Entrepreneurs are always looking for opportunities to grow their existing business. This is achieved through the introduction of innovative products and services as well as the expansion of these products and services into new markets.
Entry into the European market is an opportunity to double the number of customers, revenue and profit. The combined GDP of Europe Economic Union in 2014 was $18.5 trillion, compared to $17.4 trillion for the United States (U.S.). The European continent is both lucrative and appealing for U.S. technology companies, yet they are delaying entry into the market.
Why are U.S. technology companies delaying the expansion into the European markets?
- Resources are focused on the U.S. market, it would be a distraction to enter Europe now
- Concerns regarding financial instability in the Eurozone in the short-term
- Not able to identify the relevant key personnel to start the business successfully
- Management bandwidth to oversee a European team is not available
- Cash flow doesn’t allow us to achieve this goal in the short-term
- Achieve the desired results with a couple of resellers managed from the U.S.
Most management teams in U.S. technology companies are focusing on and maximizing the return from their domestic market before taking advantage of the growth opportunity in Europe. This leaves behind the potential market shares that would accelerate revenue growth.
What are the critical ingredients to continue to grow market share in U.S. and take advantage of the European market?
The foundation of a European market expansion can be undertaken without distracting the U.S. management and sales teams and without disrupting the growth of domestic revenue. There is no need to delay the expansion of a technology company into European markets, assuming you have developed a foundation revenue in the U.S. that exceeds $67 million in the past 12 months.
If you have the foundation revenue, the next critical aspect of geographic growth is to select individuals, or an organization, that understand the nuances of the local markets, that have a track record of success and that desire to grow revenue for your company. The focus remains on growing a successful business in U.S. while international expansion is achieved, adding shareholder value and the attractiveness of the company to the market.
How is it possible for a U.S. technology company to insulate itself from the risks of an expansion into European markets?
Working with an experienced European management team, like Operatix, counteracts any risk of exposure to instability in local economies. Operatix takes responsibility for building the European market for U.S. technology companies, also insulates the U.S. management and sales teams from any cultural barriers, local human resources intricacies and varying income and corporation tax regimes. As well as the entire responsibility for growing the region’s revenue, committing to targets and quotas, and transferring back a successful and fully operating business. This risk is taken on by the Operatix team rather than your company.
The reasons for U.S. technology companies delaying their entry into the European market is understandable, but also avoidable. There is little point in allowing competitors to grab market share by delaying the opportunity to expand, especially when your company has Operatix, a risk free and a productive solution, at its convenience.