Thinking of launching your startup internationally? These steps will help you narrow down on the best markets.
The good news is that with the wealth of financial products and resources available, there’s never been a better time for you to launch your startup internationally.
The bad news is that it’s not as easy as many entrepreneurs believe that it is.
I’ve seen too many startups die because their founders are either too ambitious with their expansion or so cautious that they don’t launch into the right countries – if they even launch overseas at all.
And the one thing that these failed startups have in common is very simple – their founders failed to do their research.
You’re here because you have ambition – and I’m here to share with you the process I recommend to my clients before they launch their startups overseas.
If you’re reading this, that probably means you already have an idea of where you want to launch your startup next, and that’s a great place to start.
With this in mind, you need to look into how you want to expand within that country. There are a lot of different options for this, but the most common ways businesses expand overseas are:
- By city,
- By language,
- By ecosystem.
For instance, when Uber expanded into the UK, it launched in London first, as this is a city where the taxi industry was already successful. Expanding into international cities makes sense for Uber, as this is where the supply and demand for their business comes from.
However, they failed to consider how their business model would work with taxi licensing laws in the UK, and as such, they are now having to rethink their UK expansion after being banned from operating in London.
At this stage, you need to be honest with yourself about what resources you have available and what kind of international launch will work best with your startup.
Country attractiveness comes down to a combination of various factors. Country attributes, predictive indicators of economic performance and growth, competitive landscape, and addressable market size should all be considered when you rank overseas markets.
Country attributes tend to be broadly grouped into cultural factors, economic factors, technology, institutions, and infrastructure.
No two businesses are the same, so you need to do your research into each country’s market to understand whether it’s economically viable for your startup.
A poor economy for one business might be a great opportunity for yours, so only you can answer whether a country is an attractive prospect for your business.
Personally, I think understanding your startup’s Total Addressable Market (TAM) for any country you want to expand into is the most important part of your initial research.
I often warn my clients that this part is the hardest step, as it relies on you having enough data to calculate your TAM reliably. To get you started, these are the data sources I often turn to for this:
- Country-level government reports on other companies in your industry and the size of that industry,
- Analyst and industry expert reports on product markets,
- Searches on LinkedIn for companies or employees in a targeted segment,
- Pricing data on competing and adjacent products/services.
There are also multiple ways to calculate your TAM, and this guide from ForEntrepeneurs is a great resource to walk you through each method.
It’s crucial that you’re realistic about the percentage of the market that you can access. Once you know your TAM, you can narrow this down by each market segment that you can address effectively.
When you’re doing your research, you need to look at the economic situation of a country in its entirety. After all, no business exists in solitude, and it’s important to understand how your startup will fit into a country’s economic landscape.
A couple of great things to look out for are:
- Global and local competitors,
- Competing products/services,
- Your customers’ budget,
- Cost and availability of marketing streams.
For example, Roomi, a startup that helps renters find roommates, chose to locate their first offices outside of the USA in New Dehli, India, because of the vibrant rental market and the availability of local talent. It just goes to show that factors you may not consider at first – like the local availability of talented people to work for you – can help your business to thrive internationally.
This is perhaps the most important thing to understand as a startup founder. You need to do your research so you can understand whether launching internationally makes sense for your business, where you have the potential to launch successfully, and how these new markets differ from your own.
Have we missed anything or have any questions? Get in touch
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You might also enjoy these popular International Expansion related articles Startup New Market launch Budgeting, What To Consider When Expanding A Business Internationally and European And US Startups Internationalisation on the same topic.
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