Many people believe that startup businesses aren’t able to do much until they develop enough to be called small businesses. However, that’s not the case. A lot of startups have got initial capital and budgeting to develop, grow and even scale quickly and appropriately. In most cases, the most opportunistic way to scale a startup business is to look at international expansion as soon as possible.
The global market presents new ways to achieve business success and the competition isn’t as troublesome as it is in the local markets. Still, expanding internationally is a major challenge that shouldn’t be taken lightly. There are many things that need to be considered and there’s also a lot of planning and preparation involved.
If you make a mistake, there are chances that you’re placing your entire business at risk of failing altogether. That’s why you must first assess whether or not your startup is actually ready to expand internationally, in the first place. With that in mind, here are a few ways you can determine if your startup is indeed ready for international expansion.
Consider the Finances
The first and foremost thing you need to do is plan your finances for international expansion. There are long-term expenses you must be able to take care of until your startup business establishes a stable foothold on the international market. In other words, if you cannot financially support your startup on the global market until it reaches profitability, your startup isn’t ready for it.
As an example, for some businesses, it may take up to 10 years to reach only a +1% ROA (Return on Assets) while on the global market. That means it may take a while before your startup starts to generate profits and you start seeing any ROI. During that time, you must cover the expenses out of your own pocket. This may present a challenge for startups that lack capital, but there’s always a way for you to find the proper funding that will help you expand properly.
Consider the Location
The international expansion means you have to choose one of the major global markets to tackle. Moreover, you’ll also need to pick a location for your company offices, manufacturing plants or whatever it is that you want to establish on foreign soil.
As an example, many companies focus on the Asia-Pacific market as it’s one of the markets with the greatest growth potential. Should you decide to take the same path, Indonesia would be one of the most interesting locations to opt for.
The main reason is that Indonesia has one of the most stable economies in the region, which is fertile soil for prosperous startup businesses. You can also partner up with local companies such as Invest Islands to find a suitable piece of real estate for your company on an exotic Indonesian location. Picking a destination is very important and it requires much thought on your part.
Consider the Logistics
One of the major challenges of international expansion for startups is logistics. As you may already know, logistics includes the storage, transportation, packaging, and labeling of goods both in your country of origin and throughout international routes.
While you can use The Lock Up Self storage facility during initial setup to handle your cargo storage, you’ll still need to sort out other needs. Your self-storage facility will not harm your budget but will also let you manage the logistics easily
What’s more, there’s also a challenge of remaining compliant with international laws, rules, and regulations regarding the export and import of overseas goods. In other words, you have to do a lot of research before you start shipping goods overseas.
In addition, you’ll need a customs brokerage and freight forwarding services to ensure that the entire process is seamless. If you skip the necessary research, you may end up with many problems. After all, it would be a shame to prepare your goods for transport only to discover they’re considered contraband in the country you wish to sell them in once they reach the international customs.
Consider the Cultural Differences
Another challenge your startup may face when expanding internationally is cultural differences. Operating on your local market that you’re familiar with maybe nothing like operating on a foreign market. You have to understand the culture so that you can know how to approach the consumers.
Another thing you must overcome is language barriers. For that to happen, you have to have someone with a lot of knowledge about the local customs on your team so that they can help you integrate into the local community and navigate the foreign market efficiently.
However, if you wish to hire employees in a foreign country, you must familiarize yourself with foreign employment laws, rules and regulations as well. That involves obtaining licenses, permits, and insurances for your company to operate efficiently and legally on foreign soil. At the end of the day, it wouldn’t hurt to have an exit strategy just in case so that you can avoid any inconveniences.
Expanding internationally is indeed an ideal opportunity for startups that will allow them to develop and grow successfully. However, there are a lot of things to take care of before you can actually do so, so make sure your startup is ready for such an endeavor.
