As a startup entrepreneur, it’s one of the most challenging questions to answer. You may be considering expanding to a different region, onto a different platform or even internationally, as Laundrapp is in the process of doing. Although expansion can be as scary as it is risky, chasing growth is key for any business to succeed.
When considering any form of expansion, it’s important you begin the process at the right time for you and your business.
Although Laundrapp expanded throughout the UK successfully, we did experience a variety of challenges along the way. In order to establish demand, we implemented an effective method allowing potential customers to vote Laundrapp to their area. Through social media and our website, potential customers were able to vote on whether they wanted the Laundrapp service in their town or city. By getting people involved in the launch process, we were able to assess the demand for our product as well as build a customer base from day one.
Once you have established there is demand, you need to determine if it’s the right time for you to expand. Of course, if you jump straight in, you run the risk that it might not work successfully. That being said, you also need to consider that if demand is there and you don’t go for it a competitor may get there first. When we came up with the concept of Laundrapp there were no competitors, by the time we launched we counted half a dozen across the world - digital moves fast!
It’s also important to be clever with your approach. When we decided to go international with Laundrapp, we had to consider how to go about it and ultimately, we made the decision that the best approach was to licence the product country by country. This method has allowed us to expand with both minimal risk and capital from investors but it also comes with its own challenges.
In previous ventures, we sent the teams on cultural awareness training just to learn how to do business in other countries, to quickly learn how different cultures approach doing business and of course general business etiquette. In some instances, we required entire new ways and approaches of doing business. In China, for example, I had to upskill in Karaoke! I can honestly say I’ve never done quite so much karaoke in my life and I never thought it would lead to business deals.
Currently, we are in that process of getting countries on board and we have already had successful launches into Australia and New Zealand. That isn’t to say, however, that this method hasn’t been without difficulties and won’t be challenging in the years ahead.
If you want to consider licensing your product, bear in mind that you are giving other parties access into your business and the baby you have built from the ground up will now be in the hands of another. The partners might want to do something different in their native country and this might actually be the best thing for that market, but it’s hard to let go of control. You may also be letting go of a proportion of profits or shares, so ensure you weigh up what is best for you.
If you have built a successful business model in your home market then inevitably there will be pressure to internationalise. Just because something has worked in the UK, however, doesn’t mean it will work abroad. Take cultural barriers for example. For Laundrapp, the big one was that the washing styles of different countries are very different. In places like New York, everyone relies on laundry services in their building. Other cities use laundrettes as a social meeting places, where as some countries see washing a chore that they would rather not do. For each country there is a business opportunity, you just have to shape your business model to fit the market.
Beyond the market and cultural barriers, there is a whole other set of considerations. You will need to think about how you will establish new offices, hire your team and get your legal in place. This could be going on whilst you and your current team are operating on different time zones and may be speaking different languages.
We have learnt a lot through our expansion process, so here are some questions/things to consider:
Have you proven market fit/demand? – Are you sure that focusing all the additional investment required to expand domestically or internationally wouldn’t be better spend stabilising your core market? There could be a huge untapped potential in your existing market
Have you built a big enough barrier to protect your core market? – Your core market will suffer with shifting focus and whilst your attention is diverted elsewhere a competitor may launch or an existing competitor may grow and take your market share
Do you have the right team? – Do you have a proven team that have taken businesses to different markets? If expanding overseas, your business will require a drastically different skillset than from the traditional entrepreneurial startup owners
Are you sure you have the right model? – And in model I mean, is it easier to franchise or license? Can you license your technology? Can you run the business as a separate entity? Once you’ve treaded the international path it’s hard to change the model so be clear on the most effective route to market and stick with it
Do the research! – Treat each new market like a startup. Start small, prove market fit and scale in this order. Don’t invest heavily in resources, marketing or teams until you’ve proven demand for your product or service. Start in the simplest way possible and be prepared to pivot!
Develop a plan, then double it! – Things don’t always go to plan and even the most experienced of teams will make mistakes. Assume you will need double the time and double the budget!
Be honest! – Move fast and break things. Hopefully not too many things considering you’ve got this far, and you’ll be taking a proven business model and opening it up to new potential audiences around the world. Sometimes, however, things just don’t go to plan. For example, you hire the wrong country manager, you choose the wrong city or your service is ahead of its time for the market. Just be honest, approach every market as if it were your own and manage it with the same level of humility and rigour.
Expanding is an exciting time in any business, however, to be successful you must do your homework, establish the demand and work out how you will go about your expansion. Once you’re ready, trust your gut (and the data you have gathered), as the worst thing you can do is miss the boat and watch someone else sail away with the dream you were too scared to achieve.