Аuthor of the “Digital Era” book, independent fintech-expert, Founder and CEO of Fintech Solutions LLC, Co-founder of Let’sPartner fintech
Growing or scaling a business is a logical stage in the development of most companies. The only problem is when exactly to make this step, and how to make it wisely in order not to lose the already gained business positions. After all, there are a lot of examples on the market when a young business, trying to expand its market share, simply disappeared without being able to survive in the expansion. At the same time, in the “old” framework they were more than successful. In this blog, we discuss what needs to be considered for lossless scaling.
Recently, I had to prepare a speech for the owners of small and medium businesses. The organizers asked to tell about exactly how to present products and services in the international market. Having gathered all the experience of my successful projects, and everything that has accumulated during communication with investors and start-ups, including the experience of the LetsPartner platform (https://letspartner.co/en), which today brings together 4,080 startups from more than 90 countries, I have prepared a checklist with tips how to scale the business.
Let’s start with the prerequisites for scaling. Usually, new markets are thought of when:
● The company generates a constant inflow of customers. It is important to delight customers with high quality service so that every existing client would like to recommend you to another client. In such conditions, you will always be successful.
● Your product or service solves really big problem of a large number of people. This is a critical condition for business development and scaling. The problem should be quite large and very relevant. It remains only to determine what price the consumer is willing to pay for solving the problem.
● You have a great team. If this is the case, then you solved problem # 1 for business. Jim Collins, the author of the incredible Good to Great book, said this: “In business, the most important decisions are not related to what to do, but to the person who does it.” Without the right people in the team, you will not go on vacation, let alone expand your business. A team is at least 50% of your success.
● You have an impressive financial capacity. We tend to overestimate our knowledge in the financial sphere, as, indeed, our capabilities. Most likely this is why 82% of startups and SMEs are closing due to poor cash flow management. ⅔ all companies can stay afloat for only 2 years, and half of businesses have financial strength enough for 5 years.
So, suppose that all 4 factors you have marked “YES” in your checklist. How to start conquering global markets? Regardless of whether you are creating your first business in life or are already seriously thinking about conquering new heights and territories, you will need to do your homework:
1. Assess the capacity of the market and the relevance of the problem. It is important to understand how the problem that you solve is relevant for the new market. And also, how many consumers will be happy to buy from you. Answering this question, you will understand the potential of the market and will be able to calculate the feasibility of starting a business.
2. Conduct an analysis of competitors. This is a critical task – your success depends on its implementation. You cannot even imagine how often in the battles of startups, and talking to business representatives, I heard the phrase: “We have no competitors, because our product is unique.” You need to understand very well who your competitors are and what their strengths and weaknesses are. Qualitative analysis will help find your niche and form the right value proposition for the market. In carrying out this task, you will find the answer to the question – why the consumer will buy exactly from you and correctly form the value proposition.
3. Local legislation and mentality. Some time ago at the international conference, a world-class expert said that if every time he faces the argument “It doesn’t work here” he would be paid $100, he would have been a millionaire long ago. And he was wrong. Do not check it for yourself, it can be a very expensive mistake. Carefully study the new business environment and features of the mentality. This does not always mean that you do not need to do business. The main thing is to understand how to properly adapt it to a new market. In some cases, you have to change business models. I am sure that you know this tiny peculiarity of Ukrainian market which costed a fortune to many new players entering the market – we are not used to pay for services. We watch non-licensed films, listen music for free etc.
4. Adapt the product or service to the local market. Debatable point, of course. The reality shows, even the largest brands follow this strategy – be glocal (Global + Local).
And the final checklist of 10 points, which I call “Everything will definitely work out if …”:
• Your service or product solves the big problem of a large number of people,
• You have high financial literacy – you understand how to manage cash flow and which business model to use,
• You already have successful results in numbers, as well as experience, confirmed by failures and learnings,
• You have strategic partners in new markets,
• Your project has prepared a value proposition for all client segments, and you can pitch it in 5 seconds in 1-2 sentences to investors, partners, clients, employees,
• You adore numbers, make decisions based on data, test all hypotheses and measure results,
• You have a very strong and competent team.
• You enter new markets, which means that you speak foreign languages,
• You act in stages, do not rush to scale simultaneously in many markets, but focus on 2-3 geographies, then master the next 2-3 markets, etc.,
• Your client is always in touch with you, and you quickly receive and process feedbacks.
Here, perhaps, are the main points that should be taken into account when scaling up a business.
As Confucius said:
ANY ROAD BEGINS WITH THE FIRST STEP.
I wish you success!