Starting small and expanding slowly works for some businesses, but it’s not a strategy which I would promote. In this day and age, businesses can become global overnight and often do.
Frequently those working on longer-term expansion projections are simply left behind and this is particularly true in the technology space. If you have a sensible business plan, factoring in global activity from the outset, and have confidence in your product, then the opportunity to create a global business is there for the taking.
Investment isn’t something that happens overnight. When starting any business, you need to spend the necessary time looking at your idea objectively to determine whether you really have a compelling argument as to why your product deserves investment. When I started my business, I spent close to two years hidden away in my Yorkshire barn developing a prototype before I felt that it was at a point where I could pitch the product.
This level of planning is crucial to building a solid foundation for your business—particularly if you are trying to solve complex business problems with your product. It is also hugely important at this early stage to take the time to discern the priority level of the problem you’re trying to solve for your potential customers. Some business problems may be considered as pain points but may not be necessarily high enough on their priority list to warrant investment in a tool to fix them.
Once you believe that your product really has market viability, personal networks can often be a successful route when it comes to finding your first wave of investment. Assuming you have previous experience in your field, consider the contacts you already have and their wider network. Is there someone who already knows you as an individual and trusts your judgement?
Keep the customer satisified
Once you have secured enough investment to develop your chosen product or service to the point of being commercial it can still take a further year or two to refine your offering and begin selling to customers. It’s crucial not to rush this stage. Ensure that your customers are happy with the service that they receive, tweaking and adapting the product to their needs. Without happy customers, further funding will not be possible. But, with a handful of customers you can reference, as well as a solid business plan, you can begin to approach the venture capital community for further investment.
The timescale in which you can secure venture capital funding for your idea really varies depending on the product or service you’re creating. My experience was that it took almost five years from the initial conception before we secured venture capital funding, but ensuring that we got it right at every stage has set us up for the expansion and successes which we’ve experienced since. It’s crucial to be tuned into the challenges you face in the market and have a clear view of where there is an opportunity for success – these are questions that will be posed once you begin to ask for investment and you need to be confident answering them.
Typically, venture capitalists recommend that a company secures a foothold in its primary market before expanding, but if the proposition and plan is right, then the world is your oyster. The journey is about showcasing your product, but also about demonstrating that you, as an individual, are someone to be bought into and can be trusted with their investment. It’s all about building confidence, which a sound idea, detailed development and market understanding can deliver.
Beyond the financial challenges of starting a global business, it’s also essential to get your team right from the outset, regardless of geographical location, and build from there. So long as the wider team are all bought into the same product and vision, then the right people, rather than the right place, is what is important. Sales are also no longer reliant on being in-market. Despite the fact I set up my business in the UK with my R&D team based in Yorkshire, my first customers were based in the US and Australia. With our CEO simultaneously setting up our global headquarters in Silicon Valley, we’ve been global since day one and we’ve never looked back.
Hope for the best, prepare for the worst
When it comes to physical expansion, my advice is to set up low cost regional offices, and keep overheads as low as possible until the team is operational. You can start expansion into a new region with just two or three people in your team. With a sales manager and communications consultant, you’re equipped to begin selling and get the word out that you’re supporting that area, while ensuring that you don’t burn through valuable investment capital. Personal contacts in each market as you expand can be a huge help too – having trusted colleagues which you can rely on and trust in their local knowledge is hugely beneficial to any business.
When expanding beyond your own region, it’s also crucial to understand how local regulations can impact on your product and how it’s developed. As an example, any cloud providers have to be acutely aware of local rulings around data storage, particularly around geographical locations. Understanding these local nuances can make or break a business.
From early on, our business also had international influences and expertise, which have certainly supported our ability to scale internationally. This has continued to be a focus for us, with a whole host of different nationalities now sitting on our board and senior team.
Starting a business in an uncertain and challenging global economy can seem like an uphill battle. Each business is different and will experience a unique route to funding and beyond. It’s well known that venture capitalists often prioritise startups which were conceived in Silicon Valley or that have a narrow product focus initially, but my experiences show that this doesn’t have to be the case. The reality is that a great idea and a potential customer base already in existence are the core factors for achieving success. Once you start to build from there, it’s just a matter of taking your time to ensure you don’t cut corners at each crucial step. Good luck.
Thinking of expanding your company’s capability? Have a look at our handy Santander export series.
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