Planning for Global Expansion

What are signs that global expansion is a good strategy for your company, and that you’re ready to do it successfully?

Make sure you have business operations down pat in your home market – a new market adds so many different complexities on top of day-to-day business operations.  If you don’t have business operations down in your home market, a new market is going to be that much harder. 

If you’re “bored” in your home market, it’s a good sign you’re ready to expand – while you can’t just copy-paste in a new market, if you can handle home operations in your sleep and know your business inside and out, you’re prepared for global expansion.

Software/online businesses can expand internationally more easily – you’re not going to have to deal with trade and compliance complications and shipping physical goods across borders—though you will likely have to navigate data privacy.

What criteria should you consider when deciding which international market(s) to enter?

Similarity of customers – just because your product makes sense for US customers doesn’t mean it makes sense for global customers. For example, Starbucks entered Israel with lots of assumptions about how customers like their coffee but didn’t do due diligence on whether those preferences hold true in Israel – and they don’t. You have to really take a look at the customer and the industry in the new market.

Regulatory landscape – understand the complexity of the regulatory landscape, it always trips people up. Data storage and privacy regulation is one of the biggest hurdles for companies–they can get you fined or banned from a country. Trade and tax regulations are also really high stakes to get right. 

Language barriers – certain countries necessitate you to localize the language–you want to stay away from them because that’s very difficult, time-consuming, and expensive. You want to start in countries that speak English or have a population speaking English as a second language. Its also important because then you won’t have to localize your backend systems for non-English speaking employees.

Government and market conditions – if the government in the market is similar to the US, you’ll have a better opportunity to succeed. Expansion is much more difficult in a country like Russia, with vastly different business norms. Heavy government involvement and bureaucracy in business adds another layer of complexity. 

Market size (depending on the industry) – depending on the industry, market size can be a factor in whether you invest in moving into a new market—ensure that the new market can support your company and costs of expansion.

Generally, what markets tend to be easier or harder to enter?

Think of countries on a scale of “bunny hill” to “black diamond” – while no market is easy to enter, there are definitely some that are easier.

Difficulty	Type of countries	Countries in Category
🟢 Easiest	English-speaking Western countries that are more comparable to the US.	Canada, UK, Ireland, Scotland
🟦 Intermediate	Stricter Western countries that have tighter regulations and heightened adherence to rules (less flexibility with your company as you look to expand there).	Germany, Japan
Expert	The further east you go into the Middle East, Asia, or Africa, the more difficult it gets.	Middle East (Israel, UAE),  Eastern European Countries (Poland, Hungary)
Experts Only	The hardest countries are those that have business cultures and governments that are very different from the US.	Russia, China

What types of international operations require a company to set up a legal entity in a new country?

Entity creation requirements vary by country, use a lawyer to navigate regulations – there is no clear-cut answer to when you need an entity. Each market has its own special requirements–even within the EU. You need to have a lawyer in-market to navigate this decision, they’ll advise you on setting up an entity or doing business without an entity. You’ll likely need an entity if you plan to have real estate or employees in the country.

What are the key steps in setting up operations in another country?

Overall, entering a new market will take a year or more – the total timing of entry depends on the characteristics of the country. Expansion into an easier market can take around a year. The process can be broken into three phases:

How do you foster a connection between new market teams and the home office?

The new market entry role is the middleman between corporate HQ and global market teams – this role manages and triages all of the different teams working on the new market—they orchestrate the project management relay race required to get everything going in conjunction. 

Create a milestone checklist run by a new market entry employee/team – make sure a centralized team tracks the status of various milestones. There are many interdependencies between different functions that need to be orchestrated. Falling behind on one item can have a cascade effect. 

Institute frequent check-in calls to assist and “unblock” local teams – when I ran new market entry, I’d have a new market call every week with all functional teams on the call. Even if a particular function wasn’t directly involved in a particular market at that time, they should know what’s going on so they can be ready for the handoff. Look for places your HQ team can step in to unblock an obstacle for the local team.

Is it more valuable to have a GM who really knows your company or the new market?

Make sure your GM knows the new market – you want to make sure that the GM has deep knowledge of the local business and government practices and understands the necessary steps to enter. 

Make sure your GM knows your industry – don’t get a GM who lives in that market but doesn’t understand your industry. They’re not going to understand how to deal with the government in your industry. 

You can teach the GM about your company a lot more easily than you can teach an industry or market – industry and market are beasts to learn and the only way to learn them is by failing. You can much more easily teach a new employee about your company than you can teach someone from your company about the new market.

Which roles do you need to have in-market, and for which can you rely on centralized resources?

Your GM and sales and marketing teams must be local – you will be going in blind if you don’t have a local general manager. Sales and marketing should be local because they will help HQ understand how to position the product in the new market. 

Other functions can be centralized in HQ –  for several functions, the HQ team can leverage the expertise of the local team.

Who owns global expansion management? When does it make sense to dedicate someone full-time?

Global Expansion typically falls under finance and strategy – both of these think strategically across all aspects of the business—similar to global expansion.

Invest in a dedicated employee – everyone on your team has other things to do besides deal with a new market. If new market entry is a big part of your strategy (and it’s a big undertaking, so it likely is), get an employee to champion new market work.

If you can’t have a full-time person you are going to handicap yourself, but General Council or CFO could own global expansion –  if you don’t have budget for a dedicated employee, have your General Council or VP of Finance / CFO lead global expansion. Once you’re getting into operations, bring a VP of Operations in to work side by side with them.

What limits how many new markets a company can or should enter at once?

Hone your expansion playbook by starting with one country – start somewhere easier like Canada or an EU country (or a simple market that makes sense for your business and customer). If it goes well you can start to replicate your efforts. There is a basic framework for running global expansion and once the whole company has done it once, you develop some competencies. The process isn’t copy-paste and there’s always new complexity, but starting with an easy entry will allow you to develop a usable framework.

Once you have a framework, you can scale while staying within bandwidth limits – keep in mind that your teams will still need to handle US responsibilities alongside their expansion roles. At a certain point you’ll have to hire in the new market to handle certain operations, so that your US team isn’t overextended.

You can have one global expansion employee per region – in a perfect world you would have one dedicated expansion employee per country, but at least one per general region is important and can help alleviate bandwidth issues.

Make sure you can invest enough in each market to make a strong impression – you want to impress the market, and you don’t want to come in and fail and create a lasting negative impression. Manage expectations and be strategic about when you announce entry into a new market. 

What are the most important pieces to get right?

Get the right general manager – the right General Manager will make or break your entry. It is by far the most important item to get right. Everything can’t be done at headquarters. There is so much local knowledge that the person on the ground needs. You need a leader in the market, not just employees. 

Put in the time with due diligence and preparation – take the time to understand the market. I’ve never seen an expansion that goes fast and succeeds. There are too many moving parts and too much risk involved to rush.

What are the common pitfalls?

Manage expectations, don’t overpromise – don’t announce to the market that you’re launching before you are ready to do so. It is important to garner hype and you might want to use an initial pre-launch sales strategy, but don’t put a timeline on it; you never know when you will encounter an obstacle that delays your launch. When delays happen, customers become frustrated and may cancel pre-orders.

Don’t assume expansion will be quick and easy – don’t assume the market will be just like the US. Even in easier markets, it can take over a year to launch, and more difficult entries into markets like Russia or China can take four to five years to launch.