Bootstrapping any business is crazy ride – you’re cash-strapped, resource-constrained and constantly time poor. It requires creativity, innovation and occasional serendipity to walk a tightrope without the safety net of funding.
It’s easy to underestimate the stress that additional time zones and cultural differences place on a business. It can also be incredibly challenging to find the right people or right entry model for each geography.
For our business, it’s certainly been an interesting journey and there’s plenty that we would do differently with the benefit of hindsight. Here’s some things that we have learned along the way that may help you structure your international expansion for growth and success.
1 . Ensure your home country can support expansion
Before investing time and resources in new markets make sure your home base and headquarters are running effectively. There’s no point placing additional stress on a business that is already in trouble. Your support team should be operating like a well-oiled machine, the development team knows where they are heading and your local sales team is functioning effectively. When combined with a solid understanding of your business and your market, you will have a model that you can replicate in a new market.
This also means that you will have the time and energy to invest in those new markets. The more you split yourself into smaller markets, the more resources you need to succeed – this is something many businesses underestimate.
From a scale perspective, a business doesn’t need to be huge to expand internationally, but you do need to have the resources to allocate to the expansion. The amount of support you will require will depend on your go-to-market strategy. A direct strategy will require more money and resources than an indirect model that is serviced through partners. But even an indirect strategy can consume a lot of resources if your product has a significant service component as you will need to provide support and talk to implementation partners regularly.
It also makes sense to consider how many new markets you want to enter at once. A conservative approach is often wise, particularly if you’re small. If you believe the US is your market, then just focus on the US. Don’t try and do the US, UK and China all at the same time. Focus on one market a time, get that up and running, and then do the next one. That way you can get wins on the board and build a process for opening each new overseas office.
2. Grow your presence offshore first
While it’s tempting to rush into a new market, it’s best to build a presence in those markets before setting foot on soil. Yellowfin has leveraged this strategy in several expansions successfully – in the US we had a number of customers before we put people on the ground, the UK was initially built by doing late night deals over the phone, and in Japan we built our presence at first with a distribution partner.
These all gave us a solid presence and proved that we were viable in that market without investing a lot money straight up. As each market is different, this also helped us understand the market before we jumped in head first. While we had initial success in the US with little effort, this experience didn’t translate to Japan or other markets. In Japan, we developed key relationships with Austrade and our distributor that gave us time to learn the market and build relationships.
3. Start small but strategic
Once you have gained traction and built some presence in the market, you can bring in a sales team. This way your sales team won’t be wasting their time cold calling and, if you plan it well, you can be cash flow positive quite quickly.
Often salespeople say they can demonstrate a product as well as sell, but they’re rarely the right person to talk and demonstrate details to the technical buyer of your product. Together, this team of two can get out there, start doing deals and grow your business.
It’s also important to position your office in a location where you will get the maximum bang for your buck. If you’re going to the UK, don’t set-up in a small town in the middle of nowhere – position yourself in the heart of business. In the US, it’s a bit different as 90% of your customers won’t be near your office regardless of where you locate. It’s important to be close to a hub so your team can get on a plane, and you’ll need to budget for them to travel the country.
4. Choose the right person to lead the business
Once your sales team has started to grow your business, the biggest challenge is finding the person that you can really partner with in your new region and run that office. This is often not your first salesperson. You need someone who is motivated to build your business like it’s their own. They shouldn’t be motivated by commissions. They should care about building a successful team and a business that can grow to 20 or 40 people.
If you are not 100% confident in an individual’s ability to grow your office – don’t hire them. Don’t take shortcuts when hiring regional leaders because these people are the building blocks to your success. If you put the wrong person in the role the mistakes they make can compound quickly.
5. Get on the plane
Get on a plane and spend a lot of time in the market as this will help your team be successful. If you’ve been selective about the regions that you enter, then you will have the time and resources to develop them properly.
By strategically planning your expansion and allowing your presence to grow before you put boots on the ground you can build a viable footprint without spending a fortune. This then sets you up to expand and develop a regional presence that will be your foundation for global success.
Glen Rabie is the CEO and founder of Yellowfin