By Robin Saluoks, CEO & co-founder, eAgronom.
When I launched my first company at age 16 providing science experiences to school children, the proposition and growth prospects were very clear and remain essentially the same today as they were back then. With the second company I founded, this time in my 20s, things have been very different. What started off as simply coded farm management software pulled together as a favor for my father has since developed into a multifaceted climate technology company with $10 million of investment.
Things have been moving very fast, and while there is always a lot to learn and challenges to overcome, here are some of the things I have learned so far on my founder’s journey. I hope they can be helpful to you, too.
Deciding When To Expand And How
When we experienced our first sniff of success and were riding on our first high, we decided to enter eight new markets in a year. Let’s just say we learned a lot from that experience, not least to not try to run before we could walk. There is no hard rule that can pinpoint when the right time for market expansion arises, however, it will become clear once growth in your original market begins to slow and you feel you have reached saturation point with your current offering. Once you feel your business is ready for geographical expansion, there are many things to consider, such as:
• Is there a sufficiently large potential customer base in the new target market?
• What does the competitive landscape look like?
• Does your offering translate well to the target market?
• Is your offering compliant with local legislation and regulation, and if not, how difficult will it be to achieve compliance?
• Will you require a physical presence in the target market?
• Will you be able to recruit the required talent?
• What are the other barriers to entry, including tax responsibilities, language requirements and cultural differences?
There seems to be an endless list to consider when planning the first expansion, but as with everything else in life, solid preparation will lead to smoother execution. The appropriateness of this may vary, but from my experience, expanding into neighboring countries where you can benefit from cultural and geographical closeness is a good bet.
Never Underestimate Culture
While thorough research can provide you with ample data and information about the economic potential of your target market, there are softer, non-quantifiable aspects that are just as important to consider. Cultural awareness is a trait that many ignore at their peril. While the incredible worldwide domination stories of a small number of tech giants (think of Uber, AirBnB and others) may lead some to believe new markets can be taken at will and customers will adapt to their way of thinking, this only works on rare occasions. For example, the industry we operate in, agriculture, is very difficult to penetrate for outsiders as trust, strong relationships and wariness of large corporations are common features across farming communities.
When deciding whether to recruit locally, manage from afar or offer to relocate an existing employee, it is therefore important to consider not only the local culture but also the industry culture. Having an honest conversation with some of your existing customers about what they like about working with your company and what they would like to see improved is worth considering in the process. In terms of recruitment, in many situations, it might make sense for a number of functions, including finance, legal and marketing to be outsourced to a third party at the beginning while trying to establish a local in-house business development function.
Are You Ready To Scale?
When a business feels it has gotten as much out of a market as possible, expansion does seem to be the next logical step. However, this is also the time to consider your proposition and evaluate whether your company’s horizon needs to grow also. To give an example, our business started as a straightforward farm management software company that then added a consultancy arm, then added carbon credit and green financing elements and so on. You should be constantly evaluating your proposition to see how you can most successfully expand, not just geographically, but also by widening your market with new offerings that future-proof your business and give you a competitive advantage.
From an operational perspective, getting your company’s infrastructure ready to scale is crucial before expansion is put into motion. That is not only true from a technical and process perspective; your staff also needs to have the capacity and willingness to be part of this new adventure. While it is natural that not all employees will want to be part of the growth journey and may decide to look for opportunities elsewhere, making sure everyone feels supported and part of the plan is hugely important.
Risks, Caution And Plans
We are entrepreneurs, so taking risks is basically part of our genetic makeup. While we wouldn’t be able to succeed without an element of risk, we sometimes need to take our foot off the accelerator, step back and evaluate the situation. The best way to ensure you don’t get ahead of yourself is to build a leadership team made up of people with different backgrounds, skills and personality traits. While it might be easier to surround yourself with people who always agree with you, in the long run, this strategy may come back to bite. You need strategists, planners, analytical minds, dreamers and doers who come in all shapes and sizes. However, the important thing is that they share the same values. With such a team, business expansion is off to a flying start.