Most startups that I meet have the ambition to go international. That is almost compulsory when you have a small home market as Sweden. The most common mistake is how the internationalisation plan is thought to be executed.
Either the company is looking to go directly to the US. In ICT most often the San Fransisco bay area or in later years also Los Angeles. Or they have been thought - often by different public organisations - that they should start looking at the BRIC countries (Brazil, Russia, India and China). Nothing wrong with these strategies for companies that are mature and already have tried exporting to other countries. But for start ups or even SME:s who are still in early stage it is most often a to big challenge (I am talking now about companies that are looking for customers, not those who is out looking for funding. That will come in another blog post). The main reasons for this are:
- The further you go, the more expensive it is. Actually its simple, just think of going on vacation living in Sweden. It is cheaper to go on vacation in Europe instead of going for instance to China. Same thing when you start exporting, going to countries far away will be more expensive for you unless what you think. You will need to stay away for more days, travel costs more and so on.
- Business culture is radically different. Even if we think that there are a lot of cultural differences in Europe, it is nothing compared to what you will meet going to for instance China or India. That means that a business case that takes maybe 2 months to close in Europe will probably take a year somewhere else (except the US). And time is - as I am sure you are aware - one of the most valuable assets of a start up.
- It will cost you a lot. Following the above, you have probably figured out that it will cost you. So unless you have raised an essential amount of seed money, you need to find ways also to bootstrap your internationalisation strategy. And going for away is most often not so good if you are bootstrapping.
So where should I go then, if I am located somewhere in Europe. Well probably it is a good idea to start looking at your countries main export markets. That information is in most countries free and if you are in Sweden you will discover that the main export markets are not the ones that everybody is talking about. The concrete advice for Swedish companies would therefore be starting up with these 4 countries:
Norway is the number one export market for Swedish companies. Especially if you are in ICT needs in Norway are huge and for instance Swedish consultancy firms are very competitive when it comes to pricing.
With Europes biggest market, Germany is the obvious choice for a Swedish start up. Swedish technology has very good reputation in Germany, the business culture is very close to ours and the German economy is still doing well.
Even though many people think that doing business in Denmark is difficult, business opportunities are good. Especially for those looking for collaboration with companies that has good sales drive, a danish partner can help boosting sales.
London is the 4th largest city in Sweden, if you just count how many swedes that live in the UK capital. So if you want to find a market where also the financial sector is strong, UK is only a 1.5 hour flight away and Sweden has a fantastic reputation here.
All these countries are accessible within a couple of hours, often with cheap flight connections and without complicated regulations around visa, import tax and company rules. So think of it. Maybe your next trip should go to Munich instead of Bangalore?
Next time I will write about Europes hidden market with 130 million inhabitants and a buying power comparable to Brazil.