Thinking of expanding to another country? Here are some points to consider
Moatassem Moatez has launched and scaled several startups in his role as business partner at Innovest Middle East.
Geographical expansion is one of the most important strategic decisions that a founder will make, after of course, their decision to start a business. Extending your reach beyond your home country is almost like re-starting your business again, from the beginning. Going to a new country, building your network, understanding the market, competition and the culture is not a simple task, but a decision if managed well, can bring fruitful return to the business.
Based on my experience working with several startups within the Middle East region, there are eight key points that a founder should consider when launching a business outside of the home country.
Your established business in your home country is the bread and butter – it is the main revenue generator and requires full attention. Therefore, before launching a new business abroad, your current operations must be at solid standing in order to focus on new territory without full-on involvement in the home base. You must ensure you have the right team, processes and constant revenue stream in place before expanding elsewhere.
It is essential to have someone from the core team who understands your business, product and culture of the organisation who is ready to relocate to the new market. This will help eliminate ambiguity and learning curves, including market, culture, and business environment in your new venture and shift focus to the actual business implementation.
Choose the Right Partner
A local partner is not only for funding but one who can also fulfil many other blinds spots you may not be aware of when going into a new market. The key need for a local partner is to give you easier access to the market, open doors and ensure that you have a strong footing into the market. Hence, it is preferable to have a local partner from the industry who knows the ins and outs, regulations and most importantly, key stakeholders. When it comes to funding, it may potentially be the least of your concerns as you undertake initial explorations into a new geographical area.
Process and Procedures
Protecting the startup’s proposition and value to the customer is vital. Therefore, when expanding geographically you need to have clear processes to ensure that there is no margin of deviating from the core value of your business to customers. For example, McDonald’s across the world has the same burger and you, as a customer, can expect the same experience, taste and service level in any country McDonald’s operates. The toolkit and tight procedures given to every franchisee is to ensure that the margin remains the same across all restaurants, limiting the room for error.
You can have the best idea that is highly successful in your home country, but this does not guarantee success in a new market. The new market may perhaps not be ready to host your idea due to its infrastructure, legal structure and patents, among other factors. For example, if your idea relies heavily on the 4G infrastructure to operate and the country’s providers do not offer full 4G services, the user experience will be sub-standard and could dent the success of your product.
One essential skill you gain as an entrepreneur is people skills and the ability to communicate. You can only improve on this if you learn how to control your own emotions, especially in a foreign country where you may not be familiar with the business culture. Let go of your ego, and do not take anything personally. Keep in mind how you started in your home country when your business was small, when you did not have much of a network and it took time to takeoff. When you are faced with challenges and obstacles, find a solution and keep working hard.
Inflate versus Deflate
Opening a representative office in a foreign country can be a simple enough affair, if you have the right resources. But what happens if things do not go as planned, what is your exit strategy? How will you scale down or even shut down, without major losses to your business or your personal assets? One way to prepare for the unexpected is to have a lean, adjustable model before taking a step into a new territory.
Your body is your machine and it is the only reality that is carrying you day in and day out. You must take extra care in how you treat it, and this does not mean being a fitness freak, but simply making sure the basics are taken care of so the machine can work efficiently. Eat healthy, ditch the junk and exercise! Take care of your mental health and get your rest. Keep your surroundings positive, keep the negatives at bay and maintain a positive mindset.
Do you own a startup? Showcase to over 6000 investors, VCs, incubators, partners, potential customers and attendees at #STEP2019! Apply here https://bit.ly/2Q613Br