Charly Esnal | Base Miami
If you’re thinking about going global with your company, first you need to know if you’re actually ready to expand. It will be worth checking out the advantages and disadvantages of international expansion to see if it’s a step worth taking, as well as some tips to help you along the process of internationalization!
By now you know that we are big advocates of internationalization for Latin startups and especially of expanding to Miami. Why this particular city you may be wondering? Well, Miami is establishing itself as a new tech hub and many VCs are currently abandoning the Silicon Valley ship and exploring the warmer waters of the Caribbean sea.
Miami offers new opportunities for those adventurous enough to take a chance. However, in this article, we will focus on international expansion per se instead of concentrating on just Miami. So, if you’re thinking about expanding, we will cover the main things that you should consider before you do.
The Advantages of International Expansion
You’re interested in taking the giant leap, and we get you. Expanding internationally has many advantages. Let’s take a look at some:
Establish New Revenue Streams
New markets mean a new customer base, and with new customers come more revenue streams. Going global allows your business to cater to a different customer base with other wants and needs. So, if your international market analysis is correct, you should be filling a demand not yet too exploited.
Access a Unique Talent Pool
Expanding to a new territory opens the door to accessing local, high-quality talent that your company may not count on thus far. Embedding your business in a new culture means hiring local talent to help you navigate the challenges more smoothly.
Improve Market Perception
Few things are so important nowadays as establishing a substantial presence for your brand. Credibility is a crucial factor here, and going global helps you achieve that goal. Customers see that you really mean business and that you’re thriving, thus increasing your brand’s credibility.
Stay ahead of local competitors
When you establish your business in a country, you need to find a way to gain a competitive advantage. Going international helps you do just that. Although you will most likely find some sort of competition abroad (direct or indirect), you are still gaining a competitive edge over your local competition.
The Disadvantages of International Expansion
Sadly, not all that glitters is gold, and the same principle applies to global expansion. There are a few key considerations to take into account before deciding to take the big leap. Interested in knowing which they are? Take a look!
Costs
Setting up camp (and shutting it down) in another country is expensive. You’re looking at establishing your business entity, building your office or workspace, and paying salaries. Then, there’s the legal side of going global, including hiring local lawyers, tax accountants, and human resource experts.
And this is in the case that your business thrives in the new market. If you decide to shut down operations, it can be expensive and time-consuming, too (you could be looking at a 2-year-long process).
Foreign regulations
Each country has its regulations, so you need to assess and evaluate before moving. Tax regulations, global privacy rules, liability risks, are all potential regulation conflicts to take into account well before expanding.
Business practices
Suppose you are expanding to a country with a different culture to your own. In that case, it is recommended that you try to delve deep into the new cultural practices. Especially in regards to how they do business and social practices. Bear in mind that language may also be a barrier, so consider taking some classes!
Product distribution and development issues
Exporting, importing, and developing products in a new market can be challenging due to local standards and procedures. There may be demanding local requirements to sort out and unfamiliar paperwork to fill out. So, definitely try to get some advice on this matter!
3 Tips for a successful international expansion
If after reading the pros and cons of international expansion, you are still decided to take the big plunge, congratulations! At Base Miami, we would like to offer some piece of advice that may be helpful on your new journey. Here are our top three tips for a successful international expansion.
1. Redefine your Customer Profile
You know exactly who your customers are in the country you are in right now. You even have a clue that you may know your foreign country’s customers too. The truth is, you most likely do not.
So, take the time to study the market, learn about the cultural differences, the stage of the market they are in (the US is a much more demanding country in terms of customer satisfaction than Latin American countries, for example).
If you are unsure of how to validate your ICP (ideal customer profile), you can hire a company to help you with this challenge.
2. Get Embedded in the Culture
Learn about the new country you will be soft landing into. Take the time to study their culture, language, business opportunities. Assess market readiness, understand how your new customer prospects behave, what their pain points are.
Get advice on local regulations and governmental restrictions that might affect your operations. All in all, the more you know about the country and its people, the smoother the transition will be.
3. Make Local Allies
Nobody makes it on their own. You will need local allies to help you establish and consolidate your business. Consider hiring your employees locally, as this will give you an extra advantage.
Network as much as you can, get out there so you get to know the people and the people get to know you. Try to partner with organizations that already know the local ecosystem too. Creating meaningful connections can be a defining factor in whether your business makes it or not. So, don’t take this tip lightly.
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