When is the right time to expand into Europe?

Expansion into Europe requires careful consideration of not only whether your business is ready, but when. Timing is everything. So, when is the right time to expand into Europe? Let’s take a look at nailing the right time for positive European expansion plans for your tech business.

Introducing new products and exploring new markets are obvious ways to grow your business, and Europe offers that opportunity. What’s the best time for a business to take that leap? According to a report in Harvard Business Review, moving too late allows your competition to take the lead, and foregone revenue, but moving too early may overstretch your business and lead to failure. So, what’s the right time?

In a recent interview, our CEO Rick Pizzoli was asked, in his opinion, when is the right time to expand into Europe. For him, the baseline is “When they're well established in their home market, have happy clients, established sales processes and a clear plan — or willing to develop a plan — for expansion.”

Capitalize on opportunities to expand

Recovery from the recent pandemic is at the forefront of most minds, but this may also be seen as an opportunity to be capitalized on for your European expansion. Rebuilding and fund generation is one of the first moves to recovery, and public funding builds confidence in choosing the right time to expand into Europe. 

NextGenerationEU (NGEU) is a commonly agreed recovery plan of €806.9 billion between EU member states, as part of the largest stimulus package ever. This agreed plan is of particular relevance for the tech industry, as one of the stimulus package’s main focuses is digital transition and tech for both public and private sectors. Also of interest is the promise from the NGEU to ‘make Europe greener, more digital and more resilient.’

Ensure you have customers in the target area

Before heading to Europe, you need to have an established home market that you’ve unlocked first, as Dario di Cerbo, senior business developer at our partner Swisscom, advises. Your customers are happy, but that doesn’t guarantee success or make this the right time to expand into Europe by itself. Will your vertical fit? Is there a ready market for it? Ensure that your target country has a receptive audience, and check out the local competition. Our CRO and head of UK business development Gavin Page says that it helps to have customers already there, even if that’s as a result of a deal done elsewhere. Local customer references are key. Translated case studies and testimonials in the vertical are even better.

Be mindful of budget and channel structure

Page also advises to be mindful of budget, be realistic in order to launch into a new geography and make sure that any sales effort is supported by a wider marketing plan. He also makes the point that starting with a salesperson and no realistic marketing or lead generation support is a bad idea. A sales head alone will be pulled in too many directions and when managed remotely, you need to be clear on KPIs and on expectations.

Telco sales expert René Weilharter says that keeping a marketing budget is imperative, and paying a retainer to sales agents is an absolute must over commission-based. Depending on the vertical, it can take three to 12 months to close your first major deal in Europe. It takes time to build a brand abroad, and you need to invest in it — otherwise people won’t trust in your tech’s staying power.

Build an optimal channel structure. Different markets may require different channels in order to optimize sales, and this often involves utilizing talent already there in the chosen region, in order to tap the local market successfully. Some verticals, like European telcos, rely on relationships that have been established years or even decades in advance. Depending on the European country, relationships matter more than anything else.

Consider remote work models  

Companies who have the edge on European expansion understand that remote work hiring models are here to stay. Remote and online outsourced models are no longer seen as bucking the trend, they are both a current and future solution and can be used to gain an advantage to expand your business into Europe.

As Jennifer McGuire, director of strategic alliances for Globalization Partners EMEA notes: “A survey conducted by CFO Research of Industry Dive and Globalization Partners found that, in Europe, Middle East, and Africa (EMEA), 90% of senior finance executives expected to exceed or meet their 2021 business goals, and 84% declared interest in tapping into the more cost-effective, global talent pool facilitated by remote work.”

Remember your customers are working hybrid too, so you need to find the best people for the job, no matter where they are. Just make sure they speak the local language and understand the local culture. 

Tackle language and diversity

Using the services of an outsourcing business neatly avoids other issues you may have to tackle when you expand into Europe. Not just to get your business head around the language problem, but also tackle country-to-country regulations, practices and local industry trends, even cultural fit, they all apply. 

Expansion into Europe cannot be seen as a one-country approach. Going multilingual from the start — for example adding more languages to your e-commerce site — immediately opens up your business to a multi-marketing approach, reaching more customers. 

Various vectors define current trends, for example, recovery from the ongoing pandemic and how your business reacts and its ability to adapt to change. How tech startups and scale-ups throughout Europe demonstrate resilience to such trends influences investment opportunities going forward.

Beware of local laws

Approach those with strict local laws appropriately, for example, if you are attempting to sell in Germany, be aware of privacy and data residency requirements that go beyond GDPR, sagely notes Robb Miller, senior VP of sales at Algonomy. There will be legal hurdles to jump with your European expansion and forewarned is forearmed. Failure to comply can result in heavy fines, and worse, a negative impression of your company.

European employment law and rules differ from those at home, regulating standards and applying directly at the national level. They can be a logistical and expensive nightmare if breached. Be aware of national laws, as they may operate differently depending on the EU member state. In most cases, an employment law is created at a local level and then taken up by each member state. 

Partner up to make navigation easier

Tech companies who wish to expand into Europe must research, collate, analyze, then adjust accordingly, in order to fully understand the region and guide tech sales strategies for future optimum results. Find a partner with knowledge and experience of the region you wish to target. Clearly define your value proposition from the beginning. They will understand the local markets and nuances, and a desire to grow revenue for your company. As McGuire told us in our interview, “Good business partners can be the difference between success and failure. In a region as diverse as Europe, where companies need to comply with both country-specific and EU legislation, a partner who knows how to navigate these regulations will save you time and money.” 

Your HR team and adapting to remote trends

Another global employee survey, conducted by Globalization Partners, shows that 48% of employees feel happier working remotely, and 37% of those who work at companies that avoid the transition to remote work plan to leave their current job within the next year.  

In a business world where 75% of companies are expected to make hybrid or remote work a permanent fixture, your HR team needs to adapt to this trending preference to retain talent and pull ahead of the competition, noted McGuire.

Expansion into Europe can be a lucrative move for a tech business. Timed correctly, it will increase your customer base, revenue and overall profit — so don’t delay that move. Your focus should remain to continue to grow your company at home, while achieving a smooth transition into European expansion, and all the while add value. There should be no disruption of growth with domestic revenue if properly planned and with a good foundation revenue. As Pizzoli succinctly puts it, “Plan well, focus, be creative, give it time to succeed.”

Let’s finish with a ‘timely’ quotation by author Daniel Jay Millman: “I learned that we can do anything, but we can’t do everything, at least not all at the same time. So think of your priorities not in terms of what activities you do, but when you do them. Timing is everything.”

More News