Expanding to international markets is not that simple just as it sounds. There are a lot of factors to be considered. Over expansion of your business often leads to lose business into old and the existing markets itself. The markets should be categorized into four.
- Beachhead twins
- Community-powered markets
- Tech-savvy markets
- Complex markets
When expanding to the international markets, the direct sales entrepreneurs should set practical expectations on your ROI.
Expected-to ROI =
(Expected Contribution in dollars × Survival curve) − (Run-rate OpEx + One-time setup) /(One-time setup + Working capital step-up)
Expected contribution: Revenue minus the variable costs
Survival curve: Number of customer/distributor segments you are planning to retain into the second year.
Run-rate OpEx: Operational expenses paying for local managers, agencies, compliance, translations, privacy tools, and logistics services.
One-time setup: Localization, payment gateway onboarding, tax IDs, product registrations, and legal checks.
Step-up capex: Extra inventory, warehouse setup, returns station, or POS material