Internationalization should be part of your strategy from the start
One thing that we see time and time again with many European start ups is that they think locally, and while the initial market for any new company will undoubtedly be local, implementing a good internationalization plan in your business plan from the onset is key to truly actualizing the potential of your enterprise.
Compared to the U.S., single European markets are still relatively small, the Spanish think first and foremost of Spain, the Germans of Germany, the British of the UK, the French of France, etc… etc…, and while barriers to entry in your country specific market and language are undeniably lower than in one that is foreign these markets are still undeniably smaller than that of the United States.
Looking at Europe, the largest local market is that of Germany, with 82 million inhabitants, Latvia on the other hand has a market of 2.25 million, compare that to the 300 million of the U.S. and you start to see what we’re talking about.
While a German company may be able to survive strictly within its own market, the Latvian one will have a harder time doing so, simply due to the country’s population as a potential client base.
However, that does not mean that the German company should think locally, in fact the opposite, both the Latvian and German start up should think of internationalization from the beginning, and once established in its own market should then look to move abroad. After all a good service is a good service and should be transferable across borders.
Here are a couple of things to think of when working on your business idea.
1. Is our product or service local, or does it have international appeal?
2. How difficult is it, would it be to deploy our product or service in a foreign market.
3. What are the easiest markets for us to move into, what are the barriers to entry in those markets and what are the needs of those consumers compared to ours.
4. How does the culture of our target international market(s) differ from ours, and how may we have to adjust our product to provide a good value proposition to those consumers.
5. Based on your assessments of the above will we have to adjust our launch strategy or is it easily transferable to adjacent markets.
Obviously expanding into new markets gives your firm an advantage in as far as potential market size is concerned. But with it you can also use your firms experience in these markets to create for yourself a strong first mover advantage, develop linguistic market competencies that can then be transferred to other markets using the same language, and secure additional funding for growth.
Mind you these are just a few simple things to think about, to truly understand and plan the internationalization of your firm you should be prepared, and many books have been written on the subject.
Here’s a list of books that we feel are imperative to learning the ins and outs of taking a small enterprise international.
: Internationalization, Entrepreneurship and the Smaller Firm: Evidence from Around the World
: Innovation and Small Firms
: The New European Rurality: Strategies for Small Firms (Economic Geography)
: The Foundations of Small Business Enterprise: An Entrepreneurial Analysis of Small Firm Inception and Growth (Routledge Studies in Small Business)