Whilst it may be part of a planned strategy to expand into another country as part of a company’s overall growth aspirations, it is vital to de-risk that decision as much as possible to increase the likelihood of a successful expansion. Expanding to another continent can be scary where language, legal and cultural differences need to be considered. So, what are some of the key hurdles to a successful launch here in the UK, a country that prides itself on the ease with which overseas businesses can set up and become operational in a very short timeframe?

Commercial Viability/ Market research

Just because your product or service sells in your home market does not mean it will get market traction in a new market. In my experience, not enough market research is carried out, both quantitative and qualitative, to underpin the decision to expand. Too much of the decision is based on “it is the right thing to do“ or our PE house tells me our firm’s value will increase with international expansion. Have you really done a critical review of the competition in the new market, assessed price points correctly or spoken with enough potential customers to establish that there is a real need for your goods or service?

Each element of the product, price and customer expectation needs to be checked against local best practices and customer expectations.

Financing the launch

Too often I have seen a wholly unrealistically low-cost budget set for overseas expansion. If there is not a realistic financial commitment to expansion the project is likely to fail .Again, this goes back to pre-launch research of all aspects of expansion.

Realistic Year 1 targets

Many companies do not set realistic “what will a successful expansion look like“ year 1 targets for sales, market penetration etc. Without realistic targets, how can you gauge whether your launch has been successful or not?

Local partnerships

Rather than going head-to-head with possible competitors, it may be possible to collaborate with / enter into a partnership with these companies. Often ignored out of nervousness, but if a company understands its USP, then it serves a better chance of seeking a complementary local partner.

Knowledge

In my experience, companies spend too short a time in the pre-market entry planning phase and, as a result, cut corners on research as mentioned above. They may recruit before they need to etc. The local regulatory regime will be very different to the home country for sectors like Financial Services, and the Food sector to name but two.

The people consideration

There have been several pieces of research conducted which have consistently proved that a good product or service with poor management is more likely to fail than a poor produce or service with good management oversight. To me, getting the people-fit right will make or break any overseas launch. You should consider seconding some of your management or staff to the overseas start-up for the crucial first 6 to 12 months to ensure the key elements of culture etc are taken on-board by the NewCo. Having your staff on site will ensure unbiased feedback is given to head office about how the new business is doing. I have seen a newly recruited business development director give overly positive feedback on the UK launch, in part, to protect their own employment.

Other considerations not to lose sight of :
• Not having a plan B if the initial launch was not as successful as hoped for.
• Expanding the business in an uncontrolled manner.
• Letting costs expand to keep pace with revenue growth.
• Losing sight of the core values of the business: these should be enduring.
• Not sharing your vision with the local overseas management. Staff need to feel part of the
business.
• Allowing staff to focus on activities not outcomes. Busyness does not mean success.

These thoughts are based on my experiences over 20 plus years of helping many businesses from varied geographies and sectors set up in the UK. We have seen what best and worst practice looks like from the success and failures of our clients. I am very happy to speak with any company pre-market entry to assist with what is an exciting, but also, potentially, a challenging launch in the UK market.

Gerry Collins
Managing Partner
Ecovis Wingrave Yeats
T: +44(0) 317 6675
E: gerry@ecovis.co.uk

Tags: UK200

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