What Are the Best Business Models When Scaling your B2B Business Abroad?

You may be wondering what are some of the best practices and business models when taking your B2B scale-up abroad. If you are interested in "What is Internationalisation for a B2B Business?" you may want to check out this blogpost. 

In the technical literature but also in real practice, a few models are already consecrated best practices for the expansion of B2B business or a small-medium enterprise:

• The classic stage model where you actually set up an office, hire employees than market, and do sales activities for about 1-2 years prior to seeing how business picks up. The downsize on this model is that it will cost you a lot more than setting up an office back home (sometimes 5X to even 10X times when setting up shop in the US, for example, than in Europe). You will also take more risks and invest much more and learn some tough lessons prior to understanding the market feedback and potential for your services and solutions.

For an SMB going abroad and entering new markets, the stage model is usually something hard to achieve, as SMBs do not sit on a pile of money, need a faster return on their investments, are more agile and rarely can afford long term market investment without seeing some quick wins.

If you are interested in best practices of SMB internationalisation, please make sue to join our webinar on What does it take to go abroad as a B2B ScaleUP.

What are good internationalisation models for an SMB going abroad?

Looking into some of the emerging internationalisation business models, newer economy models are paying off in terms of both quicker time to market and less risk on the initial expansion, with rapid almost real-time market feedback in a lean & agile combination of doing business.

• A sound business practice is to look into the network that you can tap through your already existing connections (suppliers, customers & partners). Which of these stakeholders are already present on the market you are targeting? Can they help you with referrals, setting up, connecting you to the right prospects? By leveraging the power of the internationalisation network model, you can bring business from the new market quickly building on the trust and already existing business development channels from your referral network.
• A highly ambitious entrepreneur that is deciding to pioneer relationships on the new markets or the born global business that are actually globally set from infancy (for example, a SaaS business) may want to consider from the start the international business opportunities.
• The internationalisation entrepreneurship theory - IET focuses on the role and value of entrepreneurs, commonly cited as the most important variables in the SMEs internationalisation process.

Entrepreneurs of born globals are perceived as the initiator of the internationalisation process, being the main factor of sustained competitive advantage, possessing socially complex resources (e.g. entrepreneurial knowledge, experience and skills), which facilitate the capture of new resources for the venture and recognition of new opportunities in and outside the domestic country as found by Alvarez and Busenitz in his research study on models for internationalisation of SMBs. Moreover, these resources are often individual- specific and, therefore, difficult for competitors to imitate.

How could this work for your business?

• Can you engage a business partner in the new country or territory you would like to expand and invest in that relationship to build a win-win partnership?
• You may want to consider operating a virtual office in the new location
• Use your business network and follow stakeholders like some of your best customers and partners in their successful internationalisation cases
• Travel often, invest in a good luggage :). Ideally, can you relocate someone in your business management to the new location at least temporary until business picks up?
• Raise funds in the new territory to deepen your commitment and engagement to the new market before deciding to invest in the new market to mitigate your risks.
• If you do get there, as with tourism, do not go where tourists are taken and guided :). Go where the locals go! In business terms, that translates into joining industry associations and being active through these, especially at their events. In the US, you may want to leverage the channel partnerships of some of the big players like AWS or Salesforce and develop active business on the channel.

What are the questions to consider prior to internationalisation

• What are you selling? Is there a market for it not just this quarter or year, but long term? For example, some of the B2B SMBs that sell products with competitive markets in the Western countries may consider emerging or underdeveloped markets for their products or solutions, to ensure long term positive growth from international business
• Can you see some of the limitations you are going to encounter in the new territory? If so, will you be able to overcome these barriers, use these, or have a plan in place to overcome them easily?
• Can you sustain the market entry for at least 6 to 12 months passed your typical sales cycle? If you get positive market feedback, can you ensure focus long term? If not, please be aware that you will take the shockwave through the organization for opening the new market, but you will not get to rip the best benefits until you mature on the new market. Do not go to a new market just to sell; for an SMB, it will not be sustainable long term. Ideally, you want to plant a new business there that is almost self-sustainable.
• Can you start with countries closer to home? That may prove easier to manage and lower risk.

Make your own rules & KPIs for the new market.

This is not a general rule, but there are some of the KPIs and practices we implemented when taking our business abroad: The rule of 3 and the rule of 5.

The Rule of 3

Strive to pe present and later on well established in at least 3 countries (not ours, general best practice), addressing at least 3 verticals to mitigate industry risks with a max 60% split of the biggest country or the biggest vertical in your portfolio.

The Rule of 5

Once you are well established, consider opening a local office in the new country if you have already 5 people in your team that are working for or within that country or if you have let’s say 5 key accounts, to deepen the long term commitment to the new territory.

Want to know more about scaling your B2B business abroad?

If you want to find out more about the barriers you will need to overcome when entering an international market or just have questions about going abroad with your business, join the free webinar on What does it take to go abroad as a B2B Scaleup. Register here.