Taking your brand overseas can be appealing, and many entrepreneurs would jump at the chance. However, the Global Business Expansion journey can be treacherous.
Between establishing a fresh customer base, learning new laws and regulations, finding trustworthy partners, and becoming familiar with the local customs, the road to becoming a global company is difficult to navigate.
While not every business is fit for such a challenge, some are. Before you decide to make the leap overseas, you need to consider these factors.
A country that was initially known as an outsourcing destination primarily for US and European companies is now set to become the next Silicon Valley of Asia — with local tech startups having raised $14.5 Bn from over 800 investors in 2019. Many of these startups (especially those within B2B) have the US and Europe as their core business markets. Building products in India first provides a competitive advantage over the rest of the world.
You can build, iterate and test product-market fit at a much lower cost here, and get the initial revenue you need before moving on to a global business stage.But international expansion can be more challenging than most Indian companies think.
Though the US and Europe both have high technology adoption rates and a larger Total Addressable Market (TAM) than most of the world, 90% of Indian startups still fail within the first five years and struggle to maintain sustainable expansion beyond the local market.India’s technology scene is exploding.
So how do you increase your chances for success? This guide will help you address the key challenges of global business expansion for Indian companies, and provide a playbook for effectively planning and executing your expansion strategy. Key challenges hindering global expansion
1. Lack of Trust
One of the most common stigmas is that Indian brands are not trustworthy. Data from 2018 indicates that only 23% of American companies said that they trust Indian companies. This doesn’t mean you need to disguise yourself as a brand from another country — it just means you’re going to need to work extra hard to secure the buyer’s trust.
Indian companies also have a reputation for relying on aggressive outbound activities such as cold-calling, generic sales emails and in-person visits, which are not as effective with Western companies that are accustomed to smarter, less-invasive and more personalized marketing.
Crucially, these cold-calling and email list buying strategies are rarely scalable and, considering the average cost of a lead generated through outbound is $332, also have a poor ROI. This along with the lack of B2B marketing experience that their agency counterparts in the West might have hinders sustainable lead generation and lead nurturing.
2. Lack of Investment in Marketing and Branding
Indian companies that have found success with their brand domestically may use the same approach when targeting the international market. It’s here that these brands learn that what might have worked domestically in terms of design, messaging and endorsements doesn’t work with an international audience.
It’s crucial when attempting to grow into the international marketplace that you don’t view it as an extension of your domestic marketing approach, and instead focus on doing what appeals to those new markets.
3. Poor Customer Experience
Finding international leads and converting them into customers are important steps, but to be truly successful as an international company, you also need to provide exceptional customer experiences.Client ‘churn’ is a serious problem for many Indian businesses and if not fixed, will cost you more money in acquiring new business as well as affect your brand perception in the long run.
Customer service from companies in the US and Europe are now so good that any international clients you find will have very high expectations. But many Indian businesses are accustomed to hiring cheap labor instead of a few quality hires, which can make or break the experiences your customers have with you.
Going Global Business Expansion
Doing business around the world can seem a long way from doing business in your hometown. But each year countless small businesses make the trek. Like most long journeys, going global business can be boiled down to a series of steps. Here are the ten basic steps to going global:
1. Perform a “Deep Dive” Due Diligence
Before going global business expansion, it is critical to understand what the full impact on your business will be.
- Prepare a market segmentation analysis to determine if your product will sell in the local market.
- Prepare a product gap analysis against local products. Is there a demand that is not satisfied by a local company?
- Perform a SWOT analysis against competition. Your product will likely be higher priced than local products. Will the market buy your product?
- Consider market opportunity/sizing. How big is the market and how long will it take you to capture your targeted sales?
2. Develop a Strategy and Business Plan
Each market has its own nuances due to economic, cultural, governmental, and market conditions. It is important to develop a localized strategy and business plan that drives local success while remaining integrated with the overall corporate strategy and objectives.
- Define short-, medium-, and long-term strategy. Set reasonable goals to measure progress and cost/benefits.
- Define goals, objectives, and success metrics.
- Complete the business model and structure. Decide if you set up a separate company, a branch, or a sales office.
- Develop a top-down annual budget.
- Develop a tactical project plan with commit dates.
3. Establish a Beachhead Team
Many global companies try to launch with executives from the parent company or rapidly build a local team from scratch. This is time consuming, risky, and slows time to market. Using proven senior interim executives allows the company to hit the ground running, quickly validate assumptions, and drive key readiness initiatives while the company hires the right senior management team.
- Bring on senior interim executives with deep domain expertise or outsource interim leadership to executive leadership organizations.
- Establish the financial infrastructure—consider outsourcing this to local service providers.
- Begin the recruiting process for the permanent leadership team.
4. Product Readiness
Based on the product gap analysis, take the necessary steps to market-ready your offerings to achieve high-impact product differentiation.
- Review government- and industry-specific regulations to ensure that compliance and certifications are obtained if needed.
- Determine if any localization of the product is needed. Pay close attention to the translation of the name of your product in the local language.
- Initiate a patent and trademark review—some countries are known for “copying” good ideas.
- Initiate testing and quality assurance review based on local standards.
- Consider a local logistics and distribution network. Who will sell your product and how will it get to them?
5. Organizational Readiness
Cultural differences, whether it is language, regulations, or customs, requires a firm to be flexible in the policies and procedures implemented in an international operation to ensure employees are engaged and executing on the company’s plans. The “one size fits all” mindset can have short-term benefits but will have negative long-term effects.
- Evaluate the organization structure needed to successfully execute your strategy.
- Develop policies, procedures, and handbooks that comply with local requirements while maintaining balance with overall company policies.
- Develop competitive benefits programs to attract qualified local employees.
- Develop competitive compensation packages based on local standards and customs.
- Develop a local information technology infrastructure that is compatible with your domestic infrastructure.
- Manage payroll and human resource functions—again, a process that lends itself to outsourcing.
6. Establish a Go-to-Market Strategy
The effective selling and marketing of your products or services requires a comprehensive, cohesive strategy that addresses sales strategy, sales delivery, branding/value proposition, marketing strategy, marketing programs, and pricing, which together create clear market differentiators that propel market acceptance and revenue growth.
- Determine your optimum sales model: direct, indirect, OEM, distributor, hybrid?
- Determine your sales methodology: solution, feature, consultative, price?
- Determine if a new brand will be created or whether you will use the parent brand.
- Develop a comprehensive marketing plan and KPIs.
- Evaluate your pricing model—consumers in less developed countries are very price conscious and your product may not fit the local economic environment.
7. Legal Readiness
Some countries are known for being highly litigious, so it is critical that strong legal processes are put in place to minimize unnecessary commercial risks. Also, government agencies have strict requirements that necessitates legal documentation be in place prior to operating within the country. Being proactive does require money upfront, but this more than offsets downstream risks and liabilities.
- Create localized commercial agreements.
- Review industry-specific regulations to ensure compliance and certifications are obtained if needed.
- Perform general corporate services such as dispute resolution, immigration, customs, and shipping.
- Maintain corporate records and governance—again, an outsourced function might work well.
8. Tax and Finance Readiness
The proper tax and finance infrastructures need to be set up early on to ensure that you are receiving timely reporting and that your foreign entity is adhering to local corporate policies and procedures.
- Consider outsourcing accounting, payroll, and tax.
- Establish local banking relationships.
- Develop a risk management plan.
- Develop a transfer pricing study.
- Develop a cash repatriation plan.
- Prepare and report sales and VAT taxes.
9. Prepare Your Final Budget Preparation
Results from the above steps should provide sufficient data for stakeholders of the foreign company to develop a final budget that is aggressive yet attainable, and one that will be owned by your local team.
- Develop a 3-year budget and a 12-month business plan with detailed key performance indicators, and update every 6 months.
- Perform quarterly operating reviews.
- Establish a real-time (or at least weekly) budget to actual reporting with variance analysis.
10. Establish Close Relationships with Local Businesses
Gain a strong competitive advantage by creating a supporting ecosystem of complimentary products and services, which can come via third-party relationships. These relationships can support the scaling of the organization while minimizing the financial risk.
- Negotiate alliance/partner/distributorship programs.
- Develop an ecosystem strategy and business model.
- Build an internal alliance team to manage and foster relationships.
Expanding your business overseas is not for the fainthearted, but for most businesses it will be inevitable as global markets offer greater opportunities for growth. By paying attention to details and outsourcing administrative functions, the difficult job of “going global” can produce great results.
Why Go Global Business Expansion?
Global Business Expansion is not necessarily the best way to grow your company. The U.S. market is big enough for most small businesses to expand almost indefinitely. But entering the international arena can protect you against the risk of decline in domestic markets and, most important, significantly improve your overall growth potential.
Don’t look for any magic formulas to expand your business globally. The challenges are continually evolving and are, at their root, a product of social interaction, economic evolution, and political dynamics. It will always take smart business owners, armed with the latest knowledge, proper homework, and modern analytic tools, to minimize the risks and maximize opportunities.
Tapping into global markets, especially the large and under-developed ones, not only promises market growth beyond your most optimistic vision but also empowers people around the world to share in a better economic future.