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How to go international for digital start ups, country choice

Going abroad for start ups, key considerations

There are several issues to take into consideration when choosing your first international markets to enter, underneath are a few very relevant items to consider.

1. General size of the markets

This is an easy one. Elements here are national income, number of inhabitants, size of an industry, digital adoption, etc. Here you have a few top performers: USA, Germany, Japan, India, Brazil, France, UK, etc. But there are several other factors to take into consideration.

2. Legal en privacy

Often overlooked during the early stages. Can we offer our service in this specific market and are there issues with privacy, data protection, advertisement limitations, etc. that are difficult to solve for our company in new markets? Germany has very strict privacy laws and in France it is very difficult to fire someone. Ask a lawyer.

3. Localisation

Many digital software services (Saas) contain local data or to be localised information. Like local prices for a specific product or a map, local reviews, payment systems, written actualised content, local location info, etc, etc. There are local payment systems that may need to be added or content and distribution parterships needed. Are they easily available? Can we set this up?

4. Own staff, language and founders ambition

Do we speak the language? Do we like to go to that country? Do we want to wake up very early for a conference call? Do we need local language support? Do we need to hire new local staff? And if so, does this mean a large upfront investment and can we manage this?

5. Finance

Do we have enough resources to compete in the large or expensive market with large customer acquisition costs and large upfront investments, or should we focus on smaller niche markets without big competitors?

6 Sales cycle

Do we sell face to face with a long personal saes cycle or do we sell online? If face to face is needed then customer acquisition costs may be high, because local people on the ground are needed. Then you don’t want to start too far away from home but test closer markets first.

7 Competition

Are there large local leaders in your industry? Do you feel comfortable to compete with them? Is your product as good or different enough to make it? What is the price of the local competition, are you expensive?

8. Exit strategy

What impact may our activity in a specific market have on the value of our company? If you become (a little bit) succesful in the USA it is much more valuable than being succesful in Belgium. It is the same for the Dach countries (Germany, Austria, Switserland).

9. Current clients and relationships

Can we leverage existing relationships with clients in these new markets? Do we know other people that can open doors and give insight? Have we been contacted in the past?

There are a range of other issues that are important for specific cases like density of the market or distance and market distribution structures. Depending on the service offered it is always best to establish relationships with people who understand the local market, then test it and if possible compare it with other possibilities before putting all your energy in one basket.

In internationalisation, it is like in most areas of business a bit of trial and error, hard work, opening doors and generating opportunities. Looking at the abovementioned factors before you start and prioritizing markets helps to focus your energy and minimise the risk of failure.

Feel free to contact me if you have any questions or remarks.