Launching a business in a new country is a daunting task, no matter how successful you’ve been at home. At iwoca, we recently expanded to both Poland and Spain, so we wanted to share with you some of the key questions you should be asking before taking your business global.
Is international expansion right for your business?
If you’re selling an app, expanding to other countries might be as simple as checking a box on the app store. Unfortunately for most businesses it’s not that easy. You need to understand the effort required and compare this to the size of the opportunity.
For instance, an ecommerce retailer might find that shipping items abroad will make their pricing and service uncompetitive with local competitors. However this can be resolved by using a local logistics provider (which stores and ships goods from their own warehouse) and international expansion is often a no-brainer if you are offering products in limited supply abroad.
Expanding across Europe was part of iwoca’s plan from the outset. We knew that it gave us a unique opportunity to push ahead of the competition and offer finance to as many of Europe’s 20 million small businesses as possible. Regulatory differences meant expansion required significant investment but this now means we are one of very few business lenders to work in multiple European markets (most others are established banks).
When weighing up the effort required to expand abroad the key issues to look at include language barriers, staff requirements, legal costs and the different rules and regulations you will have to follow. Estimate what the cost of these will be and don’t forget to account for your own time investment.
Which countries should you choose?
If you do decide international expansion is the right choice, the next step is to pick your target markets. UK businesses have a huge advantage over US firms in that operating inside the EU makes expansion to its member states much easier, although exactly how easy this is depends on the industry. Picking the closest and largest markets (Germany, France etc.) for your initial launch might seem like the best idea but check they are not saturated with competition and don’t present challenges not seen in smaller countries. Draw up a spreadsheet of potential launch markets and rank their relative merits and faults before making your choice.
iwoca first expanded into Poland due to a favourable regulatory environment and poor credit availability to small businesses. We decided to run the business out of the UK, hiring native staff and using virtual phone numbers to offer a seamless experience. Launch was a steep learning curve (adding multiple time-zones, currencies, domains, languages and more) but the business has grown even faster than the UK did and we followed a similar model for the launch of iwoca Spain.
Are you going to go native?
For some businesses adding an international component is a matter of picking up a few more sales with minimal extra effort. For others it’s a core part of the strategy in which case you really need to make the investment to go native and deliver a local experience.
That means getting testimonials from your new customers (people want to read about your great service in their own language), producing local content, ensuring translations are flawless and offering top-quality service wherever the customer is based. This might not be as hard as it seems. For instance you could hire part-time support, use freelancers or work with a local customer service agency.
Whichever route you decide to follow it’s certainly worth taking the time to think through your international plans. Expansion into new markets can be an easy way to expand your reach and there is plenty of support available from organisations such as Department for International Trade (which replaced the UKTI in July 2016). Not only does the government body organise a number of trade missions each year to countries all over the world, but it also offers a wealth of advice for those wanting to grow a presence in another market and is an excellent first port of call for any business with international ambitions.