Blog

How To Approach International Expansion

Digitalisation has made it quicker and cheaper to have an international footprint, but sometimes you can’t avoid having local presence and understanding to really make the business thrive.

International expansion does not happen overnight. There’s an ocean of preparation ahead.  If you have boot-strapped your business and are used to keeping things lean and mean, this is not always easy to do. One rule of thumb is: whatever you estimate, double the time and double the cost.

Do Your Homework

Identify your principal market. There is no shortage of desk research tools to help. The new government website great.gov.uk aims to facilitate connections for British companies with international buyers.

It’s a good idea to immerse yourself in the market first, that means living in it, observing consumer behaviour, watching potential competitors, researching and understanding the dynamics of the marketplace. You just have to spend time on the ground – and that doesn’t mean just attending a couple of trade shows, and don’t underestimate the impact on management resources during this phase.

What Are The Requirements?

Every country will have its own administrative checklist to tackle such as visas, trademark checks for infringements, compliance with their legal regulations, contracts, employment opportunities for local staff, tax, accounting, insurance etc… be prepared for a laborious few months ahead of you.

Signs Your Company Is Ready For International Expansion:

Customer Base: You might find that your customer base is pulling you to new territories. In an ideal world revenue generated from them could fund further international expansion.

M&A: Or you’ve entered into discussions for a merger or acquisition with an international company which would provide a nice stepping stone to a new market.

Business Lifecycle Phase – Expansion: Businesses in this stage often see rapid growth in both revenue and cash flow as the blueprint has now been established and you might start to think about capitalising on international expansion.

Steps For Successful International Expansion

1 Prepare your Strategy

2 Evaluate & Plan Market Entry Barriers

3 Research Cultural and Regulatory Differences

4 Appoint a strong management Team

5 Create Risk + Governance Structure Fit for Purpose

6 Monitor Progress and Set KPIs

7 Seek the Right type of Funding

Financing International Expansion

With the expansion of alternative finance and the rise of private debt debt funds there’s a huge diversity of finance options to businesses who want to scale up internationally. Here are some points you need to consider:

• What is the cost of financing?
• What are the Tax structures?
• What is the new market legal system like?
• What Government demands are there on local staffing?
• Is there Financial advice and cross market banking opportunities?
• What is the right funding mix: Debt? Debt + Equity? Other?

Building Your International Expansion Budget Needs To Include:

• IP Protection
• People
• DD
• Sales & Marketing
• Customer success
• Tax, insurance and indirect costs
• Travel
• Legal Costs
• Ongoing Capital and operations costs

Learn From Others:

Twitter’s go-to-market model included two unique strategies, both targeting Japan. First, it created a joint venture with Digital Garage in 2008. Through Digital Garage, Twitter created an entirely different service specifically targeted for the Japanese market. It even started charging for premium services in early 2010, years ahead of any business model in the U.S.

Fuse Capital Clients Go Global

As well as funding UK based tech companies for growth and scaling, we have helped several companies with their international expansion projects, the companies below have all successfully set up in a new market:

Summary

Scaling overseas requires significant market research, legal preparation, and long-term strategy. One of the most important aspects of making sure everything goes smoothly is thoroughly understanding the particulars of the country you want to expand to:

• How does this market differ culturally from that of your home country?
• What adjustments will need to be made in terms of marketing, functionality and user experience?
• What are this country’s regulatory and legal requirements to do business?
• Having the right funds to manage international expansion.