Assessing Your Readiness for International Expansion

By Ishan Dutta, Global Scale Up Specialist

As an International Growth Advisor at the Growth Company, and as an entrepreneur and businessman myself, I came across the need for a simple, practical framework for small and medium-sized companies looking to expand overseas.

That’s why I have decided to write a series of simple step-by-step guides to anyone looking to export. It may not cover all your questions, but hopefully it will cover some of them. The first of these guides is entitled: “Assessing Your Readiness for International Expansion”.

Checking on your business readiness for International Expansion

Before embarking on global expansion, SMEs should first evaluate their own business and their business readiness for international expansion.

Specifically, I would suggest you should be asking the following 5 questions about your business:

1.    Product & Service Suitability. 

Do you have a product or service built which offers something unique, with at least some initial traction?

By product or service, I mean, have you developed a basic offering - even if it is a dumbed-down version of what you really have in mind? Does the product work and is it sellable? This is what is sometimes referred to as a minimum viable product. (MVP). If you don’t have this yet, you should get this done first.

2.    Traction

By traction, I mean do you have a few paid customers? Ideally this would be in your domestic market, but it could be from anywhere. By “Customers” I mean people who are using your product, and by “paid” I mean that these customers were not given the product for free.

It doesn’t have to be many customers, but the fact that you have even a few paid customers is like the proof of the pudding. It means that whatever you have created does generate interest and as a commercial proposition, it works. 

This is a simply massive step. It may seem obvious, and to commercially minded people, it is. But there are a lot of product and tech people out there to whom product development and product improvement, product perfectioning takes priority. It’s their passion, and sales comes second.

I would encourage anyone looking to sell abroad to show at least some success in their domestic market. It’s not just the fact that the first sales are a milestone. It’s also that your early successes are going to give you a lot of pointers as to how your international growth strategy is going to be. Because the chances are that the things that worked for you in your home market are also going to work for you overseas. Without that early domestic experience, you risk wasting time and money on something half-baked.

3.    Financial Health

This is a little bit controversial, but let me state my point of view, which comes from many years setting up businesses in different countries and making them succeed. If you need to borrow money to fund overseas expansion, or if you need grant money to get international sales going, you are probably not at the right stage of your business growth. In which case I would suggest that you should concentrate your resources (finances and time) on scaling up in your domestic market first.

You need to have spare resources, and spare cash to fund any international expansion plan.

My first experience as a General Manager of a business is still a vivid one. When I went to India to set up a subsidiary for L’Oréal, we ended up at the end of the first year achieving half our budgeted sales and double our budgeted loss! 

We ended up assessing our first year together with senior management. We drew up a more prudent budget for Year 2. We were rather successful in that year and that helped us build the base of our business. Incidentally, that business is a huge business today. But it just goes to show that expanding overseas does take time. So financially you need to be prepared accordingly.

4.    Operational capacity

Another thing you need to assess before you start going for international or export sales is your operational capacity. Check if you have the capacity, the systems, the processes, and the stock to scale internationally.

While making this assessment, identify any operational gaps that need to be addressed. If you are selling a product, do you have the spare capacity to produce and ship for your targeted export market? If you are looking to launch in the US, for example, where volumes are typically much higher, a successful product intro into just one chain could mean that you need to scale up production volumes enormously. Can you do this? 

5.    Key Responsible Person & Management Commitment

It’s generally good practice to have one key person in your team clearly tasked with the responsibility of running and taking responsibility for results as you scale internationally.

But in addition, any major project needs the backing of the management. In the case of a small company, this would be the company owner, CEO or founder. 

It’s not just about backing, however. It’s also about being able to align priorities. Should resources go towards a trade show, or advertising, or developing a better product or a salesperson for the target market? It’s important that the management goes through the options with the person heading up the international expansion and agree together.

Ready to move ahead?

Have you gone through this checklist? Do you think your company is ready for international expansion? In that case, your next step will be to create your international launch strategy and plan. I will cover this topic in my next article. Stay tuned!

Want to learn more?

Did you know that at the GM Business Growth Hub, international exports are one of our priorities? And we offer one on one coaching, as well as workshops to businesses looking to scale abroad.

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