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The ultimate goal of any startup business should be to expand and ultimately grow in scale and more importantly, profitability. All startups start small and working in local markets but at some point, it’s time to take the leap to an international market and doing so brings its own amazing rewards.
Going international means that your potential customer base for your startup expands significantly, but you’ll also enter a whole new world of complications in regards to the operation and management of your startup.
When is the appropriate time to go international with your startup, what kind of complications to expect ranging from local laws and politics, and, finally, how to avoid unintentionally alienating your new international market customer base?
When To Go International
Before tapping into the amazing potential of the international market, you need to be critical and ask of yourself and your startup whether your product is easily sold internationally by design. Products that typically have the easiest time going global are products that do not need local operations or logistics, do not need much localization, and are based primarily online.
For example, applications and games sold through app stores typically enjoy easy transitions to international markets. If your startup sells a product that isn’t easily moved to an international market, then you’ll need to consider the degree of difficulty before making your international move.
Particularly, moving a business into an international market is a complicated process whose ROI (Return On Investment) in the short term will be much smaller than expanding a business domestically. You need to sit down and carefully consider if your business can afford to spend the time and management bandwidth necessary at the moment to complete the move internationally.
International Laws and Regulations
Expanding your startup internationally means that you will need to start dealing increasingly with laws and regulations related to your product. Particularly, local laws and regulations provide a difficult and unique challenge for startups as you might have to start changing your product in potentially fundamental ways to be legally sold in the local market.
An example of this is that the Kinder Chocolate Egg is illegal to be sold in the United States, regardless of its inherent harmlessness and legal sale in other countries all over the world. Unfortunately for Kinder, the inclusion of a small toy inside a chocolate shell means that their product is labeled as a choking hazard by United States laws and as such cannot be sold inside the United States.
The law in place in the United States prevents the sale of a chocolate covered toy capsule in its borders which means that the law in the United States would force a fundamental change in the key aspect of the Kinder Egg if Kinder Egg did decide to move to the United States.
Before trying to move a product to an international market, make sure that product is legal in its current form to be sold in that international market, or be ready to make those fundamental changes in your product.
If you have a product that will require local operations and logistics to sell, then they need a clear-cut communication system is extremely important.
When moving internationally, startups will need to invest significantly in creating a chain of communication that is staffed by knowledgeable people in not just the product that you’re startup is selling, but also the local market that you’re moving into. For example, if you’re a German company trying to move into the Australian market, sending a key employee with excellent knowledge of the product across to Australia to work during the transition is an excellent idea.
Having a senior German staff member, knowledgeable in the product working with Australian consultants that are experts in the local Australian market will help the creation of a strong logistical chain of command across borders. However, be aware that moving staff internationally has its own difficulties, so make sure to have the migration agent in Sydney sort everything out and save you from any legal issues.
International Market Research
It should go without saying, but a successful push into any international market will only happen if that push is supported by a strong knowledge of the market that you’re pushing into. You should spend a great deal of time during your push to an international market in researching that international market and in particular, researching the local domestic competition that you’re going to encounter. If you’re selling a product that’s already present in that international market, you should try to find a way to stand out against the competition.
Especially since it’s possible that your own product will be disadvantaged simply due to its international origin. For example, local tariffs, tax breaks, and laws can drive the price of your product up drastically when compared to domestic products. The international market in question that you’re selling to could have tax breaks and laws supporting domestic businesses against your own international business. An example of this can be seen in the sale of the Apple iPhone in Asian markets. In these Asian markets, the iPhone is sold as a luxury product from an international source whose appeal partly lies in its status as an international product that inflates the price against local companies such as Huawei.
While the difficulties in moving a startup to an international market seem insurmountable, it should be noted that the potential rewards, we feel, outweigh the potential headaches. The ability to move into a massive new market should not be underestimated. However, don’t be hasty in your move internationally. Take the time to evaluate and research not just the suitability of your product for the target market, but also the suitability of the target market for your product! There’s a lot of work involved, but ultimately, moving your business internationally with a strong business plan in place will reap rewards almost unimaginable.