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We have seen it all too many times over the years. Going straight into execution sales mode is one of the commonest ways companies waste time and money entering the US market.
Faced with the challenge of market entry companies often consider one of two strategies:
- “Hire a sales guy”
- “Find a partner”
Unfortunately, neither of these approaches work in the early stages of market entry. Worse, it usually takes a lot of time and money for entrepreneurs to learn that lesson. The US is an expensive place, time is money and companies often burn hundreds of thousands of dollars over many months pursuing a “dead-end” strategy.
There is another approach that actually works. Companies need to re-test their value hypothesis and product-market fit, in the US, before they proceed to one or both of the steps of “hire a sales guy” or “find a partner”.
Why? Because validating the market enables companies to test and adapt their assumptions about the business model and adjust their plan accordingly.
Instead of just “jumping in”, the first step is to reduce risk, so companies and investors don’t commit time and money to a strategy that doesn’t work. The goal is to ensure that your company is “flight ready” before it “takes off”.
So where do you start? This ebook will go through the five steps you need to make to ensure your startup is ready for expanding your business internationally.
Suggested: Want To Scale Your Business For International Expansion?
The Advantages of International Expansion
You’re interested in taking the giant leap, and we get you. For a business owner and entrepreneur, there could be nothing better than taking your company overseas. On top of conquering a new market and its clientele, expanding internationally comes with other many advantages. Let’s take a look at some:
1. Establish New Revenue Streams
New markets mean a new customer base, and with new customers come more revenue streams. Going global allows your business to cater to a different customer base with other wants and needs. So, if your international market analysis is correct, you should be filling a demand not yet too exploited.
2. Access a Unique Talent Pool
Expanding to a new territory opens the door to accessing local, high-quality talent that your company may not count on thus far. Embedding your business in a new culture means hiring local talent to help you navigate the challenges more smoothly.
3. Improve Market Perception
Few things are so important nowadays as establishing a substantial presence for your brand. Credibility is a crucial factor here, and going global helps you achieve that goal. Customers see that you really mean business and that you’re thriving, thus increasing your brand’s credibility.
4. Stay ahead of local competitors
When you establish your business in a country, you need to find a way to gain a competitive advantage. Going international helps you do just that. Although you will most likely find some sort of competition abroad (direct or indirect), you are still gaining a competitive edge over your local competition.
Companies That are Successful Follow This 3-Step Process
Based on our experience with hundreds of companies, we have identified several distinct stage gates that companies must complete to progress through a successful “land and expand” journey. At each stage in the journey, fundamental questions are answered and major risks are eliminated.
Stage-Gate 1 - Market Readiness
In this phase, companies get initial exposure to the market, build out their network, gain insight and prepare their market entry strategy. They engage with potential customers, partners, and other industry insiders to learn about the market and how and where they fit in.
Done right, this effort takes in the order of magnitude less time and money than putting people on the ground to just go out and try to sell for a year or two. At the end of this phase, the company has:
- Validated the market
- Prepared its story, collaterals, legal structure, and go-to-market strategy so it can start to sell.
Stage-Gate 2 - Repeatable Sales
A repeatable sales model is one where you have figured out how to create happy customers through a consistent, repeatable, profitable, and scalable sales process. Most companies never get there.
When it comes to sales channels, most entrepreneurs think that “more is more”. The reality is the opposite. Less is more. Most successful companies get more sales from a single channel than the sum of all other channels. Sadly, most companies never find that one successful channel. Instead, they continue to invest in multiple channels in parallel until their cash runs dry. This is a “throw stuff at the wall” strategy. It burns your cash and wears you down.
In our experience, the fastest way to get to a sales model that works is through systematic, methodical trial and error applied to a highly targeted sales model.
Stage-Gate 3 - Funding and Scale
Once companies have achieved a repeatable sales model with consistent growth and retention metrics over a period of time, US growth capital is within reach. Companies can expect it to take one and a half to two years in the US before they are able to raise US venture capital.
Why Does This Work?
The step-by-step journey above works because it systematically de-risks each step of the journey before increasing the level of investment of time or money. The first phase for instance requires no people permanently on the ground here, no immigration lawyers, recruiters, etc. The second phase requires a founder or executive on the ground but no sales team, PR firm, etc.
In this model, companies don’t move from one phase to the next unless they have hard evidence that shows they made it successfully through the stage-gate. Instead of scaling pre-maturely, they scale when they have proven the model on a smaller, less expensive scale.
Time to Develop your Successful Strategy
The Lean Canvas Model
It all starts with reviewing what you already have and there’s no better way to understand your company’s business model than with a Lean Canvas Model. The Lean Canvas Model is Ash Maurya’s adaptation to the original Business Model Canvas, first introduced by Alex Osterwalder. According to him, it’s “a one-page business planning tool that gets read.”
Maurya’s Lean Canvas solution is to break down your startups’ fundamental whys into a one-page template that can be used for any business type and be read in under 20 minutes. It packs everything you need - and possibly more - in a template that’s easy to read, fill, and update.
The Lean Canvas Model is ideal for startups, and, as a startup founder, it is crucial that you understand its importance and how to build one for your business. There are nine categories or blocks in the Lean Canvas Model Framework. Each needs to be filled out following this particular order:
#1 Customer Segments And Early Adopters
Approach this block with your customer’s problem in mind (which is the following block to fill). These two are intrinsically connected. So keep that in mind when completing this part of the template.
Start by asking yourself questions about your business like:
- Who is going to use your product or service?
- Who will benefit from it?
- What are their key demographics?
- What is their pain point?
If you have a multi-sided platform, you will need to create separate Lean Canvas Models for each case: supply and demand.
Suggested: How to develop an ideal customer profile ICP?
#2 Problem And Existing Alternatives
What are your customers’ top three pain points? Describe their needs as simple as possible so that anyone can understand them. Avoid technical jargon at all costs.
When thinking about your customers’ problems, think about their existing solutions too. Who is already out there doing something similar to what you offer? How are they solving their customers’ needs? The key here is to conduct market research on your competitors so that you may identify your unique value proposition.
#3 Unique Value Proposition and High-Level Concept
To write a great value proposition statement in under 200 characters, think about the benefits that your customers will have received from using your products. So, this step involves going back to the first few steps:
- Understanding your customers’ pain points.
- Understanding the problem you are solving.
- Understanding how your product/services solve that problem and the benefits your customers will get out of it.
Your high-level concept is like your elevator pitch. You’ll need to break down what you do into the shortest, most clear sentence possible so that it can be used for VC pitches, press releases, and all sorts of communications. If your sentence is too long, it means you still don’t have a clear grasp of what you do and what you offer.
#4 Solution
Go back to your customers’ problem and think about how you’re going to solve it. Exactly write your solution so that anyone may understand it.
#5 Channels
You have established that your business solves a real customers’ need, and you know exactly how you’re going to solve that need. Now, you need to select the channels you will sell your product and acquire new customers. Up to 3 channels are right; more can be counterproductive.
#6 Revenue Streams
How are you planning to charge for your services? This block aims to clarify that. Choose your revenue streams of preference.
#7 Cost Structure
Once you finish your business idea validation process, you will have a clear picture of your fixed costs. But if you want to jump ahead, you can start by writing down the expenses you know you have and leaving the minutiae for later.
#8 Key Metrics
Having clear metrics will help you analyze what’s working and what needs adjusting. So, define which metrics you will be tracking. A good example can be measuring the number of purchases, abandoned carts, the number of signups, etcetera.
#9 Unfair Advantage
Last but definitely not least is your unfair advantage. This is the most critical step of the process because it’s what will differentiate you from your competitors. Defining into simple and a few words what makes your business unique and better than your competition is tricky and requires some serious thought. However, once you do, that’s when the good stuff starts happening.
Conduct Market Research for US Entry
To understand the new market, it’s important to deep dive into it. And the best way to do it is by looking at those in your same competitive niche. What are they doing? What’s working for them? What’s not?
The goal here is to map the existing ecosystem landscape to identify the relevant players for your niche. You want to base this decision off on their product/service and positioning. Take a look at the graphic to give you a quick idea of how to do this exercise:
Conduct a Competitive Analysis - Petal Diagram
The Petal Diagram is a new way to look at your competitors and assess them when you’re trying to create new markets or resegment existing ones.
Like our fellow, Becky Bausman, Senior Vice President of Communication Strategy at Duarte, Inc says “The diagram places your unique company or product in a center circle, and then surrounds it with petals, each one containing competitors in a distinct category adjacent to the company. It forces the person using it to look at the problem of competitive differentiation from each of several distinct perspectives.”.
An empty Petal Diagram may look something like this:
And after completing it, it could look like this:
Define your US offer
Unique Value Proposition and Pricing
Now that you have your business model, market research and competitive landscape you’re ready to define your positioning and create your offer: That is your value proposition and pricing model.
A Unique Value Proposition (UVP) is what makes your company different, find the best way to describe yours with a WOW! Statement that creates interest in you and your company.
Pricing is about knowing your customer, knowing your product, knowing your market, and keeping an eye on the competition. Be ready to calibrate and re-calibrate!
WOW! Statement
As an entrepreneur looking to "sell" your startup to potential investors, you want to wow them with your pitch. And how do you do that, you may be wondering? The answer is not with an Elevator Pitch; the answer is with a WOW! Statement.
The WOW! Statement concept was first introduced by the venture capitalist Bill Reichert in his viral article Getting to WOW!. Bill came up with this new solution to pitch a startup after witnessing countless CEOs bore potential VCs with the classic elevator pitch. So, we can say that WOW! Statements are "the elevator pitch 2.0".
The three keys to coming up with a dazzling WOW! statement is to keep it simple, clear, and compelling.
By simple, we mean simple language (everybody should understand what you do, even if they don't know the niche or jargon) and straightforward explanations. By Clarity, we mean to avoid technicalities and any specific jargon that may throw the listener off.
And to be compelling means to generate curiosity. You need to provide a solution to a problem that clearly stands out. What makes your business different and revolutionary? Being original with your proposal will give you the best shot to instill curiosity in your audience.
Sanity Check
At this stage, we are ready to see if everything we gathered and created resonates clearly with the market. We call this process a “sanity check”, and it ́s one of the toughest things so far as you need a network to support you. The goal here is to reach out to ten ecosystem players to validate your assumptions.
First, prepare the questions you need to confirm. Then you need to engage with these ecosystem players, which can be other entrepreneurs, chambers, associations, trade show organizers, et cetera. Based on the feedback you receive, go back to your Lean Canvas Model and offer sections to adjust them accordingly.
Build your US Offer
Now it’s the time to get all fancy and ready to show off. The US market is very picky, so you need to “look” your best. This is why you need to revise your branding as it will drive all your communication and how you present yourself as a Company. Look at your company name, does it resonate with the US Audience? What is the story you want to tell? How do you want the US Audience to know you?.
Next, is to look at your US landing page. This is especially important because if an American goes to your website and sees all the content in Spanish and that your headquarters are in Medellin, you could be losing prospects.
If you want to go to the US market, you need to show a US office, speak like an American, and act LOCAL.
Build your initial network list
You will need contacts in the US, partners, employees, people that can lend you a hand. So, it is advisable that you do some outreach campaigns. Where you do them is optional, but some of the most common channels are E-mail, Linkedin, Phone.
Look for connections in common on LinkedIn, nothing beats a personal connection. When you reach out to people always be human, personalize the messages. If you’re not on LinkedIn yet, what are you waiting for?
Build your lists for outreach heavy on the prospect and partners side, but also include time for you to prep your trip to the US. Define a date and start building your agenda to meet your initial network in person ideally. Nothing beats in-person networking.
Cold Outreach is working less and less each time so the more you can leverage connections the best, but don’t drop the Outreach as it’s still a tool to add value to your initial efforts
Need help getting started?
Base Miami has over 20 years of experience in the US tech landscape. Founded by Latins that have scaled their businesses in the US, we have the know-how and network within the thriving Miami business Community to support Latam tech Startups with their US business launch to avoid costly mistakes and achieve in 3 months what would take them 18.
