Choosing the Right Market for Expansion | MrJoe - Coach to CEOs

Summary

The speaker discusses the challenges of expanding a business into new markets, emphasizing the importance of considering both the potential and the effort required. They suggest evaluating markets based on two dimensions: the potential for growth, which can be high in large markets with significant populations, and the effort needed, which may increase due to language barriers, regulatory challenges, and the need to educate or change consumer behavior. The key takeaway is that while a market might seem promising, the actual success of a business depends on a careful balance between these factors.

Takeaways

• 🤔 The speaker often gets asked about the best market to expand into and whether it should be a market with the same language.
• 🌍 They mention the example of Spanish and Latin America as a potentially large market to target, suggesting that language can be a significant factor in market selection.
• 📈 The speaker emphasizes that while language can be an easy consideration, there are many other factors that contribute to the success or failure of a business in a new market.
• 🇬🇧 They point out that even if a market shares the same language, such as English-speaking markets like the UK or Australia, business growth may not be guaranteed.
• 📝 The speaker suggests starting by evaluating existing markets and hypotheses about why a market might be a good fit for expansion.
• 🔍 Two key dimensions to consider when evaluating a market are the potential of the market and the effort required to enter and operate in that market.
• 👥 The potential of a market can be assessed by factors like population size and the total addressable market.
• 💼 The effort required includes considerations such as language barriers, regulatory compliance, and the need for market education or behavior change.
• 📉 High potential markets may not always correlate with low effort, and vice versa, indicating that a balance must be struck when choosing new markets.
• 📚 The speaker recommends an exercise to map out these two dimensions to help visualize the effort versus potential of different markets.
• 🚀 The transcript highlights the importance of strategic planning and careful consideration when deciding on which markets to target for business expansion.

Q & A

What is a common question people ask regarding expanding to new markets?

A common question is about where to start and which market to go to next, especially whether to choose a market with the same language for ease of expansion.

Why might someone consider expanding to a market that speaks the same language as their current market?

Expanding to a market with the same language can be easier due to the reduced need for translation and the potential to leverage existing language skills, such as expanding to Latin America if the current market is Spanish-speaking.

What are some factors that contribute to the success or failure of a business in a new market?

Factors include the ease of language translation, market size, population, addressable market, and the potential for growth, as well as the effort required in terms of adapting to local regulations and market behaviors.

Why might a business have a hard time growing in a new market even if the language is the same?

While language can be a barrier, growth in a new market also depends on other factors such as market acceptance, competition, and the business's ability to adapt to local preferences and regulations.

What is the importance of considering the effort level when expanding to a new market?

The effort level is crucial as it involves the time and resources needed to adapt to a new market's regulations, cultural differences, and potential language barriers, which can significantly impact the success of the expansion.

How can a business evaluate the potential of a new market?

A business can evaluate the potential of a new market by considering factors like population size, total addressable market, and the market's growth potential.

What does the speaker suggest as an exercise to help decide on a new market to enter?

The speaker suggests thinking about two dimensions: the effort level required for the market and the potential of the market, which can help in mapping out and deciding on the new market to enter.

What are some challenges a business might face when entering a new market with a different language?

Challenges include the need for translation, understanding and adapting to different legislations, and potentially having to educate or change the behavior of the new market to align with the business's offerings.

Why is it important to consider both effort and potential when deciding on a new market?

Considering both effort and potential is important because a market with high potential might also require significant effort and investment, and not all high-potential markets may be feasible or profitable for a business to enter.

How can a business assess whether a market has a large addressable market?

A business can assess the size of the addressable market by looking at the market's population, the number of potential customers, and the demand for the products or services offered.

What does the speaker mean by 'serviceable addressable market'?

The 'serviceable addressable market' refers to the portion of the total addressable market that a business can realistically serve and capture, considering factors like logistics, distribution, and customer reach.

Outlines

00:00

🌐 Exploring New Markets: Language and Potential

The speaker discusses the common dilemma of deciding which new market to enter, emphasizing the importance of considering both language and market potential. They suggest that while entering a market with the same language can be easier, it's crucial to evaluate the growth potential of any market, including factors like population size and the addressable market. The speaker also mentions the need to assess the effort required to penetrate a market, such as overcoming language barriers, navigating different legislations, and potentially educating or changing consumer behavior in the new market.

Keywords

💡Market Expansion

Market Expansion refers to the process of extending a business's reach into new geographic areas or markets. In the video's context, it is about deciding where to expand next, whether to a market with the same language or one that presents new challenges. The script mentions considering both the ease of language translation and the potential growth of the market, such as entering Spanish-speaking markets like Latin America.

💡Language Barrier

Language Barrier is a communication obstacle that can affect business operations in foreign markets. The script discusses the ease of entering a market with the same language, suggesting that it simplifies market entry and communication with customers. However, it also implies that overcoming language barriers can require additional effort and investment.

💡Potential

Potential in this context refers to the capacity for growth or success in a new market. The speaker talks about assessing the potential of a market based on factors like population size and the addressable market. For example, a large population might indicate high potential for growth, which is a key consideration when deciding where to expand.

💡Effort Level

Effort Level denotes the amount of work or resources required to enter and operate in a new market. The script mentions considering the effort level alongside potential when evaluating new markets. Factors such as language differences, regulatory compliance, and market education can increase the effort level, as illustrated by the need for additional time and investment in markets with different languages or regulations.

💡Regulation Compliance

Regulation Compliance is the requirement for businesses to adhere to the laws and regulations of the markets they operate in. The transcript highlights the need to navigate through regulations in new markets, which can be a significant effort and a barrier to market entry, especially when the regulations are complex or unfamiliar.

💡Market Education

Market Education involves teaching or informing a new market about a product or service, and potentially changing consumer behavior to increase adoption. The script suggests that in some cases, businesses may need to educate a new market or change consumer behavior for their products to be successful, which adds to the effort required for market expansion.

💡Investment

Investment in this context refers to the resources, time, and money that a business puts into entering a new market. The transcript discusses the need for investment when dealing with high effort levels, such as in markets with different languages or strict regulations, indicating that successful market expansion often requires significant upfront investment.

💡Growth

Growth in the video's context is the increase in business size, revenue, or market share. The speaker mentions that while a business may have a presence in a new market, actual growth in terms of subscriptions, profits, or revenue might not be equivalent to the home market, emphasizing the importance of strategic market selection for growth.

💡Profitability

Profitability is the ability of a business to generate profit from its operations. The script implies that profitability is a key metric for evaluating the success of market expansion, as it may not always match the levels achieved in the home market due to various factors such as market maturity or competition.

💡Market Hypothesis

Market Hypothesis is a theory or assumption about why a particular market would be a good target for expansion. The transcript suggests that businesses should have a hypothesis about why they believe a market is suitable for expansion, which can then be tested and validated through market research and analysis.

💡Strategic Evaluation

Strategic Evaluation is the process of assessing and making decisions about business strategies, such as market expansion. The speaker in the script recommends a strategic approach to evaluating new markets by considering both the potential and the effort required, which is crucial for making informed decisions about where to expand.

Highlights

Common question about identifying the next market to enter.

Consideration of whether to expand to a market with the same language for ease.

Example of targeting Spanish-speaking markets, including Latin America.

Challenge of ensuring business growth in a new market despite language similarities.

Importance of evaluating the potential and effort required for a new market.

Assessing the size of the addressable and serviceable market for potential.

Need to consider the level of effort in terms of language translation and market understanding.

Examining the impact of different legislation and regulations on market entry.

The necessity to potentially educate or change the behavior of a new market.

Balancing the high potential of a market with the high effort required for success.

The concept of mapping out markets based on potential and effort.

Discussion on the hypothesis of why a market might be a good choice.

Approach to working with clients to evaluate and select new markets.

Highlighting the importance of market research and strategic planning.

Understanding that a website's presence in a market does not guarantee success.

The difference between potential and actual growth, profits, and revenue in new markets.

The need for significant investment and time when entering a new market.

Transcripts

and then back to your questions about

like where do you even start like I

think a common questions I always get is

like okay where's the next Market I

should go to like like should I go to

the same language um it because easier

um and even if I go same language for

example Spanish then that is that's me

sorted because I'm covering Spanish and

also Latin America like that would be a

big market so I kind of like that is one

thing that always like stop stop stop

for a second and think about that um to

start with sure language things is kind

of quite easy to think about but there

are so many different things that um

will contribute to the success or not

when you're in the you could have the

language translated easily or you say

it's English Market I can easily go to

the UK or Australia because it's English

you will get there but whether or not

your business is going to grow um in the

way that you want that is another matter

like you could have a website exist you

can have a the products exist in the

market but you your your subs your your

subscriptions um or your growth or your

profits Revenue probably not going to be

kind of equivalent to what you have in

in in your home market so one thing that

I normally will do with um client

sometimes or or our management it's like

okay let's send back a bit like see

which Market we have in my sure you have

a few markets and then you have the

hypothesis as well like why you think

that market would is a good one to go

for so but then one exercise to do is

think about two dimensions for me is one

is like think about the effort level

that you have to put in for the market

and then also if you want to say that

it's more on potentials of the market so

then you can mop it out um so for

example you can say um this is a big

Market this is good in the potential

side because uh it has a very huge

populations um my time my total

addressable Market or um in my

serviceable addressable Market is going

to be big because um then that means

it's a good thing so there's high

potential also you need to think about

um efforts what efforts it's going to be

like for example is that going to be a

lot ofs because it's a different

language so you need to figure out you

need to invest a bit more time on that

but it's also the legislation is very

different in that market like um you

need to go through a lot of regulations

um and everything to kind of be approved

or certain things or you need to think

about actually do you need to

educate or change the behavior of that

market so that it will come to you and

use of it so then the effort level will

go really high and that means you need a

lot more Investments even the potentials

the time is really high but that you

know that might not go together