In today’s age of globalization, the success of a startup doesn’t just lie solely in having a breakthrough idea or business model, but also in the speed of expansion and growth. International expansion is a strategic step that entrepreneurs need to keep in mind if they are looking to grow their business.
Startups often think that only businesses with abundant resources can expand into overseas markets. However, the reality is that international expansion becomes possible and faster with advancements in technology and globalization. Compared to large enterprises, startups although smaller in size, have an easier time evolving and adapting to specific markets. However, make no mistake, this is still not an easy task for startups.
So what should entrepreneurs keep in mind when they want to expand into overseas markets?
When is the right time to expand internationally?
Founders often question whether they should expand to the international market from the start or wait until the business has established a foothold in the domestic market. There’s no specific answer to this question, and it depends on the nature of the business. Basically, founders need to consider things like finances, internal resources, products and customer groups. Building out a successful product in Singapore does not mean it will also be successful in Vietnam, Indonesia, or China.
To do this, founders need to think about international expansion when forming a business idea or developing the very first product. This will help startups to avoid being too narrowly focused and creating products or services that only meet the needs of one market.
For us, this came one month after we started operations in Singapore. Thailand was our market of choice for the first expansion, due to the speed at which the country was advancing. In fact, we started operations in April 2016, but by the end of the year, we were already in Singapore, Bangkok, Ho Chi Minh City, Taipei and Jakarta. For us, time was of the essence as we wanted to capture market share as quickly as possible. Since we had an easily scalable product, we also wanted feet on the ground. These are people who understand the local nuances and were able to support our customers.
Which market should you head to?
Running a startup targeting domestic markets is challenging, but looking at the wider region is even more difficult. There are various challenges to tackle, from languages and business culture to customer needs and behaviors, and this is just one market, and not to mention competition from local players as well. That’s why it’s highly important to prioritize the markets to expand into first, and which can be left to later.
There are various factors to consider when planning for this, including growth potential, market demand, our own understanding of that market, and more. Before I started AnyMind Group, I was tasked with expanding the business of my previous company into Southeast Asia, and I saw first-hand the potential of this region.
Selecting which market to expand should be done carefully because each market will have its own nuances and customers in each market also have different expectations, especially in one as diverse as Asia. It’s important to throw away your preconceived assumptions of any market and instead focus on researching and surveying the market. Lessons cannot be imposed from one market to another, but instead you should thoroughly research even the smallest points and build the right customer touchpoints. As such, it’s important to also localize your products and services through integrations and partnerships with local players.
Building out versus using available infrastructure
Compared to large enterprises, startups do not have as abundant the resources to expand abroad. The hardest thing for startups is a lack of scalable data infrastructure and resources to reach new markets quickly, leading to a loss of advantage over local and more established competition. This includes difficulties in managing functions at scale such as logistics, inventory, manufacturing, or even building out the right touchpoints to reach target customers.
Unless you are a business in the technology space, having to invest in building infrastructure from scratch will sometimes become a major hurdle for startups. Companies should instead harness ready infrastructure from cloud platforms and online software to run their business; thereby eliminating barriers between markets or departments, or even between customer segments.
For example, tapping on a logistics management platform simplifies the logistics process such as building and operating, monitoring product quality, and even managing the entire logistics process remotely. A business in Vietnam produces goods in Indonesia and wants to ship these goods to Thailand. A typical process involves goods shipped from Indonesia to Vietnam for quality control, and then to Thailand. However, cloud-based logistics management means that goods can be monitored once it’s produced in Indonesia, and then shipped directly to Thailand, saving cost, time and resources. In addition, startups can also take advantage of eCommerce-enabled platforms to put themselves right into their target customers’ screens.
Building a scalable business model based on digital and cloud-based technology will be easily replicated without consuming too much resources to operate, compared to building your own infrastructure.
Finally, expanding to overseas markets is a challenge for any startup, but that does not mean there’s no efficient or effective way to do it. Planning from day one means that you’ll be able to scale and optimize actions and processes as you continue to grow as a business.