For startups that have established a successful business in the UK, the next logical step is to expand services or product to a global market. While this may be an expensive and risky move, if done correctly, it could boost company turnover, profit margins and reputation. So, in order to make a smooth transition from a domestic to an international business, there are a few key factors that must be taken into consideration.
Choosing a country: Market size vs market understanding
When considering the countries to take a UK business into, market size and understanding are very important factors. Local competition not only already operate in the market, but their local heritage has gained them an established customer base. It’s likely that the competition also offers a solution that’s already customised to local preferences, making a UK startup’s offering less appealing from the outset.
To combat the advantages of local competition, successful startups typically focus first on gaining substantial knowledge of a new market before entering, with startups undertaking a deep analysis of the local competition. Combining this competitive intelligence with initial ‘customer discovery’ interviews of potential users will help a startup’s leadership team form their market entry strategy.
Using local knowledge and expertise to hire staff
When expanding a business overseas, one of the challenges that often arises is hiring and managing top quality staff. Without the appropriate local hiring support, founders can sometimes feel that initial hires are extremely risky. Local recruitment agencies can, of course, minimise staffing risks, while startups with limited funding may need to spend weeks (if not months) in the country to develop the connections to find top talent.
Whether there is local recruitment support or not, the business must make a conscious effort to visit the market and establish connections on the ground. This can support both market entry and will pave the way to finding and hiring the right people.
Overcoming the barriers of team expansion
Cultures and time differences can be challenging when managing a startup business across multiple countries with different languages, so it’s important that regular communication is consistent across the teams to ensure everyone is aligned. Often face-to-face time with teams is restricted due to distance, but scheduling regular calls with a structured agenda can make all the difference.
How to get a US investor to fund you?
For those wishing to ‘break America’, it’s close to impossible to raise funding from the US without having a physical presence there. Investors don’t want to hear “we’re planning on entering your market”, they want validated proof that a business is committed to making the move. In actual fact, an early stage startup either needs to have an established relationship with a US investor or move their business headquarters across the pond to raise investment.
One approach to avoid is ‘tech tourism’, a method to gaining funding that simply requires jumping on a plane to New York City or San Francisco and meeting a handful of investors within a week. It will take at least six to nine months of being on the ground and establishing connections for an early stage startup to raise US funding.
Will Brexit impact your expansion plans?
The UK government has traditionally been one of the world’s largest supporters of startups, especially through investing tax incentives. The government will most likely make every possible effort to keep EU entrepreneurs in the UK through a streamlined visa process for both the company and hiring talent.
By Andy Shannon, Head of Startupbootcamp Global