You have already validated your business model in your country, conquering the local market, and now you're thinking about taking the leap by expanding internationally. It's a fact that almost every entrepreneur dreams of establishing a company abroad.
However, challenges are around the corner when trying to reach foreign markets. In fact, even industry giants have failed in their international journey by thinking they could replicate their entire business model to another location.
So then, what lies behind the unfruitful process of positioning a business abroad? The answer is a lack of product/market fit. This is one of the leading causes why companies, regardless of their size, fail when targeting new territories.
A common mistake for founders is to be overly confident as they have mastered the local market and mistakenly decide to expand based on that presumption. Therefore, if you plan to get onboard an international journey with your startup, you must first figure out some aspects and define the product/market fit for the targeted location.
What’s Product/Market Fit?
Product/Market Fit is a concept mainly used by startups, but as we mentioned, large companies can benefit from implementing it when targeting foreign markets. Simply put, it is when your product fits the market and your target customers recognize the product's value.
According to the famous entrepreneur and investor Marc Andreessen, "Product/market fit means being in a good market with a product that can satisfy that market."Another popular definition of the concept is brought by the author of The Lean Startup, Eric Ries,"The moment when a startup finally finds a widespread set of customers that resonate with its product."
As you see, there isn't one standardized definition for PMF, and you'll find that several other thought leaders have explained this concept from different angles. So, if customers are ripping out the products off your hands, and you've turned them into promoters of your brand, you've achieved PMF.
However, this doesn't necessarily imply that the same will occur abroad. In a nutshell, you can't expand internationally without a clear value proposition for that new location and without insights about how your product serves the customer's needs in that market. For that reason, you'll have to outline new hypotheses from scratch to validate or introduce adjustments to your business model and make it work abroad.
5 Tips To Work On Your Product/Market Fit Before International Expansion
You have made it in the local market, and now you think it's time for international expansion. But first, you need to consider the following variables to avoid the common pitfalls of the process and make a successful landing in the targeted location.
Outline The Hypothesis You Need To Validate
You have already validated, or not, the hypotheses of your business model in the local market. However, when taking your company abroad, you'll have to perform market research and outline new ones. Even if you choose a location that uses the same language as your home country, you'll have to understand the cultural differences and use that as a starting point for new hypotheses.
Define The Target Customer
It's crucial to define or make adjustments to your existing ideal customer profile, as customers' habits and behaviors are not the same everywhere. You'll have to implement market segmentation to refine the hypotheses, which is essential when you target large markets like in the US. That way, teams will work aligned with the goals of that new target customer.
Fine-tune Your Value Proposition
Unfortunately, this is one of the biggest mistakes in the international journey of many companies. Avoid falling into the trap of translating the same value proposition to a new market. Bear in mind that what works well locally may not work abroad.
First, you'll have to identify your potential customers' goals, pain points, and desires in the new market to fine-tune your value proposition. Then, you need to ask yourself a question and come up with an honest answer. How well does your current value proposition really fit your new targeting customers?
Narrow Your Focus On A Single Vertical
If you plan to land in the vast US market, narrowing the focus is vital. Trying to sell for everyone ends up being nothing for anyone. So, start with a narrow focus and dig deep to become an industry expert in the field. Research your main competitors and their go-to-market strategies to find your ideal fit in the new location.
Related Read: Deadly Sin #1: Something For Everyone Is Nothing For Anyone
Work With People Based In Your Target Market
Finding the right partners is key for a successful international expansion. Partner with accelerators and incubators, as they will lead you through the process, providing their expertise and knowledge of the market.
Their programs usually include legal and tax consultancy and also work with governmental associations. Furthermore, they can also help you build a supportive network with other founders and industry experts.
Do You Have What It Takes To Land In The US Market?
Taking your business abroad is a challenging journey where efficient use of resources is essential to succeed. By defining a product/market fit between your ideal international customer and your product/service, your company will be on the right track to expand internationally, avoiding costly pitfalls.
However, if you're still unsure who your target client in the new market is, you find yourself struggling with the initial pricing, or you can't figure out how to translate your value proposition, you need a strategic partner.
Base Miami's Market Fit program has a proven methodology that helps accomplish in 3 months what usually takes companies 18-24 months while building the initial ecosystem relationships. Partner with us today and start answering those unverified guesses before taking the leap to the US market. LET'S CHAT!
