Startups are Struggling to Expand.

How is the Pandemic Postponing Expansion Plans?

Harpreet • July 15, 2022 • 5 min read

Did you know the pandemic accelerated the startup boom, but also brought unexpected plan changes to entrepreneurs?   The pandemic ended up changing the global landscape by putting greater significance on digitalization and thus, igniting the growth of entrepreneurship all around the globe. (Altun, 2021) Many startups were born in response to the pandemic, elevating their role as enablers of digital transformation to fight against the virus.   This infographic states that the number of startups grew by 20 percent during the pandemic   However, even though the pandemic has fueled entrepreneurs and brought about more opportunities to the digital world, it also brought many barriers. One barrier is the restrictions startups face as they attempt to grow beyond their local market and enter the international market; something which forced many ventures to postpone their expansion plans.  


The importance of global growth for startups


Traditionally, entrepreneurs would focus their business strategies on domestic markets, before pursuing their international market entry strategies, often after 5-6 years, if not more. However, more recently, startups have been going international earlier or in some cases, are “born global” startups – ventures that start planning and strategizing globally in their early development phases. They prepare to launch in multiple markets at once so that they can utilize international markets and resources to scale their growth.  

But why is going global earlier becoming more prevalent?

Advances in digital technology, global talent, transportation, and global hubs are now making it easier and cheaper for startups to gain access to foreign markets. Therefore, by launching into more than one market earlier, ventures will be able to gain greater exposure to their target audience, build their brand in a broader market, and scale their business at a faster rate.   However, for some entrepreneurs, a “born global” startup is the only option to ensure their business will survive. Specifically, ventures from smaller countries must plan for global success to thrive, which is mainly due to their small domestic market and limited access to production. Therefore, to level the playing field, entrepreneurs from these geographics are aiming to solve global problems, think internationally from the outset, and internationalize faster.  


New challenges startups face when expanding

  International expansion is not an easy feat, and with the pandemic, startups are facing greater challenges preventing them from continuing with their plans.   The barriers imposed by the pandemic include:

  • Travel restrictions
  • Greater visa processing time
  • The potential hassle of quarantines
  • Reduced flight frequency and increasing prices
  • Restrictions on events and gatherings
  • Health and safety concerns
  • The overall unpredictability of traveling during the pandemic

Some could say that these are not huge challenges to overcome, with the simple solution of operating online. However, the greatest risk of global expansion is going into business with the wrong people: individuals you don’t know, aren’t sure if they have the venture's best interest in mind, and are very far away. Communication can easily be done via email or zoom, but meeting face to face with potential distributors and clients helps strengthen that relationship quickly, develop expectations, and gives entrepreneurs the peace of mind that the partnership is a right fit.    

How can startups overcome these challenges?

  Startups currently have 4 options when facing these challenges:

  • Continue to postpone plans

    Startups have the option to continue to postpone their plans, however, there is no certainty on when things will “go back to normal.” Covid-19 has been around since 2020, and, since then, we have seen countless variants introduced. By delaying your plans indefinitely, entrepreneurs are missing out on the opportunity to grow financially and benefit from international exposure. Therefore, waiting it out and postponing your plans might not be the best option, especially when there is no clear end date.  

  • Continue with expansion plans despite the barriers

    Another option is to continue with your expansion plans and face the challenges head-on. Depending on the international market and its current Covid situation, startups may or may not face these challenges. However, the Covid situation is volatile, and startups must have a contingency plan in place, in case circumstances beyond their control were to arise that could increase expenses or cause delays to their go-to-market strategy.  

  • Hire an export consulting agency

    Many corporations hire export consulting agencies to assist them in their expansion plans. These agencies provide businesses with a wide pool of resources and knowledge about the foreign market and thus allowing them to aid in a variety of disciplines, whether that may be market research, business development, legal and tax advisory, intellectual property, etc. In addition, employees at agencies have been verified and vetted, so you can put your trust in their ability to source the right people for the job. However, when considering an agency, startups might need to dig deeper into their pockets and produce larger budgets. Furthermore, agencies tend to be less flexible and are less likely to do additional work outside the scope of the agreement without additional cost. Lastly, top management or founders might be required to be highly involved when developing their market entry strategy, resulting in lost time and resources that could better be used in focusing on other areas of their business.   Working with export consulting agencies is a considerable investment, therefore, it is important to find an agency that understands the needs of your startup and has the relevant experience in your industry to be able to assist in scaling the business effectively and efficiently.  

  • Expand hassle-free: the first and only platform for international expansion

    Expando is an international business expert platform that enables internationalizing startups to rapidly grow their international performance. We do this by giving them access to vetted experts with track records in their target market while providing ongoing support and taking care of all the admin work.   Our experts go through a rigorous vetting process. Local selection committees, made up of recognized business experts, review selected applications and approve new experts based on our criteria.    

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