International business plan: From Local to Global: Building an International Business Plan for Startups
1. why go global and what are the benefits and challenges of international expansion, 2. how to identify and evaluate potential markets for your products or services, 3. how to assess your strengths and weaknesses compared to your global competitors, 4. how to adapt your marketing mix to different cultures, languages, and customer preferences, 5. how to navigate the complex and diverse laws and regulations of different countries, 6. how to estimate your costs and revenues, manage currency risks, and secure funding for your global venture, 7. how to summarize your main points and provide a call to action for your readers.
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In today's interconnected and dynamic world, many startups aspire to grow beyond their local markets and reach new customers, partners, and opportunities across the globe. However, going global is not a simple or straightforward process. It requires careful planning, research, and adaptation to the different contexts and challenges of operating in foreign markets. In this section, we will explore some of the main reasons why startups should consider international expansion , as well as some of the common pitfalls and difficulties they may encounter along the way. We will also provide some tips and best practices on how to craft an effective international business plan that can help startups achieve their global ambitions.
Some of the benefits of going global for startups are:
- Access to larger and more diverse markets. By expanding internationally, startups can tap into new sources of demand, revenue, and growth. They can also diversify their customer base and reduce their dependence on a single market . For example, Spotify, the Swedish music streaming service , expanded to 178 countries and regions, reaching over 345 million monthly active users and 155 million premium subscribers as of December 2020.
- Access to talent and innovation. By going global, startups can attract and recruit skilled and talented workers from different backgrounds, cultures, and perspectives. They can also leverage the knowledge, expertise, and networks of local partners, suppliers, and collaborators. This can help them improve their products, services, and processes, as well as foster a culture of innovation and creativity . For example, TransferWise, the UK-based fintech startup, has over 2,200 employees from more than 80 nationalities, working across 14 offices around the world. The company also partners with local banks and payment providers to offer fast, cheap, and transparent cross-border money transfers.
- access to capital and resources . By going global, startups can access new sources of funding, investment, and support from various stakeholders, such as venture capitalists , angel investors , governments, and international organizations. They can also benefit from lower costs, higher quality, and greater availability of raw materials, inputs, and infrastructure in some foreign markets. For example, Stripe, the US-based online payment platform, raised $600 million in a funding round in March 2021, valuing the company at $95 billion. The company also operates in 43 countries and supports over 135 currencies and payment methods.
One of the most crucial steps in developing an international business plan is to conduct a market research that will help you identify and evaluate the potential markets for your products or services . market research is the process of gathering, analyzing, and interpreting information about a market, a product or service to be offered for sale in that market, and the past, present, and potential customers for the product or service . Market research can help you answer questions such as:
- Who are your target customers and what are their needs, preferences, and behaviors?
- What are the size, growth, and trends of the market and the industry ?
- What are the opportunities and threats in the market and the competitive landscape?
- What are the legal, cultural, political, and economic factors that affect the market entry and operation?
- What are the best strategies and channels to reach, communicate, and sell to your target customers?
To conduct a market research, you can follow these steps:
1. Define your research objectives and scope. What are the specific questions that you want to answer and the information that you need to collect? How will you use the information to make decisions and achieve your goals? How much time and resources do you have to conduct the research?
2. Identify your data sources and methods . Depending on your research objectives and scope, you can use primary or secondary data sources, or a combination of both. Primary data sources are the ones that you collect directly from your target customers or market , such as surveys, interviews, focus groups, observations, or experiments. Secondary data sources are the ones that are already collected and published by other sources, such as reports, articles, statistics, databases, or websites. You can use various methods to collect, analyze, and interpret the data, such as quantitative or qualitative methods , or a mix of both.
3. collect and organize the data . Depending on your data sources and methods, you can use various tools and techniques to collect and organize the data, such as online or offline surveys, questionnaires, phone or face-to-face interviews , web or social media analytics, spreadsheets, or software. You should ensure that the data is reliable, valid, and representative of your target market and customers .
4. analyze and interpret the data . Depending on your data sources and methods, you can use various tools and techniques to analyze and interpret the data, such as descriptive or inferential statistics, charts, graphs, tables, or software. You should look for patterns, trends, correlations, or differences in the data that can help you answer your research questions and support your conclusions.
5. report and present the findings . Depending on your audience and purpose, you can use various formats and styles to report and present the findings, such as reports, articles, slides, or videos. You should highlight the key insights, implications, and recommendations that can help you and your stakeholders make informed decisions and take actions.
For example, suppose you are a startup that offers an online platform that connects freelance writers and editors with clients who need content creation services . You want to expand your business to the UK market and you need to conduct a market research to identify and evaluate the potential market for your platform. You can follow the steps above and use the following data sources and methods:
- For primary data sources, you can use online surveys and interviews to collect information from your existing and potential customers in the UK, such as their demographics, needs, preferences, behaviors, satisfaction, and feedback. You can also use web and social media analytics to track and measure the traffic, engagement, and conversion of your website and social media channels in the UK.
- For secondary data sources, you can use reports, articles, statistics, databases, and websites to collect information about the size, growth, and trends of the UK market and the industry, such as the number of freelance writers and editors, the demand and supply of content creation services, the pricing and quality standards, and the best practices and success stories . You can also use reports, articles, statistics, databases, and websites to collect information about the opportunities and threats in the UK market and the competitive landscape , such as the legal, cultural, political, and economic factors that affect the market entry and operation, the strengths and weaknesses of your competitors, and the gaps and niches in the market.
- For data collection and organization tools and techniques, you can use online or offline survey tools, such as SurveyMonkey or Google Forms, to create and distribute your surveys and collect and organize the responses. You can also use phone or video call tools, such as Skype or Zoom, to conduct and record your interviews and transcribe and organize the transcripts. You can also use web and social media analytics tools , such as Google Analytics or Facebook Insights, to collect and organize the data from your website and social media channels . You can use spreadsheets or software, such as Excel or SPSS, to store and manage your data.
- For data analysis and interpretation tools and techniques, you can use descriptive or inferential statistics, such as mean, median, mode, standard deviation, frequency, percentage, or chi-square, to summarize and compare the data from your surveys and interviews. You can also use charts, graphs, tables, or software, such as Excel or SPSS, to visualize and communicate the data from your surveys, interviews, web and social media analytics. You can look for patterns, trends, correlations, or differences in the data that can help you answer your research questions and support your conclusions. For example, you can find out the average age, income, education, and experience of your target customers, their main needs, preferences, and behaviors when it comes to content creation services, their satisfaction and feedback with your platform, and their willingness to pay and recommend your platform. You can also find out the size, growth, and trends of the UK market and the industry, the opportunities and threats in the market and the competitive landscape, and the best strategies and channels to reach, communicate, and sell to your target customers.
- For reporting and presenting the findings formats and styles, you can use reports, articles, slides, or videos to report and present the findings to your audience and purpose. You can highlight the key insights, implications, and recommendations that can help you and your stakeholders make informed decisions and take actions. For example, you can report and present the findings that show that there is a high demand and low supply of content creation services in the UK market, that your target customers are mostly young, educated, and experienced freelance writers and editors who need a reliable, convenient, and affordable platform to connect with clients and showcase their work, that your platform has a high satisfaction and retention rate among your existing customers in the UK, and that you can differentiate your platform from your competitors by offering a unique value proposition, such as a quality guarantee, a feedback system, or a loyalty program. You can also report and present the findings that show that the UK market and the industry are growing and evolving, that there are opportunities and threats in the market and the competitive landscape, such as the legal, cultural, political, and economic factors that affect the market entry and operation, the strengths and weaknesses of your competitors, and the gaps and niches in the market, and that you can use the best strategies and channels to reach, communicate, and sell to your target customers, such as online or offline marketing , partnerships, referrals, or testimonials. You can also provide recommendations on how to implement your international business plan, such as setting your objectives, budget, timeline, and metrics, allocating your resources, and monitoring and evaluating your performance and results.
How to identify and evaluate potential markets for your products or services - International business plan: From Local to Global: Building an International Business Plan for Startups
One of the most crucial steps in developing an international business plan is to conduct a competitive analysis. This is a process of identifying and evaluating your global competitors, their strengths and weaknesses, and how your business can gain a competitive edge over them. A competitive analysis can help you to:
- Understand the market conditions and customer preferences in different countries and regions
- identify the gaps and opportunities in your product or service offerings
- Benchmark your performance and quality standards against the best practices in the industry
- Develop effective marketing and pricing strategies to attract and retain customers
- Anticipate and respond to the threats and challenges posed by your competitors
To conduct a competitive analysis , you need to follow these steps:
1. Define your target market and customer segments . You need to have a clear idea of who your potential customers are, what their needs and expectations are, and how they make purchasing decisions. You can use tools such as market research , customer surveys, and personas to segment your market and understand your customer profiles.
2. identify your direct and indirect competitors. Direct competitors are those who offer similar products or services to the same customer segments as you. Indirect competitors are those who offer different products or services that can substitute or complement yours. You can use tools such as online databases, trade publications, industry reports, and social media to find out who your competitors are and what they are doing.
3. analyze your competitors' strengths and weaknesses . You need to assess how your competitors perform in terms of product or service quality , features, benefits, prices, customer service, distribution channels, brand awareness, reputation, and innovation. You can use tools such as SWOT analysis , Porter's five forces analysis, and value chain analysis to evaluate your competitors' strengths and weaknesses .
4. Determine your competitive position and advantage . You need to compare your performance and offerings with your competitors and identify your unique selling proposition (USP). Your USP is what makes your business different and better than your competitors and why customers should choose you over them. You can use tools such as positioning map, perceptual map, and value proposition canvas to define your competitive position and advantage.
5. Develop your competitive strategy and action plan. You need to formulate your goals and objectives, and how you will achieve them by leveraging your strengths and overcoming your weaknesses . You also need to monitor and measure your progress and results, and adjust your strategy and plan accordingly. You can use tools such as SMART goals, balanced scorecard, and key performance indicators (KPIs) to develop your competitive strategy and action plan .
For example, suppose you are a startup that sells organic coffee beans online. You want to expand your business to the European market. You conduct a competitive analysis and find out that:
- Your target market is the environmentally conscious and health-oriented coffee drinkers who are willing to pay a premium for high-quality and ethically sourced coffee beans.
- Your direct competitors are other online retailers of organic coffee beans, such as Bean There, Coffee Circle, and Roast Market. Your indirect competitors are the local coffee shops, supermarkets, and specialty stores that sell organic coffee beans or brewed coffee.
- Your competitors' strengths are their established brand names, loyal customer base , wide product range, and low shipping costs. Your competitors' weaknesses are their lack of transparency, innovation, and customization.
- Your competitive position is that you offer the freshest, most traceable, and most personalized organic coffee beans in the market. Your competitive advantage is that you source your coffee beans directly from the farmers, roast them on demand, and deliver them to the customers within 48 hours. You also allow your customers to choose their preferred roast level, grind size, and packaging options.
- Your competitive strategy is to differentiate yourself from your competitors by emphasizing your quality, freshness, and sustainability. Your action plan is to create a compelling website, launch a social media campaign, offer free samples and discounts, and partner with local influencers and distributors.
One of the most important aspects of an international business plan is how to tailor your marketing mix to the different markets you want to enter. The marketing mix consists of four elements: product, price, place, and promotion. Each of these elements may need to be adapted to suit the cultural, linguistic, and customer preferences of your target audience . Here are some tips on how to do that:
- Product : Your product is the core offering of your business. It should meet the needs and wants of your customers, as well as comply with the local regulations and standards of each market. You may need to modify your product features, design, packaging, labeling, or branding to appeal to different customers. For example, McDonald's offers different menu items in different countries, such as the McVeggie in India, the McArabia in the Middle East, and the McFlurry Oreo in Brazil.
- Price : Your price is the amount of money you charge for your product. It should reflect the value of your product, the cost of production and distribution, the competitive environment, and the purchasing power of your customers. You may need to adjust your price strategy to account for different factors, such as currency exchange rates , tariffs, taxes, subsidies, or price sensitivity. For example, Apple sells its iPhone at different prices in different countries, depending on the local market conditions and consumer demand.
- Place : Your place is the location where you sell your product. It includes the channels of distribution, such as wholesalers, retailers, online platforms, or direct sales. You may need to select the most appropriate and effective channels for each market, depending on the availability, accessibility, and affordability of your product. You may also need to consider the logistics, transportation, warehousing, and inventory management of your product . For example, Amazon uses different distribution models in different countries, such as Fulfillment by Amazon (FBA), Seller Fulfilled Prime (SFP), or Amazon Global Selling (AGS).
- Promotion : Your promotion is the way you communicate your product to your customers. It includes the tools of marketing communication, such as advertising, public relations, sales promotion, or personal selling. You may need to customize your promotion strategy to match the language, culture, and preferences of your customers. You may also need to consider the media habits, regulations, and ethics of each market. For example, Coca-Cola uses different slogans, images, and celebrities in different countries, such as "The Coke Side of Life" in the US, "Open Happiness" in China, and "Share a Coke" in Australia.
By adapting your marketing mix to different cultures, languages, and customer preferences, you can increase your chances of success in the global market. You can also create a competitive advantage and a loyal customer base for your business . However, you should also be careful not to over-adapt your marketing mix and lose your brand identity and consistency . You should always maintain your core values and vision, and balance them with the local needs and expectations of your customers.
Launching a successful product or startup has little to do with luck. Any business that gains traction on the market is the result of very careful strategizing and market analysis, not to mention the development of an original product or service. Fabrizio Moreira
One of the most challenging aspects of expanding your business internationally is complying with the legal and regulatory frameworks of different countries. Each country has its own set of laws and regulations that govern various aspects of business operations , such as taxation, labor, intellectual property, environmental protection, consumer protection, and data privacy. Failing to comply with these laws and regulations can result in fines, penalties, lawsuits, reputational damage, or even the loss of your business license. Therefore, it is essential to conduct a thorough research and analysis of the legal and regulatory environment of your target markets before entering them. Here are some steps you can take to navigate the complex and diverse laws and regulations of different countries :
1. Identify the relevant laws and regulations that apply to your business . Depending on the nature and scope of your business activities, you may need to comply with various laws and regulations at the national, regional, or local levels. For example, if you are selling products or services online, you may need to comply with the e-commerce laws and regulations of each country where you operate. If you are hiring employees or contractors, you may need to comply with the labor laws and regulations of each country where they work. If you are collecting or processing personal data, you may need to comply with the data protection laws and regulations of each country where you operate. Some examples of sources that can help you identify the relevant laws and regulations are:
- The World Bank's Doing Business reports, which provide information on the ease of doing business and the regulatory environment in 190 economies.
- The International Trade Administration's Country Commercial Guides, which provide information on the market conditions, opportunities, regulations, and business customs in over 140 countries.
- The World Trade Organization's Trade Policy Reviews, which provide information on the trade policies and practices of its members.
- The United Nations Conference on Trade and Development's Investment Policy Reviews, which provide information on the investment policies and regulations of developing countries.
- The Organization for Economic Cooperation and Development's Regulatory Policy Outlook, which provide information on the regulatory policy and governance of its members and partners.
2. Assess the impact of the laws and regulations on your business . Once you have identified the relevant laws and regulations, you need to assess how they affect your business operations , costs, risks, and opportunities. For example, you may need to consider how the laws and regulations affect your:
- market entry and exit strategies, such as the requirements and procedures for registering, licensing, or closing your business, or the restrictions and incentives for foreign investment or ownership.
- product or service development and delivery, such as the standards and certifications for quality, safety, or performance, or the tariffs and taxes for import or export.
- marketing and sales strategies , such as the rules and regulations for advertising, promotion, or pricing, or the consumer rights and protections for refunds, warranties, or complaints.
- human resource management , such as the laws and regulations for hiring, firing, compensating, or training your employees or contractors, or the social security and health insurance obligations for your workforce.
- Financial management, such as the laws and regulations for accounting, auditing, or reporting your financial transactions, or the currency exchange and transfer controls for your cash flow.
- legal and ethical compliance , such as the laws and regulations for protecting your intellectual property rights , or the anti-corruption and anti-money laundering measures for your business conduct.
3. Adapt your business practices to the laws and regulations. Based on your assessment, you may need to adapt your business practices to comply with the laws and regulations of different countries. For example, you may need to:
- Modify your products or services to meet the standards and certifications of different markets, or to offer different features or benefits to different customer segments.
- Adjust your pricing and payment methods to reflect the tariffs and taxes of different markets, or to accommodate the preferences and habits of different customers.
- Customize your marketing and sales materials to comply with the rules and regulations of different markets, or to appeal to the culture and values of different customers.
- Hire local experts or consultants to help you with the registration, licensing, or taxation of your business, or to advise you on the legal and regulatory issues of your business .
- Train your employees or contractors to understand and follow the laws and regulations of different markets, or to communicate and interact effectively with different stakeholders.
- Implement internal policies and procedures to monitor and ensure your legal and ethical compliance, or to prevent and resolve any disputes or conflicts that may arise.
4. Stay updated on the changes in the laws and regulations. The laws and regulations of different countries are constantly evolving and changing, due to the political, economic, social, or technological developments in the world. Therefore, it is important to stay updated on the changes in the laws and regulations that affect your business , and to adjust your business practices accordingly. For example, you can:
- Subscribe to newsletters, alerts, or updates from reliable sources that provide information on the changes in the laws and regulations of different countries, such as the sources mentioned in step 1.
- Join industry associations, chambers of commerce, or trade organizations that represent your business interests and advocate for favorable laws and regulations in different countries, or that provide information and support for your legal and regulatory compliance .
- seek feedback from your customers , suppliers, partners, or competitors on how the changes in the laws and regulations affect their needs, expectations, or behaviors, or how they cope with the changes in their business practices.
- Review and revise your business plan, strategies, or goals to reflect the changes in the laws and regulations, or to seize the new opportunities or overcome the new challenges that they create.
By following these steps, you can navigate the complex and diverse laws and regulations of different countries, and ensure your legal and regulatory compliance as you expand your business internationally . However, this is not a comprehensive or definitive guide, and you should always consult with your legal counsel or professional advisors before making any decisions or taking any actions that may have legal or regulatory implications for your business.
One of the most crucial aspects of any business plan is financial planning , especially when you are expanding your venture to the global market . Financial planning involves estimating your costs and revenues, managing currency risks , and securing funding for your international operations. These tasks require careful analysis, research, and strategy to ensure the viability and profitability of your global venture. In this segment, we will discuss some of the key steps and considerations for effective financial planning in the international context.
- Estimating your costs and revenues : The first step in financial planning is to estimate how much money you will need to spend and how much money you will earn from your global venture. This involves projecting your sales, expenses, cash flow, and profit for each market you are entering. You will need to consider factors such as market size, demand, competition, pricing, taxes, tariffs, logistics, labor, and overheads. You will also need to account for the differences in currency exchange rates, inflation, and purchasing power parity among different countries. To estimate your costs and revenues, you can use various methods and tools, such as market research, benchmarking, budgeting, forecasting, and financial modeling. For example, you can use the break-even analysis to determine the minimum sales volume you need to cover your fixed and variable costs in each market. You can also use the net present value (NPV) method to compare the expected cash inflows and outflows of your global venture over time and evaluate its profitability.
- Managing currency risks : The second step in financial planning is to manage the risks associated with currency fluctuations in the global market. Currency risk, also known as exchange rate risk , is the possibility that the value of your foreign currency assets, liabilities, or transactions will change due to changes in the exchange rates between different currencies. Currency risk can affect your revenues, costs, cash flow, and profitability, as well as your competitiveness and market share. To manage currency risk , you can use various strategies and instruments, such as hedging, diversification, matching, netting, and invoicing. For example, you can use hedging to reduce or eliminate the exposure to currency risk by entering into contracts or agreements that lock in the exchange rate or the amount of foreign currency you will receive or pay in the future. You can also use diversification to spread your risk across different currencies and markets, so that the losses in one currency or market can be offset by the gains in another.
- Securing funding for your global venture : The third step in financial planning is to secure the necessary funding for your global venture. Funding is the amount of money you need to start, operate, and grow your international business . Funding can come from various sources, such as your own savings, loans, grants, equity, or crowdfunding. You will need to consider the availability, suitability, cost, and terms of each source of funding for your global venture. You will also need to prepare a convincing and compelling pitch or proposal to attract potential investors , lenders, donors, or backers. To secure funding for your global venture, you can use various techniques and resources, such as networking, market validation, business plan, financial statements, and pitch deck. For example, you can use networking to build relationships and connections with people who can help you access funding opportunities, such as mentors, advisors, partners, customers, suppliers, or intermediaries. You can also use market validation to demonstrate the demand and potential of your global venture, by conducting surveys, interviews, tests, or experiments with your target customers or users.
You have learned how to create an international business plan for your startup , from identifying your target market and conducting a competitive analysis , to developing your marketing strategy and financial projections. Now, it is time to wrap up your plan with a strong conclusion that summarizes your main points and provides a call to action for your readers. A good conclusion should:
- Reiterate the value proposition of your startup . Remind your readers what problem you are solving, how you are solving it, and why you are different from your competitors. For example, you could say: "Our startup, XYZ, offers a unique solution for travelers who want to book local experiences and connect with hosts in different countries. Unlike other platforms, we provide personalized recommendations , flexible cancellation policies, and 24/7 customer support."
- Highlight the key takeaways from your plan . Summarize the most important information from each section of your plan, such as your market size, growth potential, competitive advantage, marketing strategy, and financial projections. Use bullet points or a numbered list to make your summary easy to read and remember. For example, you could say: "Here are the key takeaways from our international business plan:
- We have identified a large and growing market of travelers who are looking for authentic and immersive local experiences.
- We have conducted a thorough competitive analysis and found that we have a clear edge over our rivals in terms of quality, price, and customer satisfaction.
- We have developed a comprehensive marketing strategy that leverages online and offline channels , such as social media, influencers, partnerships, and events, to reach our target audience and build trust and loyalty .
- We have projected our revenue and expenses for the next three years and shown that we can achieve profitability and growth with a reasonable amount of funding and resources."
- Provide a clear and compelling call to action for your readers . Depending on your purpose and audience, your call to action could be to invest in your startup, join your team, sign up for your service, or follow your progress. Make sure you state what you want your readers to do, why they should do it, and how they can do it. Include a contact information or a link to your website or landing page . For example, you could say: "We are looking for investors who share our vision and passion for creating memorable and meaningful travel experiences . If you are interested in joining us on this exciting journey, please contact us at [email protected] or visit our website at www.xyz.com to learn more about our startup and our offer."
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