Expanding your business overseas allows you to use everything you’ve learned in the UK to grow in new markets. Roland Emmans, head of technology sector for HSBC, reviews the strategies successful tech business are using to go global.
Perhaps one of the most exciting things about growing a tech business from the ground up is that so many have the potential to trade internationally, often from day one.
Most tech firms will use transferable technology, which can have applications in many markets, plus software is language agnostic and can easily be translated.
It’s no wonder there are countless examples of new tech firms that have become global household names: Spotify, Airbnb, GoDaddy and Groupon to name just a few, as well as a huge army of less well known B2B tech firms that help keep all manner of systems and processes running globally.
But there are many more tech firms that have tried and failed to ‘go global’. How should ambitious businesses best prepare and what are the winning strategies?
The ‘Big Why?’
The first question we ask our customers is: why do you want to go global? Have you exhausted domestic opportunities? Do you have a new product to launch? Or do you just want to “tick the overseas expansion box” for vanity or to keep investors happy?
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There’s no doubting the potential scale of the opportunity – last year the World Trade Organisation upgraded its forecast for global trade growth on the back of stronger than expected trade flows into Asia and North America.
But beyond the possible financial rewards, international expansion requires all parts of an organisation to work seamlessly together and can be a real challenge to a firm’s culture.
To achieve this, I believe there needs to be a company-wide cultural mindset for going global, underpinned by a clear vision that permeates your business.
I call it the ‘Big Why?’ – ask yourself what being international really means for your company and your staff and why are you doing it?
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Where and when to start?
An obvious first consideration is which markets to target and in which order.
Establishing yourself in smaller markets first may be easier and allows you to perfect your offer before moving on.
We often see firms choosing to develop or hone their international expansion model out of the limelight in markets that are more welcoming to new entrants, such as Australia.
Brands like Airbnb and Groupon adopted this approach with incredible success, avoiding the temptation to target larger more lucrative markets first.
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The key is to pick your route into your chosen market carefully.
No such thing as a wasted coffee
Not only should you be seeking professional advice but also make a point of tapping into the huge wealth of knowledge that exists within your professional networks.
In the world of tech, buying a contact a coffee is always worth it. It’s an open and generally sharing ecosystem where people are generally helpful and happy to introduce you to their contacts.
Picking someone’s brains over a coffee can be a great way to learn from people and firms who have overcome the same challenges you are facing and can give you practical advice on potential markets and opportunities based on real life experiences – all for the price of a couple of cappuccinos.
Is your product right for an international market?
Once you’ve done your homework and have a market in mind, you’ll need to carry out a baseline assessment to understand how that market works and where your product fits in.
If you’ve already had some initial sales, use that data to learn more about the market, evaluate price points and better understand what customers respond to.
Depending on your product, there may be an opportunity to test the waters through trusted and established sites such as Amazon or eBay.
It’s also worth checking out potential rivals. You may be a major player in the UK but in other markets, you could find yourself up against serious competition.
This exercise can be very revealing in identifying gaps where product modifications are necessary. Furthermore, it’s worth considering how easy it is to adapt software and hardware for global markets. Some will be easier than others.
Mind your language
Getting your website content translated is clearly vital in attracting overseas customers. But it’s not just the words you use, it extends to ensuring a culturally appropriate tone and imagery.
What’s more, this should extend through to customer service. You don’t necessarily have to have multi-lingual staff at the end of a phone but, if you don’t, make this clear on your website.
More generally, cultural differences are often overlooked. Do you understand your trading partners culturally? What does this mean for the customs and words they use.
Things can literally get lost in translation due to a misunderstood or ignored cultural difference. There is no malice here, just a lack of understanding which can relatively easily be avoided by research and preparation.
This is not just the case with far flung markets – it’s very important in Europe, too.
Regulation and red tape
A good banker will help you set up local accounts and can also connect you with partners who can help you negotiate the various regulatory hurdles of trading overseas, from taxes and work visas to shipping and import/export duties.
Establishing an overseas presence
Finally, long distance management of a business can be extremely demanding.
As your business develops you’re likely to reach an inflexion point where you need a presence overseas rather than run your overseas operations from the UK. For most tech firms, a mixture of local talent plus home team staff works best, but you may want to consider partnership opportunities too.
This is by no means an exhaustive list but it provides ambitious firms with some initial food for thought. We know there are many issues which can keep tech leaders awake at night when considering international expansion – not least cybersecurity, data protection and, of course, cost.
But going global can be a simpler prospect for tech firms than for other sectors and the opportunities can be significant for those who use their networks, contacts and advisers to prepare well.