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What Startups Need to Know Before Expanding to a New Country

Posted by Kanika Sinha

June 27, 2016

Traditionally, startups have worked hard to establish themselves in their current market. They’ve refined and honed their products and skills.

And, as the final stage in the evolution of a startup, traditionally they expand into international markets.

Today, things seem to work differently. Many startups are looking at international expansion early on in their existence.

Consider Uber – the company is just seven years old and is already running in more than 66 countries. Unbelievably, it expanded from America worldwide after just two years.

Spotify is another example of a startup that expanded quickly. They opened service in the United States from Sweden early on in their existence.

Because the trend of startups expanding quickly seems to be growing, we’re going to look at what startups need to know before expanding to a new country.

Define Your Reason

The first thing you should do when contemplating international expansion is ask yourself why you want to expand abroad.

Know specifically why you want to expand. Once you know this, you can tailor your strategy for the best success.

Build a Solid Foundation in Your Home Country

Is your business stable in your country of origin?

Before looking at overseas markets, you want to make sure your business is running well at home.

You also want to have a solid team in place because you’ll need to travel to expand your business. Take a good look at whether your startup can run without you when you travel.

It isn’t going to be easy to run your business at home and expand into a new country with your existing staff. Before you decide to expand, make sure you can add new staff members.

Can you afford them? How will they fit with your existing staff? It’s a good idea to have a team focused only on your international growth, while leaving a solid team at home.

Have Financial Stability

Is your company financially stable to handle the growth? Your war chest or financial situation is also worth a good hard look.

When you expand internationally, your company may require a longer startup period. You might even lose more money than expected in the beginning.

Just like when you first launched your startup, you’ll want enough capital to move forward as well as substantial back-up monies to create long-term financial success.

Create a budget for your expansion and ensure that it doesn’t affect your business at home.

Grow in Familiar Markets

Growing internationally is risky business, so you want to look at international markets that mirror yours.

For example, if your target market at home is women ages 20-50, with a median household income of $75,000, you want to look for a similar market abroad.

Another thing to consider is the language barrier. It will be easier for your first step into expansion if the language barrier is negotiable.

Additionally, you want to look at the local culture. It’s worth your while to conduct valuable research so you know if your product even meets the needs of the international customer.

Research the Competition

Remember when you did target market studies before you initially launched your startup?

Don’t neglect this important task now. Take the time to learn about all of the local competition – how many companies are selling similar products or services? How can you stand out?

Do your due diligence so you know if there is even any room for your startup internationally.

Find Local Partners

You want to create strategic partnerships in your new country. This will not only strengthen your ability to expand, but it just might fast-track your growth.

Creating partnerships with local business people is just good business. These folks know the market, and they have a network of their own partners who can help introduce you to your new market.

This is networking, only on an international scale.

Learn About the Red Tape

Moving beyond your home market can mean extra paperwork and legal loopholes.

For technology or medical startups, the red tape can be daunting.

Before expanding to a new country, research that country’s laws and know what’s required of you.

Look at the tax codes and business regulations. Research the labeling and packaging standards as you move worldwide.

Find out if your bank will deal with foreign banks. Do you need to set up banking in the new country?

To Conclude

The take-away is to always do your research. Think through all the possible ramifications. Explore every scenario.

Look at the strengths and weaknesses of your startup and how they’ll be affected when you expand overseas.

Go through the same process you went through when first launching your startup. Research your target market, and create a business plan complete with long-range financial projections.

And, lastly, know your market thoroughly.

Are you a new startup ready to expand to a new country? Are you looking to get your new business off the ground abroad and watch it rise to success? We are here for you.

We can help answer your questions and guide you through the process. Outsource your finances, payroll, HR duties and more to us. Contact Escalon today to get started.

Image: George Hiles



Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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