Ruslan Tymofieiev is a Ukrainian entrepreneur, founder, and managing partner of the venture fund Adventures Lab, and the founder of the venture builder CLUST.
Full-scale warfare posed a significant challenge to Ukrainian businesses, but at the same time, it propelled them towards development. Over the past year, most entrepreneurs have realized how crucial it is to diversify risks and have a business operating in Ukraine and abroad. However, recognizing the need is only the first step, followed by numerous complex questions: which country to choose for launch, how to assess risks, prepare the product for release, and so on.
On this journey, entrepreneurs face so many risks that avoiding all mistakes is almost impossible, especially with no experience working with foreign markets. At Adventures Lab we specialize in scaling Ukrainian businesses professionally. Drawing on our experience, I’ve identified 12 typical mistakes when introducing a product to new markets. Later, we will discuss what can happen during scaling and how to rectify it.
#1. Internal Unpreparedness of the Business for Market Expansion
Entering new markets equals scaling success. This means that initially, you must build a successful business in one region, refine all business processes, gain experience, and only then scale the acquired expertise. If the business is performing poorly in Ukraine, it’s worth considering whether the problem lies in the market or possibly in the product itself.
Introducing a product to a new market with unresolved issues “at home” is a failed strategy that can have negative consequences for the business. After all, scaling is a kind of stress test that will inevitably expose your weak points. Therefore, I recommend addressing all internal issues first. Yes, this may slow down the company’s growth, but it’s better than later “putting out fires” in multiple markets at once.
Among the key indicators of your business’s readiness for scaling, I can highlight the following:
- You have well-established business processes in current markets.
- Growth rates on the “first” market have slowed down.
- There is a need to distribute risks and not limit the business’s operations to one country.
- You have financial resources for expansion and additional capital to cover expenses for marketing, distribution, and so on.
- You have calculated the unit economics, conducted an analysis of the new country’s market, and ensured that your product has prospects.
#2. Intuition as a Guide in Choosing a New Country
Simply pointing to a spot on the map and deciding to launch your product in, for example, Portugal, is a poor strategy. It’s essential to consult with experts, especially a business development specialist if one is part of your project team in Ukraine, and identify several potential directions. Then, test these hypotheses. In other words, study the markets of the chosen countries, competitors in your niche, target audience, their interests, and behavioral patterns. This way, you’ll analyze different markets and be able to make an informed decision on which one is most advantageous for introducing your product.
#3. Incorrect Market and Competitor Analysis
An accurate assessment of the market and the development of an effective plan are crucial for the success of your business in a new country. The more ambitious your plans, the more time you should dedicate to this stage.
“I recommend not tackling this issue independently but delegating it to professionals. While as a founder, you need to be deeply involved in this process, external consultants and research experts have a broader range of tools for information search and analysis.” comments Tymofieiev Ruslan, founder of venture builder CLUST.
Proper market and competitor analysis will help you:
- Understand legislative peculiarities.
- Explore your industry in the new country and learn about key trends.
- Identify major competitors and monitor their activities.
- Understand your potential customers and their preferences.
- Become appealing to potential customers and stand out against competitors.
- Identify growth opportunities and increase profitability.
- Mitigate risks in making business decisions.
The data obtained from market research will form the basis of your expansion strategy. That’s why this stage is so crucial.
#4. Lack of a Clear Action Plan
Entering a new market is a complex process that requires careful consideration. Many mistakenly believe that it’s enough to simply copy and paste the existing business strategy from the current market without any adaptations. Yes, you’ve invested a lot of time and effort into developing a unique formula, achieving good metrics, and winning customers over to your product. It may seem like you know how to achieve successful sales. However, this doesn’t necessarily mean that you can achieve the same on a new market without changing your strategy.
I recommend adapting the business strategy based on market research and competitor analysis. Then, in line with the business strategy, develop an action plan that prevents getting lost in chaos.
#5. Ignoring the Country’s Context
It’s not enough to simply analyze the market; you also need to consider the socio-political context. Before launching, you must understand the societal trends, who is liked or disliked, and for what reasons. By disregarding the country’s context, you might introduce your product at the wrong time – either too early or too late.
For instance, if there’s no societal trend towards healthy eating and organic products, no one will be willing to pay extra for the kombucha you want to sell. People will continue buying their usual lemonade or sweet cold tea. Your company is unlikely to create demand and initiate new trends in society, so you’ll have to spend much more money on advertising and attracting customers. In this case, launching the product would become a flop rather than a success story.
#6. Lack of Understanding of Cultural Specifics = Clients
Each country has its own culture with unique features, traditions, and taboos that your brand must be aware of and consider when entering that market. This involves not only translating your products into the local language but also adapting the entire marketing strategy.
You need to study the cultural specifics of the country and create a detailed profile of the person to whom you are selling your product. If your target audience is women aged 18 to 45, launching your product without understanding their lifestyle and preferences could lead to failure. However, if you know what this woman does, what time she wakes up, how she commutes to work, what music she listens to, where she meets friends, and what she usually orders – you can sell your product to her and, through her, to the entire category.
Understanding your clients will give you an advantage. Creating a detailed profile of your ideal customer will help you connect with potential buyers. You’ll be able to easily enter a new market and offer the desired product exactly to the right people at the right time.
#7. Incorrect Product Positioning
This mistake is a consequence of the previous ones. If you made mistakes in studying the market and competitors, neglected to create a detailed profile of your customer, and failed to consider the cultural specifics of the region, then there’s a high probability that your marketing strategy will be so weak that you won’t be able to:
- Develop a Unique Selling Proposition (USP)
- Stand out from competitors
- Present your product adequately in the market
The emphasis you place on different aspects of your product determines how your product will embark on its journey in the market.
#8. Weak Advertising Campaign
Before launching a product in a new market, it’s essential to understand through which communication channels you plan to establish points of contact with the target audience. Building on the positioning, you need to develop a PR campaign. Consequently, if you made mistakes in previous stages, it’s unlikely that you’ll be able to launch an advertisement that resonates with your customer and motivates them to buy your product.
Incorrectly placed emphasis in communication, a lack of a strong start, absence of a Unique Selling Proposition (USP), and unclear positioning – and suddenly, your product is no longer of interest to anyone.
#9. Incorrect Staffing Choices
When launching a product in new markets, it’s crucial to strengthen the team with local specialists. The talent and qualifications of your staff are investments in your business, so be prepared to invest accordingly.
Entrepreneurs often opt for junior professionals in an attempt to cut costs, but this is a trap that can backfire in the long run. Qualified personnel will ultimately save you time and money, as you won’t have to spend resources on training inexperienced employees and fixing mistakes.
#10. Simultaneous Launch on Multiple Markets
An aggressive expansion strategy and launching a product on several markets simultaneously are hardly considered a wise decision. This approach will only work if you have unlimited financial and human resources.
You won’t be able to equally focus on each market, and mediocre results or their absence are probably not what you are aiming for. Moreover, such a dispersion of attention and funds can significantly prolong the process.
To confidently enter a new market and establish a presence, I recommend doing it step by step: start with one country and then move on to another.
#11. Incorrect Budget Allocation
Money should always be spent wisely. If, during the planning stage of your budget, the unit economics calculation shows that you have funds for only the first three months, it’s advisable to postpone expansion to avoid harming other markets.
Your company may have a profitable business model in the domestic market, but in an external market, there’s a significant likelihood of unforeseen expenses. To account for all nuances and establish an accurate budget, it’s essential to analyze the market correctly and make forecasts.
Additional expenses may arise due to local taxes, transportation and import duties, advertising campaigns, and a myriad of other reasons. It’s crucial to allocate finances correctly to avoid depleting the entire budget in one month.
#12. Lack of Flexibility
When launching a product in a new market, it’s crucial to promptly respond to the initial results and adjust the strategy accordingly. You must take into account all market signals, gather feedback from early customers, and demonstrate flexibility if circumstances demand it.
The mistake lies in rigidly sticking to your line and adhering to the initial strategy without considering any changes.
Introducing a product to a new market is always a risk, and avoiding mistakes entirely is unlikely, even if you’ve done it before. However, there is a path that can lead you to success much faster, significantly amplify your results, and help you avoid stereotypical errors along the way. That path is through partnership with a venture builder.
I created CLUST precisely to assist young entrepreneurs in launching products that will disrupt the market. The venture builder format works by providing our services to partners, helping them establish business processes, build a local team, consider the legal peculiarities of another country, and set up sales. This way, founders can focus on product development without worrying about managerial routine because we take care of that part.
At CLUST, we focus on business sectors such as education, beauty & health, and fitness because we have strong expertise in these niches and believe that our collaboration with such businesses will be most effective. However, there is currently a real boom in the startup studio market, each with its own profile and expertise, so you can find a partner for any product. The key is for the idea of this product to be promising.
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