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Three Things Every Startup Should Consider When Expanding Internationally

If you have a scalable business, expanding internationally will likely cross your mind. Expanding your reach across the globe to various markets can help raise your visibility and increase your chances of continued and bigger success. Depending on the type of business you run, specific markets present tempting opportunities that may not be possible in your home country. That being said, there are three factors I believe every business should consider prior to embarking on the international expansion journey.

Set clear business objectives. When you are in the process of evaluating whether or not your company is ready for international expansion, ask yourself what your objectives are and why you want to take this step. In 2016, my company launched a cloud-based platform that focused on the medical affairs industry. Although we were originally based in Sweden, over 60% of our customers were U.S.-based, and we were experiencing 150%-plus year-on-year growth in sales and recurring revenue. With more than half of the top 20 pharma companies as a part of our customer portfolio, we knew it was time to take the leap to expand to the U.S. market.

In 2017, we established our U.S. subsidiary and began hiring talent across the country to strengthen our efforts in raising our visibility within our industry. Our objective was clear from the beginning: We wanted to bolster our relationships with key industry players and further educate ourselves on the market. If you don’t set a clear objective from the beginning, you can often find yourself wasting time and money. When we decided it was time to take the plunge, we made it a priority to develop a financial plan outlining various scenarios to give us a clear picture of what success and failure would look like.

It’s important to prepare yourself for different outcomes to successfully move forward regardless of what happens. International expansion is full of hurdles. It’s impossible to be prepared for everything, but creating a plan will help soften the downfalls when they happen. Allowing setbacks to negatively affect your business for long periods of time can be detrimental to moving forward. Take the time to establish several courses of actions to take, depending on the result. I have seen many companies fail due to lack of planning. Educate and prepare yourself — you will thank yourself in the end.

Challenge your product road map. Entering a new market presents new challenges and the need to question your product roadmap. It’s important to understand the substantial amount of time that goes into international expansion and the resources needed to make that happen.

As the founder, you have to keep in mind that this isn’t just you making this decision. I made it a priority to work closely with my management team to make sure my goals and vision for the company aligned with the rest of the group. As part of a young company, I find it particularly important to make sure management still makes detailed product decisions as opposed to relying on various departments to solely make these decisions, as they may in a larger company.

In our specific case, our research and development and commercial departments often had conflicting views, which at times can be frustrating but ultimately forced us to continually challenge our product road map and enabled a very good decision process to use internally. As a result, we have built a better relationship with our customers, and we can justify why we prioritize certain aspects of our business. This has been a huge contributing factor to our international success thus far.

Sort your finances. International expansion can come with a hefty price tag. It’s important to have a long-term financial plan in place. When my company decided to expand in the United States, we simultaneously made the decision to set up shop in Asia, as they were among the other 40% of our customer base. This type of expansion is far greater than a local expansion.

If you have investors or are seeking investment to make this possible, your investors will want to know exactly how you plan to spend their investment and what the return on investment will be. It’s important to understand that turning this expansion profitable will likely take more time than anticipated. You need to not only have a financial plan but learn about taxes, exchange rates and other factors that will contribute to generating income. Create a realistic budget with set milestones to help you reach your target goals.