Can your startup function effectively in a global environment?

It is virtually every company’s goal to go global, but doing so entails a multitude of challenges. Before you decide to expand your startup business internationally, you need to ascertain that your business is ready for it.

How do you know if your business is prepared for the challenges of operating on an international level? What are the indicators to watch out for? The following are three essential details you need to know.

Inherently global nature of business

Check if your business can already be operated internationally without requiring major investments or capital outlay, extensive market studies, and product changes.

Some businesses are already meant to go global from the get-go. These are startups that can serve customers internationally because they don’t have the logistical and operational requirements most other businesses need to deal with to be able to serve clients in various foreign markets. In particular, they exhibit the following characteristics:

Being able to conduct most business activities online
Not much difference serving local and global customers
No need for establishing a clear local market presence or business network
No necessity for putting up physical bases of operations in the new target markets abroad
Offering a product that does not require major modification to be viable in other parts of the world

One good example of a business that exhibits the aforementioned attributes is online content creation. Publishing articles, videos, and other content on the web for monetization or to attract direct advertisers neither requires the establishment of solid local business presence nor a base of operation abroad.

Almost all aspects of it can be conducted online. Even the employees can be web-based, with teleworkers hired in different countries to take advantage of their localized viewpoints and expertise in developing content deemed suitable in their respective regions.

Another excellent example is the business of selling or monetizing mobile apps or software in general. These apps don’t have a physical presence and can be sold to users online through the official Android or iOS app stores or through websites and online ads. All transactions can be undertaken online even with the freemium model, wherein apps are offered for free but users are given the option to buy items or upgrades within the app.

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In these businesses, there’s no significant difference in offering the products locally or internationally. It would even be counterproductive to limit the sales to local customers. Additionally, the products have potential demand in various locations worldwide. They don’t need to undergo major changes to be useful to international customers except maybe when it comes to the language.

Localization may be needed to make products more appealing to target customers in certain foreign markets. This is not going to be a major problem, though, as it’s not difficult to find localization solution providers. You can even find companies that provide global marketing services to help with the promotion of the products in different markets. You just have to make sure that you are choosing a reputable and experienced language service provider to handle the localization of your products and marketing campaign.

Other startup businesses that can be operated internationally right from the start include service-based ones such as those that offer search engine optimization (SEO), web development, creative work, marketing, digital asset sales, accounting or bookkeeping, and online publishing services.

There are also niche stores that can be started as an international operation with most of the transactions conducted online. A store that offers salt-powered (no traditional battery or power source) LED emergency lights, for example, can easily find customers abroad. Typical online stores that sell the usual items being sold online may also be able to find customers in foreign markets but not with the same chances of success as those of niche stores.

And of course, in case you forget the obvious, export/import businesses are international in nature right from the start. It would be totally illogical for an export business to be locally-bound.

Abundance of resources

Find out if you have enough funds, expertise, experience, and skilled people to sustain a venture into the international market.

If your business does not possess the characteristics mentioned above, you need to establish your business locally first before you can plan for a global expansion. The main reason for this is to have enough resources.

Resources here, by the way, don’t only refer to money. Indeed, funding is vital in pursuing an international expansion, but it’s not the only resource you need.

You also have to accumulate adequate experience and insights into how the business would work in other markets – all of which are achieved by operating the business locally for a good amount of time and conducting market studies. As the business gains experience and insights, its employees (human resources) are also developed to become ready for advanced roles when conducting business on an international scale.

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There are no standards as to how much cash or liquid assets, expertise, and employee skills a business should have to say that it is ready to go global.

One study by Crane found that more than 50 per cent of SaaS companies averaged more than US$10 million in revenues before they decided to expand to foreign markets, and it took them around 5.5 years on average before pursuing a new market. These details rarely apply to other businesses, though.

The decision to expand internationally with regards to the level of resources available can’t be based on benchmarks or industry averages. The management has to evaluate everything prudently to decide if the business has enough to have reasonable chances of succeeding in the international market.

High demand in foreign markets

Determine if there is compelling demand for your products in new markets.

Sometimes, your business resources may not be the deciding factor in proceeding with a business expansion. It could be the demand in foreign markets. Consider these:

You may have an abundance of financial resources, skilled people, expertise, market intelligence, and other resources, but there is no demand for your products abroad.
You may not have enough resources to enable a less-risky international expansion, but there is immense demand for your products abroad.

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In these cases, demand becomes the more important factor. If you don’t have enough resources, you can find ways to make up for it. You can accept additional investments, consider crowdfunding, or forge business partnerships to gather the resources needed to pursue highly feasible opportunities abroad. You would be willing to take risks in the presence of persuasive potential rewards.

Conclusion

Essentially, the three ways in determining if a startup business is ready for the international market can be summarized by the following questions:

Is your business inherently international in nature?
Do you have enough resources to support the expansion?
Is there compelling demand for your products in the global market?

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