Considering international expansion of your startup

US Startups: When You Should and Shouldn’t Go Global


The world is your oyster - or it could be if your startup is kicking butt on the home front. Moving your startup overseas is always a highly exciting moment for any growing business. However, while there are benefits of expanding overseas, there are also risks to this kind of global expansion strategy. 

If you are on the cusp of attempting international expansion, this guide will help you decide if you’re ready to expand, and tips for how to make the most of this business expansion

Are You Ready To Expand? 

Our increasingly interconnected world can make it seem incredibly easy to start to expand internationally. This is an especially easy mindset to get into if you’re in a tech startup. After all, everyone is online, right? 

There are quite a few things to get set up before you can start to think of global business. Some of the most important things to consider before entering a foreign market include the following: 

Do Your Finances Line Up?

First things first, you need to sit down and make an honest portrait of your company and its finances. Most startups will wait until they’ve reached about $10 million in domestic revenue before they start to think about global expansion. 

Does this apply to your company? Even if your finances look solid, you will need to do projections that take into account the costs of global expansion. You’ll have new property, new employees and new equipment. There are also the costs associated with moving into an area with different exchange, interest, and inflation rates.  

Is the Timing Right?

A good rule of thumb when it comes to timing is that when 25% or more of your business is coming from global markets, you’re probably at a point where your startup is ready for a business expansion. 

Are You Realistic About Your Chances of Success?

If you have been rocking it in the American market, you may become overly focused on the benefits of expanding overseas, rather than on the potential risks. This kind of “success amnesia” can make you blind to just how much expense and patience it is going to take for your global expansion. Don’t expect your global expansion to take root immediately.

What to Consider When Expanding a Business Internationally

If you think your startup is overseas ready - well, that’s only half the battle. You might be ready to go overseas, but are those overseas markets ready to accept you? There are few things you need to consider about your target market during your business expansion - here are some of the most important. 

Language Issues

If you are expanding into a country that doesn’t have widely spoken English, you should be prepared for potential misunderstandings. Even if you’re assured that your contacts there are trained in English, there are a lot of nuances that can be missed. To get the most out of expanding overseas, it can pay to learn the local language yourself. Not only can you identify potential miscommunications better, but it also shows respect. Hired translators and multilingual staff members also help a lot. 

Cultural Differences

Just like language barriers can cause embarrassing slip-ups, not paying attention to cultural differences can also prove to be a problem. If a country has a more reserved cultural character, “tough love” tactics aren’t going to go over well. If the reverse is true, important information may be withheld in the interest of being “polite”. Doing your research will help here, as will hiring regional experts.

Marketing Strategy

Take those concerns about language and culture, and multiply them - that’s how tricky adopting a new marketing strategy can be in a new country. You can easily end up with a dud marketing campaign at best, or a disaster at worst. 

Poor Market Fit

Sometimes a product will fail not because of the marketing campaign but because of the, well… product. Your product might be a home run on your home turf, but abroad, it will only leave consumers scratching their heads. It could also be that the product is appealing, but there is a ton of local competition already fiercely fighting for market space. Good market research is, as always, key. 

Logistical Networks

This can be one of the most difficult issues to navigate when undergoing a business expansion into an overseas market. If you have a physical product, you need to figure out how to transport it. 

You’ll also need to figure out how to manage things such as rules, regulations, tax rules, and banking rules in the new country. You especially need to be careful if you don’t have any team member who has done this kind of transition before - you may want to look into finding a mentor or hiring a financial advisor. 

Still Need Advice? Get a Financial Expert 

At Punch Financial, we specialize in giving out financial advice - and this includes when it comes to business expansion to overseas markets. There are a lot of things that a good financial advisor can do to help ease the process of global expansion into overseas markets. 

A good financial advisor can help you navigate many of the issues and concerns that we raised above. These include some of the following: 

  • Local Labor and Tax Laws: Navigating American tax law is complicated as it is - let alone in overseas markets! Before you undertake your business expansion, a financial advisor can help warn you of what you need to do, and how to do them.
  • Setting up a Business Entity: In America, you need to decide between an LLC and a Corporation. In overseas markets, these options may be slightly different, and the paperwork involved may be very different. A financial advisor can help you navigate these processes.
  • Employment Payment: The ways of paying employees and contractors can be very different in overseas markets. Once again, a financial advisor can help set up the necessary processes to make payments a breeze.
  • Taxes and Income Reports: Here’s an important fact - you’ll have to report your foreign income to the IRS. If you have any other questions about taxes or income reports when it comes to global expansion, a financial advisor can help walk you through them. 

Ready to Go Global?

If you’ve read the above and are getting excited about a global expansion, we’re here to help! Often you’ll want a financial advisor for a specific time (like a move into overseas markets), but don’t want to make a permanent hire. 

With Punch Financial, you can get accounting and financial support when you want it, and when you need it. Contact us for a consultation today. You have nothing to lose but so much to gain.

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