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.