Deciding when to expand a business internationally is like having a mild flu, and then making the mistake of Googling your list of symptoms. The search results are inevitably, “it could be cancer”So then what?Do you quit your job, write a will, rush to the hospital and/or party like it’s 1999? Or do you just sit there & wait? But what if damned thing truly is cancer and metastasises?! But then again, they’re just flu symptoms… right?There’s never a right answer, and never a right time to take expand a business globally. I’m going to argue that the best wrong answer is when lots of the “too early” points below vaguely stop applying, and when more of the “too late” points are vaguely starting to.
Note these points are framed from the perspective of commercial expansion.
Risks & Failure Points: Too Early
- The opportunity cost of investing further in your core product or optimising your service far exceed the incremental growth potential of globalisation.
- You don’t really understand the markets you’re considering expanding into, nor their opportunities & challenges.
- You failed to double your estimated cost of what a go global initiative will cost (always more than you think!)
- You’ve diagnosed slowing growth incorrectly. You think you’re approaching local market saturation, while in reality it’s product-market fit that’s holding you back.
- Your sales team is looking at go global as simply a sales thing. The tough discussions about development, localisation, support, customer success, finance, logistics etc have not really been had.
- You’re too optimistic about overseas demand, on the basis of a few random international customers who have come knocking at your door.
- You’re not sufficiently capitalised to weather a slower-than-expected start, or the need to invest ahead of revenue for a period of time to achieve critical mass.
- You are underestimating how much of your business model is inherently tied to your local operating context. Your business model is less “plug & play” than you think.
- You don’t have the right talent, ability to hire, nor the right partners to make it happen.
Risks & Failure Points: Too Late
- You start having bigger company problems. As a result, your needs-to-be-nimble globalisation plan is slowed down by red tape, drawn out decision making, and greater risk aversion. Your new operation is encumbered by all sorts of extra costs.
- Your business model has innate first-mover advantages, and your competitor is more aggressive than you are. Or, local substitutes emerge in the target markets.
- Your own customers, as you crawl up the value chain to larger deals, have global ambitions exceeding your ability to keep pace.
- You fail to perceive real demand, and undesirable substitutes like grey markets begin to emerge in lieu of you satisfying that demand.
- You’re missing opportunities for profit margin growth, reducing operating expense ratio, or achieving economies of scale which could even help you succeed at home.
- Your macroeconomic and geopolitical risk exposure isn’t diversified enough: if your home region or currency tanks, you go down with it.
- Your company culture is becoming isolated and is underexposed to global trends & consumers. Customers in your local market may not be at the forefront.
- You’re actually ready to expand, but just aren’t sure where or how to start. In which case you may find some of the blog articles on www.sibylentertainment.com helpful.
I suggest using these checklists by weighing whether “more stuff on the Too Early applies to me” against “more things on the Too Late list apply to me.”
If you find yourself sitting right in between the two groups (some of each), the time may have arrived to start thinking about global expansion more seriously.
Hope this helps!