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5 Things Your Startup Needs To Know Before Going International

2/5/2014

For high growth companies in today’s most competitive sectors, building an international business is no longer optional. If you’re planning on building a business only within the confines of the United States, you’re planning on leaving market share on the table. But I know from experience that international expansion is a big step, and a daunting one to wrap your head around. So, to help kick-start your thinking, here are the first five things you should know:
 
1. You Need to Do It
 
International viability is no longer something for someone else to worry about after you’ve been acquired. You’ll likely need to demonstrate your business’s viability on an international scale in order to build enough value to have attractive exit options, so you should be thinking about that from the beginning.
 
2. You Don’t Need to Start Building with BRICs
 
You’ve probably heard of the BRICs — Brazil, Russia, India, and China, identified in 2001 as the most important emerging economies. The BRICs have become a buzzword in global business, so you might be tempted to focus on them as you begin to think about international business. Don’t.
 
All these countries still offer attractive opportunities, but there are plenty of reasons they often don’t make sense as a first step. Brazil and India throw up lots of protectionist red tape. Russia is challenged with corruption. China’s economic maturation is very real, and it should form a cornerstone of many international expansion plans, but it’s daunting, and it often makes sense to start elsewhere in Asia first. Every business is different, and so there’s no “right” first foreign market for everyone. Don’t let a buzzword constrain your thinking.
 
3. The UK, Singapore and Hong Kong are good places to start
 
If that leaves you looking for a place to start, check out the United Kingdom, Hong Kong and Singapore. They’re English-speaking, they’re full of local talent, and their regulatory regimes are geared towards the smooth integration of foreign businesses.That makes the UK (or tax-friendly alternative Ireland), a logical gateway to the European market. Singapore and Hong Kong are logical gateways to Asia, and attractive alternatives to diving right into mainland China.
 
4. Plan Ahead
 
You can’t decide to move into a new country today, and do it tomorrow. Long before you reach it, you should have a sense of the point at which it will make strategic sense to test international waters. As you approach that point, you should pull in the stakeholders who will need to be most involved in the expansion and make sure they know it’s coming and will be prepared to focus on it when it arrives. Your strength is in moving quickly. But for something like this, you’ve got to be thinking ahead so that when the time comes to move, you can get off the blocks without stumbling.
 
5. International Expansion is Not Your Core Competency
 
Speaking of stumbling, expanding into a foreign country is not a do-it-yourself project. A fast-moving company does not want to slow down to translate its business into a foreign environment. I’ve worked with businesses that have realized this from the start, and I’ve seen companies that have paid the price for trying to do it alone.
 
If you find yourself trying to work through permanent establishment triggers, entity structure, visa requirements, employment contracts, international payroll, VAT calculations and statutory reporting requirements by country, on your own, you’ve reached the point in your planning when it’s time to reach out to a seasoned partner, and go back to focusing on what you do best.