Indispensable Advice for Startups Selling Internationally
A basic part of the overall strategy for many enterprises is conducting international business. If your startup is ready to take its business model to the next level and start selling internationally, the following will prove to be vital as you choose your markets, build a team, and learn to market effectively.
1. Pick Your Overseas Markets
Choosing the region or country you want to expand into is the first step in your international expansion. These decisions should be based in large part on political, cultural, market, and economic risk. And, of course, you want to sell your goods and services where consumers will buy them.
With a little research and time, you should have no problem selecting where to expand. Inc. gives a few pointers on what to think about when choosing overseas markets:
- Understand the political and economic policy of the region or country
- On your website, determine where current international orders and traffic are coming from
- Find out if there are any trade barriers or tariffs on your products
- Consider language and cultural differences
According to the United States Department of Commerce, most U.S. exporters only sell in one market overseas. When you start selling internationally, the size of your business will serve as a guide as to whether you will export to more than one country.
2. You Do Not Need a Full-Time Team
Speaking of business size, it is never easy managing teams with both cultural and real oceans between them. You need a huge investment in time and resources to get everyone on the same page.
Do not take on an office abroad until you are really ready since it can put an immense strain on what you have already built at home.
Consider operating with the help of independent contractors as you are working on getting your business off the ground. This will give you time to figure out what full-time roles would be required in the long run and what other gaps need to be filled.
Plus, you will also learn how to manage remote workers who are in different time zones, a must when you are selling internationally and working toward a global presence. You might find that you can achieve broad coverage without having a physical presence in the new market.
3. Try to Lock in an Exchange Rate in Advance
If you operate a small business, the chances are that you do not have extra cash laying around to sustain a foreign exchange loss. Entrepreneur recommends locking in your exchange rate for a set period of time by buying a forward contract from a financial institution or specialist.
The contract generally comes with a commission. However, it is well worth the stability and peace of mind it will give you. Once you have your exchange rate locked in, you can plan your pricing strategy in such a way that you can be sure you will not lose money.
Although costs vary based on the specific contract, the commission is under one percent of the transaction price for forward contracts at AFEX for example.
4. Translation and Localization Have Different Outputs
Localization and translation have a different output, though they do share a lot of similarities. To have your desired impact in different regions, international marketing requires a deep understanding of cultural do’s and don’ts.
For instance, an advertising campaign that is successful in Asia may fall flat or be inappropriate for Europe. Localization is the key here, not translation. Of course, translation is crucial, but you must also make your product speak in a culturally relevant and appropriate way.
Your marketing success will depend heavily upon research around culture, similarities, differences, and local features. Yet, you must also keep in mind that your main focus is to be understood.
5. Learn from Other’s Expansion Mistakes
Fab, Airbnb, and Groupon all made some serious missteps as they expanded internationally. The overall decline of Fab and Groupon can be attributed to—at least in part—their overzealous expansion.
On the other hand, Airbnb learned from its initial over-expansion and the slow-down it led to in 2013. Since then, it has executed with centralized operations along with a more data-driven and localized product approach.
All three examples provide instruction on what can go wrong when implementing an unproven business model fit in a well-funded competitive marketplace.
Twitter used two novel strategies targeting Japan for their go-to-market model. In 2008, it formed a joint venture with Digital Garage. Twitter then specifically targeted a completely different service for the Japanese market through its partnership with Digital Garage.
In early 2010, long before any business model in the U.S., Twitter even began charging for premium services in Japan.
For more tips on how to grow your business, check out this video from PayPal:
Navigating through global expansion takes patience. Even the heavy-hitters do not always get it right the first time, but through learning from your mistakes and persistence, your startup will take over the world.