7 out of 10 companies fail going international.
If you're a scaleup founder, you're probably thinking - how can I take my business to the next level? How can I grow my company beyond our current trajectory? And sooner than later, new countries always crops up.
For Nordic tech companies, going global is from day 0. For Indian companies going global is an after thought given the size of the home market.
But it's not at all that easy. If you've tried it, you know it.
Here are 5 principles that have served me well when thinking about internationalisation.
#1: Start with a clear aligned "Why"
Draft out your Objectives and Key results on going international.Why do you really want to go international? Is it because your investors want you to? Is it because you think it's fun to have an office in NYC? Is it because you found the blue ocean and the market deserves your solution?
Answering the why both for yourself as a founder / leadership team and then making it into clear objectives and key results is really the first step in this wonderful journey of becoming an international leader.
For instance, ClassPass goes international since their unit economics work on mega scale and not in 1 city. They need to go international to make sense of the investments they have taken in. They took in investments since they had international potential and ambitions. They typically tend to go hand in hand.
Your Objectives should be ambitious, inspire & answer the "why".
Your Key results should answer the "how will you measure success"
Your Activities should help you prioritise what is important to know and do.
#2: Only scale what works
Ask yourself 4 key questions to test your scalability:
- Market size: How big is the total market? How much of that is your Addressable market? What is the growth rate? What are some key trends?
- Gross Margins: What are your margins in the (a) past 1-3 years, (b) current, (c) next 2-3 years?
- Distribution: How do you drive traffic and generate demand (partnerships, media, etc.)?
- Networks: How do you create networks of local superstars & companies so you are a relevant player in the market? Another way to look at networks is to understand how your customers will hunt more customers for you.
#3: Moving the soil of success
Understand the different go to market models, what yours is and how you should move the soil that has made you grow this far in your home market.
You know all the hard work you have done to come where you are today, so make sure you have a clear go to market strategy which reflects how you will bring the soil of your success into new markets.
It doesn't do justice if you hire a girl on commission in a new market and expect her to do wonders if you are not moving support structures, networks and a lot more to make international work.
#4: It's a marathon, not a sprint
Think long term with clear short term success metrics. On average, entrepreneurs underestimate by a factor of 3.7x on time and investment required to build revenues globally.
Here is what you can do to plot out your 5 year scaling roadmap.
#5: Strong financial commitment
Scaling will be a heavy investment to sustain in the short term, so take all the capital you can now. Keep these 5 points in mind when scaling up:
- You will probably need more capital than expected if you're scaling faster than you thought
- Your sales will usually be slower than expected and this requires you to invest more than you estimated
- Have a low to high forecast to estimate the spread and be ready for the worst
- Having investors with deep pockets will make navigating uncertainty easier than angels who want their money back earlier
- A strong finance function is the cornerstone of a successful expansion operation.
These tips are also available in our internationalisation playbook. The playbook comprises of lessons from over 200 successful internationalisation ventures whom have increased their business growth rate by 200%. You will learn more about what it takes to succeed in internationalisation and scaling - all that in one book.