What to consider when you expand globally as a startup

What to consider when you expand globally as a startup

Five years  ago, when my sole occupation was that of a business journalist with a prominent national newspaper in India, I had the opportunity to interview John Flannery — the then President and CEO of the India operations of General Electric.  Headquartered in Boston, Massachusetts, this American multinational conglomerate was focusing its efforts towards having a sound strategy   for increasing its footprint in India.  To quote Flannery from that interview:

The key thing for GE as a global company is how can it be much more local in markets like India. The more local you are, the more effective you are. The faster we do it, the more successful we will be. And we will also face our competitors better. In addition, we are trying to learn from experiences here and apply them in other markets like Indonesia and China.”

Here, Flannery talks about three important aspects — localisation, competition and learning  how one  has to ‘adapt’  in order to create a niche  in markets abroad. I believe these three are the crucial variables for a global expansion. Recognising them, and thereby having a strategy in place to address these variables, will put your organisation in a better position over time.

My conversations with startups often revolve around their aspirations of being a ‘global’ company.  The challenges that GE faced when it was expanding into India would not be any different from the challenges that these startups would face when they expand globally.

For your journey abroad, here a few essentials that you might want to keep in mind while you are packing:

LOCALISATION

 Think ‘global’ from day one

The ambition to go global needs to be nurtured from day one. Weaving in a global culture will affect the way your team works, the standards you maintain and the strategies you map out. Samridhi Ganeriwalla, Founder, Little West Street — a global brand that operates out of India and provides bedding and essentials for kids says, “Right from the start, we had a goal of global expansion — thus, we invested in designing all our products in the design capital of the world – New York City. With beautiful, top-notch designs, we knew it would appeal to parents around the world. However, you do have to keep market preferences in mind – for instance, in India, the gender of the baby is not known until birth, thus, we included many more gender-neutral options in our collection.” This is what I call localisation and focus.

 Language and legal checklist

 The simplicity of this criteria sometimes undermines its importance. Mausmi Ambastha, Founder and COO, Threadsol, shares her experience: “Being a global company has advantages and disadvantages. The foremost challenge was language in most South Asian countries. We managed with English in Sri Lanka, Bangladesh and Pakistan but there were major handicaps in China, Vietnam, Indonesia, Thailand, Turkey, Cambodia, Spain etc. The cultural difference of doing business in all these places also required a lot of learning and understanding. Obtaining Business Visas was a major challenge, we are trying solve these problems and have been able to master a lot of them with innovative solutions.”

One  can solve this by hiring local talent proficient in the local languages, and take legal help locally before making an expansion strategy.

Adequate funds for global expansion

 Most companies need to be adequately funded (internally or externally) before expanding globally. Hiring locals, marketing, partnering, acquiring companies- all of it requires funds. Om Kanwar, Founder, Edugain, an Indian startup says, “Anything mediocre does not sell or sustain interest in global markets. For each country and culture, we need to do extra research to put in local elements, and make sure we do not serve anything that may seem alien in a particular geography.” So make sure there is enough cash in the piggy for that extra market research and local partnerships.

COMPETITION

 How to choose a location

As a thumb-rule, it is  generally a good idea to  expand in regions where a market for your product/services already exists. Uber and Amazon came to India when consumers were receptive to the idea of using cab service or shopping online. You should ideally scan the size of the industry in that country before venturing. Some important considerations could be: contribution  to world markets, cost of  expanding in those markets, technological maturity and language as well as cultural concerns  to name a few. Mausmi from Threadsol — a company that gets 99 percent of its revenue from overseas — says, “We picked countries like Bangladesh and Sri Lanka first, which are among the world top 5 exporters of apparel in the world.  This way we picked the countries in phases and purely played on our strengths.” Threadsol did an in-depth market research on garment industry globally and then carefully  selected countries to expand.

 LEARNINGS

 There is no fixed rule book for global expansion and I would like to end with what Deepinder Goyal, CEO, Zomato mentions in his blog ,

 “Looking back, are we glad we decided to take the leap and go international when we did? Certainly. Has it been a roller coaster ride? We’d be lying if we said it hasn’t. Have we learned a lot from it? Way more than we would have learned from sitting in India, reading the Expansion 101 manual.”

Today, Zomato claims to be a leader in 18 of our 23 markets it operates in, with 6 of them profitable, and over 80% of its global traffic coming from outside India.

The fundamental rules/checklist whenever you decide to go global will remain same to a great extent, irrespective of the scale of the company/organization. Expanding globally is something you will learn better only once you start the journey. There will be a takeaway from each country you enter and there will be new things to adapt with each step of expansion. Recently, Deepinder Goyal also talked about his biggest learning of running a  multinational business, “It is that everybody should find their own way to determine the real market size for their business (for global expansion). Nobody knows your business as well as you do, so don’t believe the press, the VCs, or market research companies. Listen to everyone, but then decide for yourself.”

So, tick your checklist, add your own, and go ‘global’.

Diksha Dutta is an Indian columnist and media professional. She has a wide experience of writing on startups/VCs/PE during her six-year long stint as a full-time business journalist. At present, she is also working on a book on Indian businesses with Bloomsbury India. Diksha works at Ashoka University, a pioneer in liberal arts education in India. She is based in New Delhi, India.

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