By Mark McDonald
Once your startup is established in the marketplace there are many ways to expand your customer base.
Expanding regionally or setting up a multinational operation is a logical step in a startup’s lifecycle.
But opening an office in a new city, state or a country can bring all sorts of operational problems like managing budgets, hiring and making key decisions.
One aspect that’s important to consider when you’re expanding across different cultures is how you can artfully maintain your own company culture. When you’re trying export that to a culturally-different region, you may face some serious challenges.
But the benefits of expanding internationally can certainly outweigh any of the potential challenges. Here are some tips on doing it the right way.
As it is with every aspect of business, people matter the most.
But when it comes to setting up an office in a new region, the country head is the most important as a first hire. Nothing is more important than finding a local person with strong leadership skills and the mindset of a chief executive.
But simply finding the right person is not enough, it’s very important to give them autonomy and interact with them on a regular basis – even fly over every week or two to build rapport with the staff.
Culture is a core element of a successful startup. It’s a business aspect most startups are heavily invested in because it determines the future of the company, and whether it becomes a sustainable business or not.
Even if you’re setting up an operation in an entirely culturally-different country, the new office should not come with an entirely new culture of its own. Rather, it should be an extension of your already established identity.
The job of an entrepreneur is to build rock star teams and provide them with enough freedom to do their job. But when it comes to expanding your business geographically there’s always a temptation to centralise, mainly because centralisation saves costs and can make management much easier.
But you shouldn’t centralise without having a good understanding of how it’s going to impact the company’s flexibility. While having standardised processes in place can be of a great benefit, having locally adjusted processes for each particular office can help you mitigate many problems that come with centralisation.
Giving your local country head the independence to think like a chief executive is critically important.
What you want to avoid is dictating how things should be done from the central office. The best way to ensure that is to assign budgets and measure the team’s performance through key performance indicators (KPIs).
Budgets need to be set for each department. Each country head will likely want to divide it differently (e.g. some countries may need to invest more heavily in marketing, others in customer service) so you want to make decisions beforehand via mutual discussion. Same goes for KPIs, you want to agree on the right set of KPIs for the entire office as well as each fundamental function.
While it is important to provide your management with the independence to make their own decisions within the budgets and KPIs, it’s unwise to assume they’ll always make the right decision.
For the most critical business processes, you want to have guidelines and directions that are aligned with the overall business goals.
Mark McDonald is the co-founder and co-CEO of Appster. This article was first published by StartupSmart. Follow StartupSmart on Facebook, Twitter, LinkedIn and SoundCloud.
Smart Company is a sister publication to The Mandarin, catering to Australia’s entrepreneurs, small and medium business owners and business managers.
