Tips for young entrepreneurs looking to go global with their business.
Indian ride-hailing service Ola started small in 2010, but by 2020, it had expanded into international markets, like the UK, Australia and New Zealand. Currently, Ola has around 75,000 drivers registered in Australia and another 25,000 in the UK. Hospitality unicorn Oyo is another successful startup story. It has registered continuous growth since 2013 and now operates in more than 80 countries worldwide. What’s more, Indian Ed-tech company Byju’s has been making aggressive strides in the U.S. market. The company aims to become one of the largest players in the Ed-tech space in the U.S., with a target to hit revenues of U$1 billion in the next three years.
It’s true that if you’re moving to a new country for the first time, it might be daunting. However, a startup can expand internationally to become a global enterprise with carefully applied strategies. Here are some tips to make that happen.
Devise expansion strategies
The only way to make definite strides and sustain growth over the long term is to develop a realistic business plan and expansion strategy. While every business is different, a few items are a must in a company expansion plan. Startups should map out a step-ladder plan assessing political, social, religious, environmental, technological, legal and economic factors in the target market.
Given below are a few fundamentals that companies must not ignore in their expansion plans:
- Market demand
- Goals
- Budgeting
- Market entry options
- Legal requirements
Byju’s came out on top during the Covid-19 pandemic by adopting an aggressive acquisition strategy, which made it the world’s largest Ed-tech firm in the industry. It has acquired Singapore-based learning platform Great Learning, United States-based digital reading provider Epic and Bengaluru’s augmented reality startup Whodat. Aurojyoti Bose, Lead Analyst at GlobalData, told Quartz that Byju’s seems to be pursuing an inorganic growth strategy and keeping an eye on attractive merger and acquisition targets as its business expansion strategies.
Do market research
Consumers and their needs will vary from country to country. Just because one country may respond well to your product or service, don’t assume a neighboring country will agree. Market research is the key to understanding what your customers want, need and expect. It allows you to find out everything you need to know about getting your business up and running and attracting local clients swiftly.
On the importance of market research, Albinder Dhindsa, Head of International Expansion at Zomato, highlights, “The biggest asset in a start-up is usually the entrepreneur who has learned the ins and outs of the business the hard way. There is no amount of market research and savvy internet searches that can replace the inherent intuition of the ‘wrinkled, war-hardened’ entrepreneur.”
Besides researching new markets, it is also essential to be familiar with the employment laws and conditions for each nation, since you will probably hire new employees there. As part of the hiring process, companies will need to ensure they offer competitive pay rates for local talent. For example, in China, employers are required to contribute insurance premiums—that cover pensions, medical, work-related injury, maternity, etc.—for their employees.
Your market research should typically include the following key points:
- Government regulations (e.g. legislation, taxation system, company operation protocols, employee’s benefits)
- Competitors
- Target consumers (e.g. age, gender, income)
- Price point
- Distribution channels
Set yourself apart
A unique selling proposition (USP), or unique value proposition, can differentiate a business from the rest. By setting itself apart, a business can deliver a value proposition that customers won’t find elsewhere. This will help the company build and even expand a customer base. What the business offers must be valuable for customers all over the globe to be interested in. Dhindsa rightly points out in his blog, “One cardinal truth that trumps absolutely everything, including a business idea, is that you need to have a world-class product.”
Hiring local talent
Hiring local talent in foreign countries is one of the most effective strategies for companies to expand internationally, especially when travel restrictions are tight. Some companies make the mistake of launching in a new market with no local personnel on board. Given that every country is different, it is beneficial to diversify your team by getting locals on board, since they can effectively navigate the culture and habits related to that particular region. Also, locally-sourced talents come with several benefits, including proficiency in local languages and diverse educational backgrounds.
Take the partnership route
Partnerships and collaborations can help businesses enter a new market and create a loyal consumer base. In August 2019, Indian budget hotel chain Oyo entered the U.S. market by acquiring the Hooters Casino Hotel Las Vegas in partnership with U.S.-based real estate investor Highgate for US$135 million. Through this collaboration, Oyo was able to expand into the U.S. hotel industry, and this might bring forth new opportunities for the hotel chain.
Many businesses that enjoy international acclaim today started small but with a vision. They established an enterprise with a pragmatic outlook and deployed innovative strategies that they believed would yield results. Entrepreneurs can set up their own business models and ensure international success by taking hints from these successful business stories.
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