Why do you want to internationalize?

Many entrepreneurs have the ambition to go international. Maybe you are thinking about it too. Why do you want to internationalize your company? It may seem like a strange question in an article about internationalization and how to approach it.

But I propose it anyway, for the following reason. Being successful in other countries is by definition more difficult and expensive, and requires a longer lead time than being successful in your own country.

If you still have a lot of market to gain in the Netherlands, it is wise to focus your energy here first. Calculate the size of your market share in the Netherlands.

Is there really no room for growth? For example, if you have just achieved your first success in the Netherlands, then expanding this success is probably a smarter step before you start looking abroad.

Only when the Netherlands starts to become too small for you and your ambition extends beyond the border, you are ready for a plan for the internationalization of your company.

No Monkey Business often encounters entrepreneurs with international ambitions who have never made these practical considerations.

Tips to internationalize

Internationalization starts with Belgium. Or not.

With my company Assistance Software, after a period of hard work, we were very successful with our software solution in the Netherlands. We served a specific niche market: the architectural and engineering industry. With a market share of over 65%, it was time for us to internationalize.

Not hindered by any knowledge of how I should approach that, I thought in all my optimism that Belgium was a logical choice. They speak the same language, have a culture that is very similar to ours, and it is nice and close.

Man, was I wrong. With a totally wrong attitude, I arranged countless appointments and even more lunches. More than 18 months later, we had to conclude that we had only contracted a few customers, while we had invested a huge amount of time and money. How could this be?

The reality is clear. Our southern neighbors don't look like us at all. They have a completely different culture and a strong 'know us' mentality.

Expand abroad

As an arrogant Dutchman I totally misjudged that. Our direct approach is rarely appreciated. In addition, companies in another country don't care that you are so successful in your home market. Lack of Belgian references, differences in mentality, not picking up subtle signals during conversations; they were all reasons why we weren't and wouldn't be successful.

This despite our good product. And the language? What a disaster. I thought we spoke the same language, but there turned out to be substantial differences. I was very ill-prepared and made all the mistakes I could make.

But how should it be? What are the ingredients for a successful step abroad?

The Top 8 Steps to International Success

Fortunately, the lessons we had learned in Belgium had not been in vain. I've done my homework, and so can you. Learn to understand a country and its culture. Make a sound market analysis. These are a few important factors to become internationally successful. After the Belgium debacle, I started to approach it completely differently.  

Mine “lessons learned” I have summarized in the following top 8:

Internationalization infographic short

1. Consider a partner / reseller strategy

Just starting a branch abroad and hiring people is of course an option, but this is a capital-intensive undertaking. My most important tip, especially in the beginning, is not to do everything yourself.

Consider starting an affiliate strategy. That has many advantages. You have direct local representation, with all the associated benefits. Make sure you are generous in sharing your turnover. Our partners got 25%-40% from the license revenue.

In addition, 100% of the implementation proceeds went to them. This provided us with a very attractive incentive to sell our software. In many cases, our implementation party already supplied many local companies and it was a matter of upselling.

2. Make a business plan per country

It is important to have a business plan you make for each country where you want to settle. In this plan, make sure that your price list is in line with the local market. Furthermore, it must be clear what the size of the market (the number of companies) and the sectors you want to serve are.

Map out the Total Available Market (TAM) and calculate your pricing model based on a real market share that you want to acquire.

3. Do a competitor analysis

A good analysis of the competition is the best start. List your competitors and put yourself in a magic quadrant (inspired by Gartner). This creates a clear picture of how and about which axes you can beat these parties.

You will also gain a lot of insight by visiting the websites of the local competition. Take your time with this, because you will learn a lot from it. Be sure to use tooling such as Neilpatel.com. This allows you to easily see how your competitor ranks online and which keywords have been claimed by them in Google. This way you can further refine your own strategy.

competition analysis international

4. Reserve budget for marketing & sales activities

Invest in marketing & sales and reserve a budget for at least 24 months. After all, the costs outweigh the benefits and this takes time. Make sure you have a booth at local fairs. And don't think too small. Make an impression.

This gives confidence and increases the chance of a good start. A perfect website, a good landing and CTA strategy are basic ingredients. If you can't allocate enough budget for this investment, it's better not to start.

5. locate

This seems simple: change the language and that's it. But usually this is not enough. Think of specific laws and regulations, for example for VAT and privacy. Certainly with software you have to deal with localizations that are really very specific.

But also in your communication you have to take into account local market leaders or apps that are different. Integrations with such solutions are crucial.

6. Start an early adopter program

It bringing in your first customers abroad is super important. Offering a decent discount is part of this. You can tackle this by looking for a launching customer through an early-adopters program.

In our case, we supplied software at high discounts (50%-70%) for the first year. The precondition was that we could put this customer on the website as a reference with an interview. Use this strategy for your first 3 to 5 customers so you can start showing local success as soon as possible.

7. Involve everyone in your international strategy

Involve your Dutch team, which has been at the basis of your success, in the internationalization of your company. Except necessary, that's just fun. You do this all together.

The foreign activities must be fully embraced and supported by the Dutch team. The mothership in the Netherlands certainly has an important function in the beginning. By the way, also communicate your international activities with your Dutch customers. Telling why you are doing this is important and provides a lot of PR value.

In addition, Dutch customers may have subsidiaries or branches abroad. You may even be able to take the first international steps through your existing customers. 

8. Accept that the salaries are different

Once you start to become successful abroad, you probably want to start a local office with its own P&L and Managing Director. This is a logical step in internationalization.

Keep in mind that an MD, for example in the US, often has a very different salary level than a Dutch MD. Accept this, and don't even be surprised that this salary can be higher than your own management fee.

Internationalize: The World is Yours

That was them, my 8 most important tips. I hope I didn't scare you off, because that's the last thing I want. Just do it has always been my credo. But be well prepared!

Operating internationally is fantastic. Imagine: they are working with your software in New York. You get off the plane in the Big Apple and take the taxi to your customer on 5th Avenue. The satisfaction is enormous.

I wish you the best of luck with your ambition.

The World is Yours!