The Top 5 pitfalls of trying to scale in a new territory by yourself

While I don’t want to rain on your parade, you’ve had success in your home country and everyone is proud of that, but replicating it in a new country may not necessarily be as easy as you think. Let me explain. Logic would suggest that if your product is proven, it works and companies are interested, it shouldn’t matter where you are. Experience has taught us that’s not a hundred percent true. Don’t forget that in your home territory, you were able to rely on a local network and contacts from colleagues but in a foreign market, you don’t have this safety net. Everything needs to be built up from scratch. So, read below to see some other things you might want to watch out for if you’re trying to scale on your own.

Top 5 Pitfalls - Aexus

1. Not enough market knowledge

This is probably the most crucial factor and where many companies go wrong if shortcuts are made. When designing a market entry strategy without the required market knowledge, scale-ups are likely to run into trouble in the execution stage. These might involve topics such as social, political, or legislative factors that are very market-specific, or the local red tape and labour laws that need to be taken into account. Also, not understanding the local market dynamics can lead to mistakes. Knowledge of the competition and a clear understanding of how your company and offering differentiate from the local players is crucial as well. 

2. Staffing issues

There are few challenges here. If you hire a person from your own country or send some of your own sales people there, they don’t know the local language and the business culture, nor do they have existing contacts there. If you hire a foreign employee, it is challenging to evaluate that person and his or her competence. What’s more, you would need to spend time and money for them to become successful and you don’t want that to be too much of a strain on the business. The culture might vary a lot, so integrating them into your company culture can take time. What’s more, you need to make sure that anyone managing your business from overseas understands the intricacies of building business in the new territory. You will also need to have excellent channels of communication open to ensure complete alignment.

Top 5 pitfalls - Misunderstanding - Aexus

3. Lack of adaptation

If the scale-up lacks a fundamental awareness of the local market specifics, it may not have a comprehensive understanding of the required product modifications. This involves more than just translating the product or marketing materials into the local language. Too little emphasis here can ruin the suitability for the market.

4. Organizational complexity

There are going to be different laws, rules and tax regulations which you need to be completely aware of. If your business fails on a technicality, you’ll kick yourself. Make sure that you are completely familiar with local bureaucracy, local labour laws and all the other things which take time and knowledge to understand and overcome.

5. Wrong budgeting

You need to be really careful here. It’s a no-brainer that expanding internationally is expensive. All too often, a company’s budgeting is far too optimistic and start-ups tend to run out of funds during the market penetration. A far more prudent approach is to limit your exposure to risk until you are more firmly established in the market where you’re scaling.

If you’d like to know more about how you can avoid these pitfalls, get in touch. We’re always happy to jump on a call.