On Wednesday evening, Globalwise Communities founder & president Shawn Mahoney shared his expertise about taking your startup international at the TechArtista Coworking Center in St. Louis, Missouri. Here are a few key points from the event covering things you should consider when taking your venture overseas.
Mahoney, who opened 29 companies in seven different countries, stressed that “Before you get started, you need to ask yourself: What are my objectives? What’s the point of going international?”
“You’re looking at about ten thousand dollars in opportunity cost of your time and cash to successfully enter another market,” said Mahoney.
The serial entrepreneur, who is fluent in Mandarin Chinese, noted that if you don’t have clear business objectives before you investigate the market, “all the subsequent action will be traps.” The steps should include a definition of success and how success will be measured.
After that, startups need to utilize these clearly defined objectives to perform a market search, for which “You don’t need to hire the most expensive law firm or accounting firm.”
There a several inexpensive government resources such as the Economic Development Export Services that are “able to perform a search in a given country and might have offices over there.”
According to Mahoney, some of the basic services only cost a few hundred dollars. “They tell you if your products are legal in a given country, and if there’s a market for your products.” The agencies can also identify your clientele. “For about 1,500 dollars, they can even find you potential customers.”
Mahoney said the Missouri Department of Agricultural Export Services doesn’t charge you for a lot of services. In some cases, the U.S. government will even return half of the money companies spent on marketing in another country. Since the opportunity cost to explore the market in question can be massive, Mahoney said it would be “silly” not to take advantage of these agencies.
Mahoney, who is also an adjunct instructor at Washington University, said that a lot of states are looking to Missouri when it comes to going international because the state has an export-driven policy and its agencies’ staff is knowledgeable. Missouri also gives grants to local companies.
Once you have selected a target market and you have confirmed that your product is legal, you must select your market entry method, which then determines your partner and customer search parameters.
Mahoney recommended listening to advice of those who have already done business internationally. “It’s never going to be perfect and geared towards you, but they have already made the mistakes.”
“When you think you’re ready, it is critical to understand your legal and non-legal obstacles,” said Mahoney. “A lot of the countries that will be the best potential market for you also have some of the most ingenious barriers to entry.”
Mahoney stressed that you have to know the local market. “Sooner or later, that local knowledge is going to be viable to success.” If you don’t have it, “somebody will outdo you.”
The international business professional, who is an active participant in the St. Louis Mosaic Project, also pointed out that “If you don’t localize your product and make it accessible to the local people, sooner or later somebody else is going to eat your lunch.” However, “this knowledge is no good if not combined with your product expertise.”
At this stage of the endeavor, everyone in the company needs to be on the same page about “Why are we going, what our goals are, and how are we measuring success.”
Finally, you need to be honest about costs. Is the opportunity cost worth it? “Don’t just calculate the cost of the flight. What is the cost of you not being back in the States?”
Here are some available resources for startups thinking about expanding to foreign markets: