Ambitious companies, especially in stages of rapid growth, tend to dream global dreams. They envision their company growing beyond borders, and becoming a major international success story. However, the notion of “divide and conquer” exists for a reason. Spread your company too thin across too many countries, and you’ll have minimal impact. Instead, steady your gaze on the most important markets, and you’ll see far greater — and faster — success.
One common phenomenon at small and mid-sized companies (especially those in hyper-growth mode) is that they have limited patience in their urge to expand. They *know* that the time is now, and the urgency they feel is contagious. The hunger for globalization is strong, but it can get misdirected at times. Most business leaders find it hard to step back, take a breath, and really do the homework to really figure out which markets are the best suited to them. They often go on a “gut feel” for a market or base international decisions on opportunistic events, such as a single partnership, a few interesting deals from one country, or some other factor that isn’t related to market opportunity and product-market fit.
Who can blame them for not wanting to do the boring old due diligence before jumping in? It’s more exciting — and actually provides a greater sense of instant gratification — to just go on a hunch and leap into action. Especially when you know there is demand for what you’re selling pretty much everywhere in the world. Progress over perfection, right?
But while the international outlook you envision might look rosy, there are often hidden thorns that you won’t even be able to see until these markets start blooming.
Here are the four biggest risks of rushing into international markets too quickly:
- Diluting your brand awareness efforts. Creating brand awareness for your company is critical. Unfortunately, it has to be done one country at a time. You might get some limited spill-over into markets that speak the same language, but long-term success requires dedicated, focused effort in each country. It’s like throwing a handful of pebbles into a pond, versus throwing a large stone. Throw the stone, and from that singular impact, you’ll see ripple effects that stretch and extend for a long duration. That’s what happens when you put all your might behind your brand in one market. Throw the same weight in, but disperse it among many pebbles? That’s what you’re doing to your brand when you divide up your efforts across too many markets. You’ll see minimal impact for your brand in *all* of them, and your company simply won’t grow as fast or as efficiently as it otherwise would in a smaller set of countries.
- Spreading your investments too thin . When you choose to target a market, even if it’s just by assigning a single salesperson to that market as many companies do in the early days, it’s important to keep in mind that you’re making an investment. In the case of international expansion, those early decisions often end up affecting the long-term composition of your revenue streams, including any currency fluctuations and geopolitical instability that might come along with the markets you target. This may seem not to matter at first, but as your business grows, problems that were “small” tend to grow along with you in size. If you spread your investments too thinly across too many markets, later on you will likely have to grapple with divesting in some of them. Gaining traction in each of those markets takes time, energy, and money. Don’t waste your resources, not even if you have them in excess.
- Being unfair to your employees. If you go into too many markets at once, you will eventually end up forcing your internal teams to compete for resources. At some point, your business will need to make decisions about how to expand your presence that will involve major financial decisions. You won’t be able to support all markets equally. Your employees and the internal harmony you create at your company are what make you attractive as an employer. Companies invest so much in recruiting, hiring, onboarding, motivating and retaining employees. You really can’t afford to risk putting your business in a situation where entire teams feel that they are being treated as “lesser” than others. The only way to be fair is to have a clearly articulated strategy in which you can make very specific statements about which markets will be a focus and which ones will not be. You’ll need to outline what the support for each market will entail, including a future-looking vision for what those markets can eventually become. Failing to have a strategy, or to elucidate this to your teams, can be harmful to them later on.
- Multiplying your operational complexity. This is the least understood risk of all at earlier-stage companies, but perhaps the one that confounds businesses the most as they grow. When you begin to target new markets, it’s easy to forget how much complexity you will be adding for your less visible teams, such as Legal, Finance, HR and IT. But the more countries you add at once, the faster the complexity of your business will multiply. Sure, you can handle many of these things through third parties and outsourcing. But someone at your company has to manage those relationships, and ideally they have experience working with those markets before. In the early days, you probably won’t recruit that type of person with deep, specialized international knowledge at your company. In the early days, you’ll instead more likely hire people with generalist knowledge for such functions.
You can absolutely target more countries and add more languages in an effort to make your business grow. And, “more languages” can be a great strategy if it’s applied to the right markets. You can always “seed” new international markets in low-intensity ways that create minimal long-term risk, and lower-touch paths to growth — for example, by localizing a single aspect or path of entry. This is an important part of a differentiated strategy. But for that to work, you’ll first need groupings or tiers of countries to determine how and where you’ll invest.
However, instead of investing in more markets, there are also usually many things you should do to grow more deeply in the markets you’re already in. Would you rather obtain a higher percentage of market penetration in a few key countries? Or, shallow penetration in a dozen? Often, investing more deeply in those markets that matter strategically will enable you to ramp up brand awareness, continue growing the teams that support those markets, and while avoiding unnecessary operational complexity. This doesn’t mean you can’t support other markets at all, just that you’ll need to target them differently.
The world is a big place. Usually, you don’t have to target too many countries at once in order to achieve your financial goals. That assumes, of course, that you know what your actual goal is! Often, a lack of clarity around the overall company goals, and especially around clear financial targets, is the true root cause of a disconnected country strategy. Clarify what it is that you hope to achieve. Put numbers on it! Then, create your country strategy in service of your broader goals. Only then can you align your team around those goals and get them excited about the specifics of what you hope to achieve globally, and within each locale.
At the end of the day, do you want your company to be a lesser-known player in dozens of countries around the world? Or, do you prefer to be a dominant leader in a smaller number of key markets of strategic importance to your business, to help drive long-term financial success?
Obviously, you want the latter. Keep the majority of your focus targeted on a small number of countries early on. It will be tempting to act on every single opportunity that comes your way, but if you do that, you’ll only be distracting yourself and your teams. Save the scenarios of greater international complexity for later on, when your company already has some strong global and multilingual successes under your belt. You can leverage that experience, and those playbooks, and adapt them for other markets later on.