5 Common mistakes when expanding internationally

Without a strong strategy and plan, international expansion can be disastrous.

Published on

May 29, 2020


Expanding abroad can bring countless benefits to your business. From increasing revenues to helping you acquire more talent, this can be one of the most strategic moves your company can take. However, if you do not have a clear vision, proper planning, and solid execution, this process can be extremely risky for your business.

With that in mind, we have written this blog post to share 5 of the most common mistakes companies make when expanding internationally. By taking these pitfalls into consideration, you will be better prepared to explore new markets and avoid spending unnecessary money, time, and energy.

#1 Expanding internationally for the wrong reasons

It is very common to see companies expanding internationally without looking inside first. We have seen countless companies starting their internationalization process either by impulse or by opportunistic situations. Unfortunately, this is also the main reason why they ended up failing.

We've listed here a few examples of this mistake that we have personally dealt with:

  • Investing abroad after being approached by one international customer only, without further validating that market;
  • Following the exact same movements of their competitors, without even analyzing if that was a viable option for them;
  • Expanding to country X only because one team member has lived there before.

International expansion IS NOT something for the short-term, and definitely not something that should be done only by impulse. Internationalization is a process that requires research, analysis, and lots of validation before any serious investment. Therefore, it is crucial to take a look inside the company first and answer questions such as:

  • What is the long-term reason why you want to expand abroad;
  • Which resources you have available for your expansion (financial, HR, public instruments, etc);
  • What is your affordable loss for this process;
  • Which KPIs really matter for your expansion.

#2 Not planning your international expansion properly

As you have seen on the previous topic, planning your expansion is a must if you want to succeed in new countries. International expansion can be a risky process, and we are sure you do not want to waste valuable resources without a proper return on your investment.

With that in mind, we have separated a few topics you should align with your team. Properly planning these topics will help you avoid some of the most common mistakes companies do when expanding internationally. In addition to that, you will also find links to additional resources to support your international planning:

#3 Not finding partners to work with

Entering a new market is a complex process that involves many different factors: market differences, business culture, regulations, payment terms, HR, international transfers, lead generation, negotiations, translations... and the list goes on and on. If you are a small company, this process can be way too complicated and demand more investment than you can afford.

Luckily, you have the option of not doing it all by yourself! We frequently advise companies to find local partners to help them deal with these factors. These partners do not only need to be a local shareholder, but also local service providers (lawyers, accountants, etc.), resellers, agents, and even competitors!

#4 Underestimate the localization need

Even though you might have a product that solves a global need, there will always be things you should adapt to each market. Underestimate how important these changes are is a very common mistake for companies expanding internationally. Here are a few examples that you must take a look at when selling to a new country:

  • Language - not only a raw translation but also using words and terms that make more sense in that location;
  • Pricing - different countries have different pricing sensitivity. Therefore, you might have to adjust your pricing strategy and even create new offers when going to a new country;
  • Payment methods - if you do not offer the payment method people use in that location, you won't sell. As simple as that;
  • Features - a new market might see more value in different features of your product;
  • Among many others.

#5 Don't consider cultural differences when negotiating

Among all the common mistakes when expanding internationally, this is by far the one people underestimate the most. It's not that people don't know these differences exist... but they do not understand how impact they can be in your market entry.

The local culture has a major influence on the way people communicate, negotiate, give negative feedback, manage organizations, and many other aspects. Understanding these differences even before start getting in touch with locals is vital for your success.

To help you deal with these differences, we suggest you take a look at the Culture Map. This book from Erin Meyer maps the main differences when doing business abroad between different cultures. It's a must-read for everyone who plans on doing business internationally!

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