Tips for VIPs #5

Tip #5: 5 mistakes you will want to avoid when expanding commercially

Having successfully helped various clients to carry out their commercial expansion processes, we asked Luis Enrique Villanueva to offer our readers some advice on what to avoid when planning for internationalization. As he says, although new markets mean new opportunities, they also mean new risks, so make sure you treat it as a long-term investment, not a get rich quick scheme.

Internationalizing your business too early

Early-stage companies experiencing high growth may think that they are ready to hit foreign markets but fail when doing so. Then they realize that their value proposition was not adequately aligned with the targeted market. A potential demand analysis should be done before internationalizing, and key questions should be raised, such as: is there a fit for my product? What proofs of concept do I need? Is the industry technologically ready for my solution? Is there enough purchasing power?

…or too late?

It is crucial to break down the aimed market to check its maturity level and saturation before undertaking the new challenge. Your competitors may already be in a strong position and there may not be enough room for your product. It is vital to take into consideration the time it takes to adapt your product and overcome barriers that may exist, such as regulations, certification procedures and logistics.

Targeting the nearest markets

Moving to neighbor countries may seem and in fact be easier, more natural and the right first move, but doing it on a whim, without analyzing certain market variables may suppose a big mistake. It is necessary to consider the market size and potential market share, growth rate and projections, competitive landscape, pricing options, distribution channels, among several others, before entering new economies.

…or the wrong buying persona

Be careful, the buying persona is not the end user. This may seem obvious for some, and yet it´s a common mistake seen in commercial expansion processes. Let´s use agricultural machinery as an example; you may be set to approach agricultural companies and individuals; however, these would usually never purchase a machine directly from you, but from a distributing company that offers post-selling services and warranty. In this sense, it is crucial to clearly layout the structure of the industry you´re targeting.

Believing that every market works like yours

Each market has its own peculiarities, so it´s highly recommended to work with an advisor or sourcing agent to support you when penetrating new geographical areas. Factors such as culture, language, political and social (in)stability, environmental sustainability, currency, and taxation need to be examined prior to expansion.

About Luis Enrique Villanueva

Luis Enrique has a financial background in the Banking and Real Estate industries.
As an associate at Toro Ventures, Luis Enrique oversees prospecting and acquiring new clients, serving as KAM for many of them. His passion for product profitability and strategic international expansion have led our clients to valuable inter-continental returns.

Luis Enrique is Peruvian-Italian, holds an Economics Degree from the Sapienza University of Rome and an MBA from IE Business School.

2019-03-28T17:11:52+01:00 March 26th, 2019|0 Comments