior to entering the market and also consider taking out relevant insurance.
- Trading Agreements: It is common to hear of companies who either update their existing trading agreements with little or no advice, believing that the terms will suffice (for now) in a new territory/jurisdiction or do a web search, download a template, and go it alone. Clearly there are considerable risks in doing such things and it is advisable to discuss needs and consider drafting. In contrast, many adopt a more considered approach by taking in-country legal advice
- Regulatory & Legislative compliance: will vary from country and sector.
- Immigration: new border controls post covid are only going to make this more critical.
- Product liability: what coverage do you need?
- Licensing: Have you got the right agreements in place to ensure continuity of sales and revenues?
- Dispute resolution: having an on-tap local legal team will be key.
- Incorporation: ensuring any company set-up is fully compliant and effective
- Employment contracts: ensuring key staff are effectively retained.
- Shareholders agreements: ensuring from incorporation these are in place, share options to staff too?
- Investment documentation: ensuring this provides resonant proof and options for additional investment down-stream.
- M&A: having necessary documentation in place for this down-stream option.
Any market entry will require a level of audit and tax planning and will be driven by the specific route to market strategy your business adopts. Equally the regulatory requirements will vary depending on the business sector and on the specific geographic marketplace you are entering. Key considerations include:
- Corporate tax planning & Structuring: key in any all sectors and geographies.
- Personal tax planning: key in any all sectors and geographies.
- Indirect taxes: key in any all sectors and geographies. Sales taxes in the US are especially complex, and liability varies both in terms of trading status and from region to region.
- Transfer Pricing: key in any all sectors and geographies.
- Statutory reporting: key in any all sectors and geographies.
- Audit & book-keeping services: key in any all sectors and geographies.
- HR & Payroll: this will be dependent on whether there are any local staff employed. There are options here to use 3rd party employer of record services, that mitigate the complexities of some legal and audit services, at least in the short term.
- Employee benefits: this will be dependent on whether there are any local staff employed. There are options here to use 3rd party employer of record services, that mitigate the complexities of some legal and audit services, at least in the short term.
- Share options: working in coordination with the local legal team to incentivise any new and important hires.
How any market-entry programme will be funded and supported financially is critical. Speed to market will be determined not just by product fit and opportunity but by what funds are available. How easy it will be to ensure payment and what additional incentives and grants are available alongside any injections / borrowing?
- Budgeting: Accurate forecasting to ensure sales, support and operations are sustained effectively.
- Finance: Ensuring commensurate funding is in place to support any growth planning.
- Pricing Models: Ensuring competitive pricing models are in place to support any growth planning.
- Banking: Looking at options around smarter and quicker banking and payment solutions separate to traditional banking models.
- FX: Looking at options around smarter and quicker FX and payment solutions separate to traditional banking models.
- Grants: Understanding the options for receipt of grants and tax breaks from both country of origin and new markets
- FDI incentives: Understanding the regional incentives available from critical economic development bodies and how to position your business solution to access and secure them.
- Debt: Access to right sized-advice on commercial borrowing – for instance s/w subscriptions around Patent Box.
- Investment: Getting access to both country of origin and new market investors.
- Insurance: Having the right policies for your business modelling / staff
Where you place and scale your business operations to support expansion into other markets is key. Again, the importance consequence of whether you retain your existing operations /manufacturing base or recalibrate this to suit expansion will be critical.
- Offices: How important is having a local base, does your business need to be close to key markets or supply-chain and what additional regional incentives can you attain?
- Recruitment: What talent do you need, does the talent need to be recruited locally? What access to recruitment organisations and groups do you need to find the right people?
- Localisation: Have you been able to localise your messaging do need additional resources / market research to ensure a resonant fit?
- Data & location services: how well is your tech adapted to higher levels of data storage and resonant location services, how much more capacity do you need to scope in for your international expansion?
- Supply-chain: new market expansion may be a challenge for your existing supply-chain do you need to recalibrate how this would fit into these new markets?
- Logistics: new market expansion may be a challenge for your existing logistics do you need to recalibrate how this would fit into these new markets?
- Warehousing: From both a cost, supply-chain / logistics perspective having some warehousing in-country my now be an option.
- Manufacturing: In country manufacturing may be an option in terms of costs reductions, efficiencies of raw materials and logistics. Equally the FDI incentives that your business can get from Economic Development agencies should not be under-estimated.
Having a clear message that enables you to easily articulate value and business needs to grow your business in key markets is vital. The more you can demonstrate scale and value – the more interest and opportunities you will get from governments and regional FDI bodies.
- Pitch Decks: Always ensure you have a concise and updated one to hand. Practice and refine your elevator pitch on a regular basis.
- Brand Values: Make sure your brand values align in the country you are pitching to.
- In-country corporates: Do not under-estimate the value of innovation to add into a large corporate who already has presence on the ground in a key territory.
- Accelerators: Seek out regional accelerator programmes which can enable a low-cost and speedy go to market routing.
- Incubators: A option in setting up quickly in a region with access to business and government networks.
- Economic Development Agencies: Their sole focus is in encouraging FDI. Do not underestimate the value in your business of having the ability to land and expand into a region and how that is seen as valuable that region in terms of job creation, payment of taxes etc. As not for profit organisations with amazing access to local government, business, and education bodies they take a longer term / more holistic view on expansion, and offer a suite of grants, accelerator programmes, incentives, and free market research too.
- Trade Bodies: By sector or by region or country, these bodies exist to support and encourage trade and have great networks for connections and market research.
- Government Support: Provide both expertise with your own country and access into other countries. ITA trade networks in the UK. FCO across the world. Trade Missions and other support touch points should be considered / used. Foreign governments – like EDOs will also provide a suite of FDI opportunities for the right companies.
- Membership Bodies: Chambers of Commerce for instance operate locally and globally and have great network access and endorsements.