By Marisol Rueda*
The development of solutions for facing regional and global challenges is one of the main drivers for Latin American startups positioning themselves in international markets. They also do well at introducing new products, services and business models, creating new markets, and offering solutions to emerging problems.
In recent years, Mexico has strengthened its institutional structure, closed the early-stage funding gap, and made progress in financial inclusion, according to the Organisation for Economic Co-operation and Development. All of these components strengthen and protect startups so that they can start going international and are able to compete. However, setting off to conquer the world is no mean feat, and you have to do lot of homework in order to prepare for the challenge this involves and tip the odds of success in your favor.
Studying, the first step
The first piece of advice for success when going international is to “think big, but start small,” says Luis Antonio Márquez, Director of the Full-Time MBA in Innovation & Entrepreneurship and Director of the Center for Innovation and Entrepreneurship at the EGADE Business School of Tec de Monterrey.
This means preferably starting off in a segment that isn’t being addressed and practicing enough to improve it. “Having deep knowledge of and dominating that segment will give you the certainty that you can be successful in a global market,” explains Márquez.
Although being successful and dominating a local market is already a big step, situations can vary abroad. In fact, there are cases of companies whose entry into new markets hasn’t been that successful, such as Starbucks in Brazil and Colombia, coffee-producing countries where the international chain has been rowing upstream.
There are vital tasks you have to do in order to reach a new market with a well-assembled structure that ensures success. To begin with, you have to consider one mistake entrepreneurs make when they want to go international: doing so without seeing how the land lies.
That’s why it’s essential to analyze the market you’re addressing, which involves carrying out a survey to see how it’s performing, what the trends are, what levels of consumption there are for your product or service, and understanding how you could solve a particular problem.
In this process, it’s important to look for a specialist or local partner who can help you understand the market you’re thinking of entering. They can offer you a soft landing, so that you anticipate how effective your product or service will be in the market you want to enter.
Marco Palma, Director General of the firm FGI (Formación Global Integral), is a success story these days. He gives this advice when thinking back on his experience of going international:
- FIND PARTNERS TO HELP YOUR MODEL SCALE.
- DON’T BE AFRAID OF GOING UP AGAINST OTHER MARKETS.
- DO IT WELL, BUT ABOVE ALL KNOW YOUR BUSINESS MODEL.
- LOOK FOR EXPERTS WHO CAN HELP YOU UNDERSTAND THE MARKET.
The legal side is important too
Another key piece of advice is to focus on just one international market, at least at the beginning. Just as you did in your own country, you have to experiment with the complexities or nuances of the new territory. This experience will soon allow you to enter another global market with much more strength and experience. What’s more, wanting to cover several markets is complicated. You can get overloaded with information and things can get out of hand.
Márquez recommends ensuring that the market you want to enter has the infrastructure for offering your product or service efficiently. For instance, it should provide what’s necessary in terms of distribution, logistics, and maintenance, as even the best products or services can fail without these components.
Legal certainty is something to bear in mind as well. Perhaps you’ve got the legal side well in hand in Mexico, but you have to evaluate and investigate whether you face the same or better conditions internationally. “You have to know what the legal framework’s like so that you can go there and not be surprised by matters of intellectual property or property rights, for example,” says Márquez.
Finally, make sure there’s an entrepreneurial ecosystem focused on startups that can smooth your path. Look for a network of Mexican entrepreneurs in the country, especially those who can give you tips about the government offices and agencies that can help you at different levels, and who can give you feedback on their experience.
- Perform in-depth analysis of the market you want to enter.
- Plan your strategy well, not just on paper.
- Understand where you want to take your company.
- Look for a local partner/facilitator.
*Note from the editor: This article was originally published in Issue 26 of Tec Review for November-December 2019.