How to internationalize a company — from the Vikings to tropical land
In a connected, remote world it is appealing and easier than ever to create a branch/subsidiary of a company in another country or even another continent. But how does one internationalize a business to take advantage of this amazing opportunity and most importantly, increase the chances of it being successful?
The year was 2014 and I joined a skilled team at a small software development Swedish company based in Stockholm. Work was thankfully more than what we could take, so there was a need to expand but in a warm market like Stockholm, where demand is greater than supply making it hard to recruit, that task was not going to be easy, so we decided to expand abroad. By the beginning of 2015 we had a (shared) office with an amazing view in one of the nicest areas of a big city in the south of Brazil. Soon after we welcomed our first colleague and 5 years later we have a profitable company with an awesome distributed team working together in Brazil and Stockholm, delivering projects for Swedish clients. The journey here was fascinating, to say the least, and we have learned a thing or two while doing that and I shall be sharing it in this post.
Checking the success factor
Our very first step to check if we had a successful business case to expand abroad was to make a pilot (but real) project with some local companies.
At Avidity all projects are planned and divided into two week sprints where we’re able to develop, deliver and evaluate as we go. This approach made it possible to work with the pilot companies as an extended team, to deliver some parts of the projects with the possibility to have small iterations where we could assess how the companies worked (technical expertise, communication, deliveries) on the go, and be able to act quickly if something didn’t turn out as expected.
While running the pilot projects we could gauge the expertise of the developers in Brazil and understand the challenges to build a team there.
We made a conscious decision to expand to a country where we had language, and therefore cultural knowledge — we believe these two aspects to be essential factors to understanding how a market and local bureaucracy work in their most hidden layers.
From the very start we contracted/outsourced the services that were better suited to be done by a local company, such as accountancy, marketing and HR. We contracted a lawyer to help us navigate the uniqueness of building a business in Brazil. You need to understand how easy (or difficult, for that matter) it is to get information on how to do the right thing. We knew opening a company in Brazil was a challenge not least for the bureaucracy but also for the sea of options we had.
Making it work
Keep costs down by using sharing options in the beginning: sharing offices and even professional services with other companies;
Understand the types of companies that can be setup (special attention to how taxation works);
Understand the costs of running the operation.
You don’t have to be big to internationalize, even the smallest companies can do that to make the company more robust and diversify the business.
No matter where you are expanding to, when going over borders some factors are always the same:
trial and error. Run pilot projects;
outsource services to local experts;
understand – and embrace bureaucracy. Know how stuff works and learn how to do it;
have local language knowledge. When you are able to communicate with someone in their native language, you are communicating with that person on a different level;
understand culture differences and how it materializes on the everyday work. For example, doing business via WhatsApp works in Brazil but it's a no-no in Sweden;
hire professional help to translate culture differences and norms. We hired an intercultural consultant at the Swedish office to introduce the social and business etiquette of Brazil to the team and our customers.
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