When it comes to global expansion for U.S.-based companies, Europe often jumps out as a natural choice. Europe’s business and social cultures, as well as its tech-savvy consumer population, are relatively familiar to companies accustomed to the North American market.
Make a swift Google search and it’s easy to see there is a huge amount of content on the web explaining to European startups how to move to the Bay Area, but there are fewer people talking about startups going the other way.
A US startup expanding to Europe will likely have a sizable business in the US, and it is often better funded. But whilst funding and an established business can provide the resources needed to successfully expand in Europe, there are many more factors which will contribute to the ultimate success of the operation.
Europe is made up of 28 different markets..
Whilst “Europe” may seem to be a homogeneous economy, it is actually a collection of 28 submarkets and should be approached as such. A business expanding in the US wouldn’t say “let’s dominate here in California, then we’ll focus on New York” but in Europe this is often the case. Although there has been a single market since 1992, European business networks and media are still primarily focused on their home markets. The rapid growth which is attainable in the US is unlikely to be achieved without a significant investment in time and resource to gain access to each market.
The UK might be a more-friendly place to start, immediately apparent are similarities in language and culture, but it is also important to recognize it is very different to the European “mainland”. That said, when opening an office in the UK, companies should be aware of differences in a number of points of Law. Immigration advice is going to be key if you want to send employees to work in the UK – one employee and you should be able to apply for a sole representative visa, but add more people and complexity (read time and cost) may rise as you send more employees.
Need more people on the ground locally? Do you hire them under local Law contracts or on a contractual or consulting basis? English employment Law is different from the US and will impact how you hire, terminate and compensate employees.
Is your business going to be regulated in the local market? You’ll need to think about ways to protect the business contractually under the terms and conditions for the product, a website review and privacy policies etc…
Once a “beachhead” is formed, it may make sense to start expanding into the other sizable markets such as Germany and France. Immediately there are cultural and language challenges to overcome before embarking on the visa / employment / real estate / IP /regulatory challenges presented by a new market, and these are not insignificant! However, the object of this blog post is to focus on some of the technical aspects of overseas expansion. Focusing on one aspect of the language challenge…
Marketing to buyers in ‘local’ markets…
How are you going to go about marketing the product locally? Assuming you’re marketing a product online, the easy way might be to just expand your shipping options to allow for international orders. Over time you would find a small percentage of new sales would come from Europe.
The more advanced strategy would be to create a new website for each country – and this would be essential in European countries where English is not the first language. You can build a loyal customer base who appreciate your efforts to provide a service that is easy for them. Once you have a new website domain in place (www.domain.com/de/) for example you should set about translating your copy into the local language – but be sure to hire someone to translate the pages for you, as Google will penalize website that use machine translations.
Taking payments from overseas…
Some caution is recommended because more fraudulent orders will arise when shipping outside your country. For companies using credit card payments this may be as simple as requiring that billing & shipping addresses match and that buyers provide you with the CVV3 number on the back of their credit cards.
For companies selling higher value products, it is important to give your customers the option to pay in their local currency. Making the buying experience easy is an important differentiator – and now extends beyond simple credit card transactions and Paypal. Sophisticated buyers are looking for a bank to bank wire solution – and there are now companies available to make this easy.
Align Commerce is a San Francisco based startup which enables business users with the ability to pay suppliers or accept payments from customers who are in countries overseas. It’s a great solution to let business test an overseas markets before opening corporate offices and banking facilities.