What Obstacles Do Startups Face When Expanding Internationally?

As you set yourself ready for the new horizons, you need to consider a lot of variables and count on crucial factors that can make or break all your plans. You’ll need to plan based upon all the quintessential aspects, such as what model company you are, what’s your customer base, how much time and money will it take to achieve your goals, and deciding on which countries you’re expanding to.   

To help you in the next stage of your entrepreneurial journey, we’ve outlined and discussed the unique challenges and obstacles that will come your way in taking your business global. You need to be vigilant about everything and plan everything with complete fixation. So, let’s begin!          

High Costs

International expansion doesn’t come easy. The biggest obstacle in making your business explore the international market is the cost here. Because, the amount of money required to kick start all your overseas operations is not mediocre, but way more than that – in simple words, it’s a huge deal. The range of total finances varies based upon the size of a company, so from a hundred thousand to a million dollars, it can cost you a gigantic amount here. It’s a different case if you’re raising collective funds for your international segment, but if you’re someone who’s bootstrapping the business, it’ll be the biggest challenge to raise that big amount of money.

Language Barriers

It’s going to be a huge challenge if you don’t speak the language of the country you’re expanding to. Always remember, the language nuances always affect your audience’s behavior to a greater extent. There’s no way you’ll be able to connect to your new audience and offer them your products and services. Although there are some tools like Google Translate that allow us to have translations, we won’t recommend you to solely depend upon them – as they can go wrong in some of the cases. There are phrases and words that seem just fine to you, but they might raise alarms for your international audience, and they can be insulting in some of the cultures. For example, the word ‘scheme’ in UK English just means a plan, but in US English it means that they’re up to no good. It’s like even if you think you speak the language, you actually don’t.

It is necessary that you research the cultures and the language mannerisms before initiating your global operations. You must have at least one member in your team that speaks a local language. This will create a greater appeal expanding into USA, UK, Canada and more countries for your company.

Local Competition

It is better that you must test the waters before diving in and going deeper. There exists fierce competition in the global markets, and the early expansion of your business will allow you to secure a valuable foothold in the competitive grounds and overcome all the challenges. This means that you have to spend a considerable amount of time and effort into understanding the local competition of the international market. You need to acknowledge all the advantages local competitors have over you, study their products and services and figure out in which areas they’re lacking. This will help you refine your product more, offer an appealing collection to your audience, and gain a competitive advantage in a wholesome way.

International Taxes

Taxes, trades fees, and tariffs differ for every country, and dealing with them is a different kind of headache. It is a huge challenge for all the companies planning to expand – especially for the small businesses and the new startups. In case if you fail to comply with the official regulations and local tax codes, not only you’ll face strict penalties but this will also put your expansion operations to a halt. You need to be aware of all the crucial operations before proceeding with your expansion. You’re recommended to take help from the knowledgeable and experienced professionals who can help you navigate the complicated taxes, or hand over your task to the local tax firm of that particular country.

Supply Chain Risks

Supply chain risks can be a real nightmare for your business expansion if you leave crucial segments of the imports, exports, shipping, and logistics out of your planning. Think of it this way, your supply chain will be crossing borders, you need to plan everything – like how to remove bottlenecks, tackle risks and manage the delay of the shipments. For uninterrupted, secure, and on-time logistics, you need to plan your supply chain management in the advance. It’ll become a little easier if you’re a big company and have separate departments dedicated to exports, shipping, and logistics.

But if you’re a small enterprise, you need to plan everything before the unprecedented situation occurs – and it goes beyond the time and cost involves in shipping. What if your containers are delayed an entire week, what if your merch is confiscated at the customs and more such cases can surface. You need to have a plan in place to deal with all such situations and acquire a deep understanding of how all things work.    

Build A Common Culture

Of course, expanding internally means you’ll be facing differences in regional and national cultures. You must consider the major fact that contradictory values might affect your operational efficiency at all levels in your company. To avoid this issue, you must establish a common ground in the shape of creating your corporate culture in the early stages of your startup expansion. Be meticulous in hiring teams that already share your work culture and values. You have to define and stick by the non-negotiable elements of your company values and reinforce them every single day with your team.

Build Your Winning Team

For the long-term success of your business, you must invest your time, finances, and effort in building a winning team. As your business expands beyond borders, you’ll need to hire more staff to manage and grow your business in a different country. Having professionals with varying skillset is essential for your business growth in different paradigms. So, you need to be vigilant about who you hire and what strategy you’re picking up to manage them – only then you can leverage their true potential and expertise to achieve your company’s goals collectively. By creating a progressive and positive culture across all your departments – sales, marketing, and research and development – you’ll allow your new staff to perform to their full potential along with learning new and exciting things. You must encourage them to fully participate, welcome their ideas, and be always open to all the new things they bring to the table.

With detailed planning and accurate execution, you can initiate your international operations – just the way you envision them. We hope that the above guidelines will greatly help you in starting your new incredible ventures. Good Luck!