How to Expand Your Startup Internationally

Once your startup hits a certain critical mass, you’ll be ready to start expanding internationally. But how do you know when the right time to expand is? And how can you get your foot in the door in a new country?

The Value of International Expansion

Let’s start by talking about the value of international expansion for your startup. It’s important to understand that expanding internationally is both a cost and a risk; you’re probably going to invest significant time and money into this endeavor, and there’s always a chance that it doesn’t pay off in your favor. Accordingly, you need to understand the benefits in store for you and calculate whether they’re worth it.

•  New markets. Your current niche may have been rewarding so far, but it’s also a limiting factor for your long-term growth. Expanding internationally gives you access to new markets, which means the potential to release new products, market your existing products in new ways, manage a different type of competitive environment, and hopefully, secure better prospects for the future.
•  More revenue. One of the biggest motivations for international expansion is securing more revenue. If you have 100,000 customers in the UK, but you could attract 100,000 more customers from the United States, you could practically double your revenue simply by establishing new operations overseas.
• Increased recognition. You may also benefit from the increased recognition you get with an international presence. Your company will be physically bigger, with operations in more territories and far more customers. That’s going to give your brand some serious prestige. Partners, customers, and employees may be more likely to work with you if you have this kind of international power.
• More recruiting power. The most successful startups are often the ones who have access to the best talent. But if you’re only recruiting and hiring in one country, you might be artificially limiting your potential in this area. Expanding internationally means tapping into more potential recruiting power, since you’ll be able to access candidates in a variety of different countries.
• Risk management. Though international expansion does introduce some new risks, operating in different countries could help you diversify your interests and manage your risk profile as well. If you have many different customer segments and many different realms of operation, your business won’t be threatened by difficult circumstances in any single area.

Nailing the Timing

It’s important to time your international expansion correctly. If you try to expand too soon, or before you have the financial and logistical resources to warrant that expansion, you might drain your resources without much gain; if you don’t have the infrastructure or capacity to manage this type of expansion, you might be setting yourself up for premature destruction.

Conversely, if you wait too long to expand, your business might become so entrenched in one area of the UK that it becomes harder for you to expand flexibly. You’ll also miss out on all the advantages you could have had if you expanded earlier.

The Planning Phase

Now let’s talk about the practical side of international expansion for your startup. Everything starts with the planning phase, where you’ll analyze your current situation, come up with a plan for how to expand, and anticipate the biggest challenges that stand in your way.

• Location. The biggest decision you’ll need to make during this period is where you want to expand first. Even if you have plans to expand to multiple countries, you’ll still need to choose which country you’re starting with. There are many viable ways to make this decision, such as by looking for the country most similar to yours (so the expansion is more intuitive and less chaotic) or by looking for the country that offers the most attractive potential financial gains. 

You’ll need to incorporate many forms of research as you gather information to make this decision, studying the economies and cultures of many different countries, and ideally, visiting those countries in person to see how they feel. You can book travel arrangements to each prospective new country, secure a temporary license and temporary insurance if necessary, and travel throughout the country to get a feel for the competitive environment of the industry, the demographics of the people who live there, and the overall feel of the environment.

• Finances. You’ll also need to think about the financial side of the equation. Expanding internationally can be expensive, forcing you to incur the costs of starting a business in a different area, international travel, legal costs, and startup costs for new bases of operations. You’ll also need to think about the increased costs you face in other countries, such as additional fees for paying international employees or the increased cost of complying with certain laws and regulations.
• Logistics. How are you going to set up the infrastructure of your business in a new country? Will you be shipping products to this country and storing them there? Will you set up new manufacturing bases in the new area? How are you going to track and analyse your business performance across multiple countries?
• Cultural differences. Depending on the country to which you’re expanding, you may encounter significant cultural differences that can make it difficult to hire new people, maintain your company culture, and even sell to local populations. It’s important to thoroughly understand what these cultural differences are, how they could impact your business, and how you can navigate them effectively.
• Timeframe/urgency. When is your expansion going to officially begin? After beginning the process, how long do you anticipate it taking? How urgent is this expansion effort? Generally speaking, you want this process to be as fast and smooth as possible; protracted, delayed efforts are going to incur further costs and more challenges.
• The transition. If you want to keep your current employees active and engaged, while simultaneously training and preparing a new international team, you’ll need to manage a smooth transition period. Make sure you set thorough expectations with your current team and that you have ambassadors on standby to make sure your new workplaces are in full alignment with your vision.

The Execution Phase

With a thorough plan for expansion in place, all that’s left is to execute. Of course, this is easier said than done, but if you have all the information and research you need, it’s just a matter of following the steps and dealing with unexpected variables as they come up.

Here are some quick tips to make this phase easier on you:

• Start small. If possible, start with a small-scale expansion. You might have plans to expand throughout the rest of Europe and Asia, but that doesn’t mean you need to launch operations in 20 new countries all at once. Instead, focus on one area at a time until you feel more confident about further expansion.
• Work with a lawyer. Doing business in new countries is going to introduce some serious legal complexities, so it’s in your best interest to work with a lawyer. What new laws and regulations will your startup need to follow after expanding?
• Market early and often. Marketing is indispensable for establishing a footprint in a new location. You might be tempted to launch a marketing strategy in the days leading up to your official launch in a new country, but it’s a good idea to start marketing even earlier than that. Ideally, you’ll be able to generate a significant following long before you officially launch.
• Hire transition specialists. Ambassadors and transition specialists will make expansion much easier both for you and for your employees. They can anticipate some of the challenges of operating in a new location, set expectations for working in a new culture, and provide support and relief for people encountering obstacles, as they encounter them.
• Don’t abandon your core operations. Making good first impressions with new customers is great, but you can’t forget about your existing customers. If you care about customer retention, don’t abandon or scale back your involvement in operations in your home country. The goal is to incorporate new operational areas – not to replace your existing ones.

International expansion isn’t the right move for every startup, nor is it guaranteed to work in your favor. However, if you’re willing to put in the proactive research and effort to plan your expansion thoroughly, you’ll be in a much better position than most new entrepreneurs. 

From there, you’ll be much more likely to see the increased revenue, bigger talent pools, and higher prestige that you wanted.