Top tips for expanding your Nordic startup internationally
You have started your very own business in the Nordics, and it’s going well. The most logical step at this point would be to continue your success. So, what next? Continue your expansion abroad.
While the Nordic countries have many perks, including a supportive investment landscape and a high quality of life, their small market sizes can be limiting for companies looking to scale.
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If your sights are set on expanding globally, there are a few challenges that you should be aware of. There will inevitably be cultural differences, language barriers, staffing hurdles, and marketing issues that you should research before making any bold moves.
Luckily for you these questions can largely be answered from the comfort of your home country and at a minimal expense – it just requires a little effort.
Consider whether to expand close to home (or not)
According to Michael Lee, the former head of international marketing at e-commerce platform Alibaba, the best way to enter a new market is to choose one that is similar to a country you are already familiar with.
Depending on the nature of your startup, your pricing strategy and whether you are offering a product or a service, expanding to countries close to your own – both geographically and culturally – reduces complexity within the supply chain. It also reduces the psychic distance (i.e. the perceived difference) between buyers and sellers, increasing the smoothness with which the business operates.
When it comes to the Nordics, initial expansion to other countries in the region is a natural choice for many startups. Here you’ll find many options in terms of distributors, agents, partners and more. Indeed, Sweden and Norway both rank in the top four of Denmark’s top trading partners, despite their relatively small populations.
But expanding to similar markets isn’t the answer for every startup. An example of a Nordic company which got internationalization right is Too Good To Go (TGTG), a Danish app which fights food waste. Having expanded to ten European countries so far, such as Germany and the UK, TGTG only operates in one other Nordic country – Norway.
Why, you ask? TGTG recognized that its biggest competitor was the Swedish company Karma which already has an established presence in the Nordic region. Instead of getting into an unnecessary battle with them, TGTG has turned its attention to other places. It plans to expand to sixteen other countries and Sweden remains off of its radar.
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Do your market research
One of the basic aims of doing your market research is to figure out whether there is sufficient interest in your product or service in your targeted market.
Google Market Finder is a great tool for assessing the level of interest in your product or service in a particular market based on metrics, such as keyword frequency. Other online tools such as Statista are capable of more in-depth market research, and Semrush is helpful in competitor analysis.
It’s also necessary to consider the extent of the competition in your new country of choice and analyze the saturation level of the market. This will help you do something different with your product to give it a competitive edge.
Get to know the local culture (and maybe even the local language)
No matter how successful your business is at home, it will not do well abroad unless it takes into account the local culture and values of the new country.
From the very beginning, it’s important to keep in mind the potential cultural and religious differences of your new country of choice and consider how local people will respond to your business ideas. It may also be necessary to tweak your product and adjust your sales strategy in order to cater to the tastes of local consumers.
Organizations such as the Nordic-China Startup Forum assist startups and investors in overcoming these hurdles. With offices in Stockholm, Copenhagen, Oslo, Beijing, Shanghai, and Hong Kong, the organization aims to reduce trust barriers and inspire collaboration between Nordic and Chinese businesses.
It might also be wise to learn the language of the country you are venturing into. It is always an added advantage when you can speak to your customers, suppliers or business partners in their own language.
For any Nordic startup, the necessity of language localization cannot be overstated. European startups typically have to localize their language options early in order to scale up due to the language diversity of the continent. For instance, Helsinki-based game developer Supercell (acquired by Softbank and then Tencent in 2016) was available in over 30 languages early in its development, an attributing factor in the company’s success.
Have a lawyer
Yet another important factor to consider is getting a lawyer when you decide to expand abroad. The process of expanding into a foreign country is not easy and every country has its own rules and regulations. Getting a good attorney who can handle all the paperwork which can be lengthy and slow is crucial, and a local legal representative can definitely make a difference in a smooth business launch.
You only have to look at the struggles that transport network company Uber had upon entering the Nordics to understand that the complexities of the legal system can be extremely costly.
Do your due diligence
Once you have considered a foreign country as a potential business venture, it’s a good idea to travel to that country in order to get a feel of the place. This will help you with your research and enable you to test out your product in its new marketplace.
Once you are there, you should also meet local partners, lawyers and other stakeholders which may be involved in your business. It is important to get to know people face-to-face even if it can be done remotely.
For many service-based startups, it may be that you are already doing business with companies in foreign markets in some capacity, but prior to making serious expansion efforts, this due diligence is recommended, as was the case when Copenhagen-founded company Tradeshift expanded into Australia and New Zealand.
Think about your financing options
Another one of the factors which you must consider before launching your business is how the financing will be done. For instance, if you are looking to expand within the European Union there are a number of options available. This helpful tool breaks down the financing options available depending on the region that your startup is based in.
Get to work
In addition to the tips mentioned above, further aspects to consider include building a strategy and a team as well as ensuring you have the right resources. Once you’ve finally done all your research and preparation, it’s time to take the big leap and take your business venture abroad!
[ Read also: 10 of the hottest startups in Copenhagen ]
Main photo of buildings in Stockholm by Unsplash/Robert Bye