Building a presence abroad offers numerous benefits, even during economic difficulties. For small and emerging businesses, going global is a significant undertaking that could disrupt existing business activities. Thus, CEOs and business leaders must understand Software company worldwide expansion and determine if the rewards outweigh the risks.
If you have experienced a few years of success as a tech business, the chances are you will have customers operating outside your country of origin. This is undoubtedly the case in central and eastern Europe regions, where technology companies have expanded abroad and formed relationships with clients in countries such as the UK or the US.
If you can't fund or scale to a market opportunity, simply don't do it. Focus on a market where you can be one of the top three players within three years. It's important to remember, as a new entrant, you will be judged harshly, and you only get one shot at it. You could burn your reputation and investment if you get it wrong.
Stakeholders across the organisation will be called on to carry more responsibilities to continue to execute day-to-day activities in addition to the global initiative. How to take your business global? Expanding your business overseas is not for the fainthearted, but for most companies, it will be inevitable as global markets offer more significant growth opportunities. By paying attention to details and outsourcing administrative functions, the difficult job of “going global” can produce great results.
How to Take Your Business Global?
Success will involve a robust, well-conceived plan with ample funding and resources for the medium term rather than an ad-hoc trial. Ensure that the whole management team understands the project and is committed to success through the ups and downs. Success is never linear!
Tax and Finance Readiness
The proper tax and finance infrastructures need to be set up early to ensure that you receive timely reporting and that your foreign entity is adhering to local corporate policies and procedures.
1. Consider outsourcing accounting, payroll, and tax.
2. Establish local banking relationships.
3. Develop a risk management plan.
4. Develop a transfer pricing study.
5. Develop a cash repatriation plan.
6. Prepare and report sales and VAT taxes.
Build a solid customer engine
Don't consider expanding unless you have a solid engine to identify, engage, acquire, onboard and develop customers in a scalable and repeatable way. Without this engine in place, you will burn money and resources.
Have a "start-up" mentality
Whilst it's essential to have a solid plan that is constantly reviewed and measured, you won't know every variable beforehand, and that's okay. As you learn from success and failure, you'll need to be nimble and adjust or even pivot. Don't be afraid or too proud to "fail fast!"
Research, validate and focus
Research is the initial starting point. Just because a market looks promising from the outside, it may have competitors or variables that will limit success. There are mountains of data available both in an accessible format and paid.
Another option is to speak with other ISV founders and share cross-country information. I have done this several times through a Linkedin outreach. It's surprising how many founders are in the same place as you. Once you've identified a market, validate it for other business compatibility factors (language, time zone, taxation, company environment etc.), then focus on it exclusively.
Define your commercial go-to-market (GTM) model
Your commercial GTM model will be the baseline for your business plan and all investment. Will you set up an office locally and employ staff? Are you going to sell from your home base in Australia? Or will you appoint partners to re-sell? Each model has its own pros and cons, depending on your business and software. We have permanently established regional entities and employed locally, and recently we have been expanding this model to include strategic partnerships.
Partnerships often look like the easy option for international expansion. However, having worked in the business partner landscape for 30 years, it is often overlooked how much upfront time and investment is involved for success.
Be clear about the roles required in the value chain, your partners' roles, and what roles you will fulfil. Will this be a service play? Or will this be a complementary revenue driver for the partner? Will it be a referral or commission model?
Once you have identified the partner roles and their opportunity in the value chain, this will determine what type of partners you need to engage and recruit. We find partnerships work best when a clear core business value is derived from the partner embedding your product into their offering/solution. It typically takes 4 to 6 months to establish a pipeline with partners and just as long to work out that you have the wrong alignment!
Leveraging existing home-country alliances overseas is a great strategy to get initial awareness and momentum, but they won't write invoices for you! Look through your tech stack and see what ISV / SaaS programs they have today, for example, the Amazon Web Services SaaS program.
Understand and plan for localisation and compliance
It may not be critical in the initial phase; however, you will not be successful without localisation and compliance. Today this includes region-specific laws such as GDPR in Europe or industry-specific compliance such as HIPAA, which may fundamentally impact the architecture of your software. The key takeaway is don't take on the market if you can't support it.
Prepare Your Final Budget Preparation
Results from the above steps should provide sufficient data for stakeholders of the foreign company to develop an aggressive yet attainable final budget that your local team will own.
1. Develop a 3-year budget and a 12-month business plan with detailed key performance indicators, and update every six months.
2. Perform quarterly operating reviews.
3. Establish a real-time (or at least weekly) budget for reporting with variance analysis.
Some countries are known for being highly litigious, so solid legal processes must be put in place to minimise unnecessary commercial risks. Also, government agencies have strict requirements requiring legal documentation before operating within the country. Being proactive does require money upfront, but this more than offsets downstream risks and liabilities.
Many global companies try to launch with executives from the parent company or rapidly build a local team from scratch. This is time-consuming, risky, and slows time to market. Using proven senior interim executives allows the company to hit the ground running, quickly validate assumptions, and drive key readiness initiatives while hiring the right senior management team.
Secure a customer first with service
Ideally, the customer will help other customers understand their experience and provide you feedback on what's needed in your product locally. We have always had beachhead customers and found their advice and guidance invaluable. Expanding internationally can be risky, time-consuming and capital-intensive. We hope these insights will help you solidify your approach.
Future Growth and Development for Software Company Worldwide
Opening new offices abroad can be hugely beneficial in helping companies get closer to their international customers. For example, having staff on the ground in the US or Latin America means US customers can deal with someone operating in the same or similar time zone as them. The relatively short geographic distance also allows for face-to-face meetings whenever needed.
Regarding finding the right talent abroad, this need not be a significant worry if organisations are prepared to do their research. Software engineering is one of the most in-demand and lucrative professions worldwide in the modern era.
Software development companies are working on giving humankind better and more efficient services. According to many standard estimates, demand and employment prospects for software engineers are expected to increase by 20% to 25%.