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What to plan for when starting a business abroad?

Very brief meetings, a language barrier and emphasis on being local. Read the following tips on how to prepare for expansion abroad

02.03.2021
What to plan for when starting a business abroad? Source: Adobe Stock

For the most part, domestic startups do not want to stay only on their home soil, but aim to expand to large foreign markets. Expansion to the United States, Great Britain or even Africa is not only financially difficult, but also requires taking the specifics of the given country into account. For example, the format and course of business meetings often differ diametrically from those in the Czech Republic and in anglophone countries, it is a good idea to get the help of a native speaker.

Statistics from CzechInvest indicate that foreign markets have long been attractive for domestic startups. In the past five years, young companies have been involved in activities outside of the Czech Republic in nearly two-thirds of cases. In the period from 2016 to 2019, CzechInvest sent an average of five companies abroad per month. Due to the coronavirus pandemic, however, only a fraction of companies could be sent abroad last year.

 “A large percentage of startups seek to take their products to the United States, where a modern-day gold rush is underway. Practically every startup would like to break through there, ideally in Silicon Valley or some other major city, such as New York. There is tremendous competition for Czech companies there, but it is also an opportunity for those that are truly high-quality and innovative,” says Markéta Přenosilová, head of CzechInvest’s Startup and Innovative SME Division.

In addition to the United States, young Czech companies are focusing their foreign-expansion efforts on European markets, while the United Kingdom has long been an attractive destination, according to Markéta Přenosilová. The next most popular destinations are in Asia, e.g. Dubai and Singapore. “Companies often think globally from the very beginning, which is one of the prerequisites for successful expansion. However, it is necessary to take into account the fact that it will be difficult for them to get anywhere abroad from a desk in the Czech Republic. Nothing can replace personal experience in the given markets,” Přenosilová adds.

In the US, you have 15 minutes for a meeting. Take a native speaker with you
The innovative video platform Motionlab, whose client portfolio includes Microsoft, for example, successfully entered the US market. One of the company’s co-founders, Filip Koubek, points out several specific aspects that must be taken into account when travelling across the ocean. First of all is the American business culture and mentality, which is completely foreign for Czechs.

“Time is the most valuable commodity; meetings are planned for only 15 minutes and everyone wants a solution that is prepared for immediate use. Everything looks great at the meeting and a European walks away feeling that it’s a done deal, when it often actually isn’t. Conversely, in Europe clients often come across as aloof, even though they have real interest in closing a deal,” says Filip Koubek.

In the matter of mutual understanding in business meetings, Koubek says that even though a Czech accent is not a major obstacle, it often causes Americans to place Czechs in the area of Eastern Europe or Russia. “Startups with experience from the US often recommend hiring a native speaker for meetings. No just because of the language, but also the tempo of the meetings themselves and presentation skills. Americans are still at a higher level in this respect,” Přenosilová adds.

Errors in written text are not forgiven in Britain
Alan Fabik, founder of the Liberec-based company Hardwario, can share his experience from our side of the ocean. His firm specialises in projects based on the principle of the internet of things, which, for example, help to map production deficiencies at Škoda, overheating of production-line motors at the carmaker TPCA in Kolín and climatic conditions in British forests. Hardwario opened its own branch in London.

According to Fabik, entering a Western European market is very costly for Czech startups. That is especially true in the case of the UK and London in particular. But what makes the UK special is its tremendous mix of different cultures.“It's definitely a good idea to get orientated in them. For me personally, it always paid off to know some details about the country of origin of the person I was dealing with. If you say one sentence in his native language, the meeting gets off to a great start. And never drag politics or religion into the discussion,” says Alan Fabik.

Filip Koubek of Motionlab offers similar views on the issue of business meetings. “It's a bit of a generalisation, but in Britain they won’t say anything bad about your product and it's often described as fantastic in meetings. In such a case in the Czech Republic, that would mean you’re very close to signing, but in the UK it doesn’t mean anything at all,” Koubek explains.
Where language is concerned, Koubek points out the frequent use of slang, which can significantly hinder comprehension. Therefore, it doesn’t hurt to ask the speaker to slow down or repeat a sentence. According to Koubek, the British do not have a problem with the Czech accent, but they are unforgiving when it comes to mistakes in written text. In this respect, Alan Fabik recommends using the services of professional translators or native speakers.

In Kenya, arrange meeting in person instead of by e-mail
Africa ranks among the less traditional markets targeted by domestic startups. FaceUp Technology, which was established by a trio of former gymnasts from Brno, namely Jan Sláma, David Špunar and Pavel Ihm, has offices in Kenya and South Africa. Their anti-bullying application is used by more than 1,800 schools. After gaining initial experience, they went the route of hiring country managers, i.e. representatives from the given country.

“When expanding to the US, we saw a huge difference, when we always flew there for a few weeks, had meetings, arranged cooperation and then returned to the Czech Republic, and then all contacts and communication suddenly stopped or slowed significantly. Furthermore, that model is not scalable; you can’t be in ten countries at the same time. Besides that, local people see value added in the possibility to deal with other locals,” says David Špunar.

David Špunar points out Africa as a market where it is difficult to do business without local representation. According to him, being local is very important in South Africa and Kenya. Therefore, the company uses those countries’ flags in its logo. Furthermore, the young entrepreneurs added a number of offline activities to their application, such as workshops and lectures for teachers.

From the perspective of business meetings, the aforementioned part of Africa cannot be compared to the European and North American markets at all. “When I was on a business trip to Kenya last year, I told our representative that we would start contacting schools and arranging meetings by e-mail. She looked at me like I was crazy. In the end, we got in the car instead and started visiting one school after another. When someone couldn’t meet with us at the given moment, he gave us a date when we should come back, and he took it as an absolutely normal thing that we just showed up out of nowhere in front of his office door,” explains David Špunar.