Thoughts on international expansion for tech. start-ups

Majority of start-up companies have in their plans an idea of international expansion. Finland (and other small countries) has a very small domestic market which pushes companies abroad. In many cases tech. start-up company is focused to its technological development and setting up basic business operations. Aspects and requirements of international expansion are set aside. In many cases a good decision - secure your domestic business first.

International expansion - What if you would have to do it today? What would you consider to be important? If you have very technical background most likely commercial aspects of business are not familiar to you. Or if you consider they are, maybe think again especially in international context. Maybe you expect that hiring one who has some experience will do it or you will learn while doing it. There exist many mindsets to this. Taking your background you will still highlight technology understanding over other aspects and competences. Unfortunately product or technology competence is not that relevant when comparing to competences and experiences on how you are comfortable transferring business from one country into another or many with commercial success.

I don't claim or try to be the source of wisdom... anyway here are few ideas and learnings I have found to be useful. Please give your comments if you consider these aspects irrelevant in your business or in general challenge these thoughts. Good discussion is always rewarding. Here is not space enough to write things on detailed level just few of the key questions with some additional comments - and not even as 100% water proof list, just free flow of thoughts.

Why in the first place you selected Finland as your first market? Most likely many will answer because setting up it in Finland was natural, easiest to test ideas and learn the business... and because you live here. But from the business model and opportunities stand point which country is the best "home market". Identify it and maybe your first expansion initiative targets this country

Country or client based expansion? Very basic question how you decide whether to conquer the world country by country or client by client. If you take country model how do you select your countries - based on what is near, cultural similarities, market opportunity, expansion cost issues, availability of assets, gut feeling, level of competition, countries you already know or have operated, language? Next area has a tight link to this.

Does you business model and how you serve your customers have assets which are unique to Finland (or your other home market). Are these assets transferable? Can you build same assets in another country? Transfer capability is tightly connected to your operating assets - what is required to serve your customers in selected countries? Or if you are selecting client based expansion how you can meet the expectations of clients when they ask operating capability in x number of countries. Next area again in link.

Is your business easy & light enough to be expanded abroad? More complicated your business model and required assets are more difficult and time consuming is your international expansion. And costly. Can you simplify it?

Have you defined and documented your business operating model, go-to-market model and assets in conceptual level or is it just in your heads? Like McDonald's knows so should everyone else that best way for expansion is copying the model and conceptual modeling acting as an enabler makes it so much easier and faster

Is your value proposition/offering easy to understand? Finland is a country of "small circles" where you have possibility with good connections to get an audience to majority of different stakeholders and decision makers. Even when your value proposition is difficult to understand people are more patiently willing to listen you and your story especially if you have connections. In international arena things are very different. No one knows you or your company and the number of competing ideas is overwhelming. Simplifying your story and understanding your audience - you cannot simplify it too much unless your value proposition targets engineers. And which links us to...

Who are your target customers? Even setting your target industry or businesses is not enough. You need to as well understand decision making models within your target customers. You cannot sell with IT jargon something to decision makers who are business managers - you need to talk their language (back to communicating value proposition). Within industries and businesses you need to further identify so called best match customers because selling for them will be much easier than to others. And this bridges us to next question.

How do you plan to sell - sales model? Do you plan to sell direct or via agents or via resellers or what is your sales model? Selling direct is most difficult and time consuming naturally because a) no one knows you and b) you sell to one or few customer at a time. Your time to money may take longer than in your plans. This is valid especially in Asia where building personal relationships has its role and the decision making cycle is very different. But it doesn't hurt your margin levels. If you are after faster expansion then you will most likely select channel/agent models but in the beginning you again face same issue - no one knows you and you don't know whom to contact. Which points to next question.

Hiring local people - how do you get professionals? Especially in China and India hiring quality people is very difficult because local people prefer well known international brands or local brands. And best people know their market value and understand what is your position (they consider you nobody but still may find you interesting because of your western background). But eventually you need well equipped quality people because in the first place they can help to identify best contacts (resellers and decision makers) and selling in many countries requires local sales force.

What do you sell? It is one thing to define your general value proposition and another define offerings. Do you plan to sell everything to everyone or highly customized solutions (sounds terrible jargon to me) or what are your thoughts defining your offerings? Of course this is an easy one if you are selling one single item. In all of these cases one thought is always relevant - new country/market may be new to you but no one is waiting for you there with open arms. Whether you like it or not you have existing competition if not as an identical value proposition but as alternative propositions or as the worst competitor of all no interest to buy. So the combination of value proposition, offerings and how do you find ways to communicate your value - basically your market differentiation needs to be a well thought process.

How do you build awareness? Some people believe that in B2B market there is no need to build brand because it is F2F selling and products sell themselves. Again remember no one knows you... and in the end show me a successful company without a brand? Many may think that it is something to be done later when more important things are in place. Just scratching the surface here but somehow you need find ways to build awareness, reputation and trust in selected target groups... and you are already in the process of building your brand. And hey I am not talking here about advertising and communication leaflets and brochures. You just don't have enough money to take that path. How to do it that is another story...

When heading to more detailed level of business specific topics such as managing customer information in different countries (EU vs. Asia differences), protecting your IPR or region specific issues such as counterfeiting or fraud management in Asia story gets much more complicated and require another story.

I just read my own thoughts second time and many of these actually apply to domestic business as well but... the importance just multiplies in international business.