How to take a leap into the international arena?

Most startups in India build a product with an aim to have a presence in multiple geographies in the world. Fortunately, we started out about two years ago and have managed to expand to Singapore, Canada and UAE.

Here's what we learnt from our leap into the international arena:

Timing: Cost of experimenting in a foreign land is more compared to the home ground. So before exploring foreign geographies, make sure your product or service has reached a basic maturity in terms of product market fit and sourcing of raw material.

Market identification: Identify the potential market from market size, ease of doing business, legal framework and business volume perspective. The ticket size should be good enough to venture in that region. In some countries (especially Canada and in Europe) privacy laws are more stringent and you may have to incorporate them in the business model. Make sure that the business is viable after incorporating their laws.

It's equally important to understand the psyche of the potential partners in that market. For instance, UAE is all about connections while the US and Canadian clients do give a fair chance to startups who are building something unique.

Extensive financial planning: Startups often overestimate their revenues and underestimate their expenses. Make sure your assumptions are close to reality at least for expenses. Factor all expenses including minor ones like metro travel (within the city) and also tea breaks as these can be expensive in developed countries. Cost of compulsory business insurance or third party liability insurance may dent profits in some countries. Making a model with a two to three year projection helps.

More engagement with local partners: In most cases sales is best done by local resources. Commission based sales is acceptable in some geographies and does not essentially require you to have physical presence. The fastest way to start selling is to engage existing local companies for sales. A fair model with clear responsibilities is not that hard to crack with existing firms. But it is important to give them a good deal to ensure that they prioritise your product.

Your partners must be your believers who stand by the product or service and the team. Also, it is important to have more engagement with your local partner to be able to make the product more relevant to the market. Our UAE partner Offado was actively involved in customising the product to suit the taste of our customers in the market.

Existing investors, angels or advisors may also help in connecting with foreign channel partners. However it is also true that it is important to be on ground and get your hands dirty for a short period as it also helps get a sense of the market. Though channel partners are enablers, you shouldn't rely on them completely.

Take agreements seriously: Be very careful of the clauses that you put inside the agreement as they can rip your business apart. One of our Canadian clients deducted $400 from our fee for a small physical change in our hardware.

Smart sourcing helps save taxes: Setting up a subsidiary in certain geographies could save huge amounts on taxes. Indian government charges an import duty of about 28 per cent. You could consider Hong Kong if you are procuring from China because it is a free market. All the business that does not involve India could be conducted by that subsidiary and allow you to be free from the rules and regulations of the Indian government.

Post sales service: Ensuring prompt post sales support is the key to customer stickiness and referral. Local companies can be engaged on per call billing if required. Incorporate breakdown notification or monitoring dashboard to give you alerts about the errors in the working of your machine.

Positive online footprint: Maintain quality service and ensure your customers provide genuine positive feedback on review or listing portals. While in India not much emphasis is given to online reputation, customers in developed countries do comment on their experience with the brand on various forums.

Build a sustainable model: While you actively expand in newer geographies, upgrade your systems in a manner that it requires lesser manual intervention. It must be more do-it-yourself (DIY) in nature. Eventually, cutting on sales and increasing spends on marketing is the way to get more visibility and customers. Also, only few countries like India like the presence of a physical sales man.

To foreign clients, providing support as per their time lines remains the key. There also needs to be flexibility in the architecture of the product so that it can be fixed anywhere.

(Prashar is the co-founder of photo advertising startup Piquor. As told to Techcircle.in's Nikita Peer)