7 Deadly Sins for Start up Businesses

Cristina Beltran

May 21, 2014


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Business communities can no longer turn their back against globalization. It is present and is becoming more apparent by the day, which makes efforts to shelter an enterprise from expansion futile. The importance of understanding foreign cultures is an imperative in the globalizing business communities. With the geographical borders blurring, it’s easy for start-up businesses to be consumed by its competitors.

Listed below are 7 mistakes that start-ups tend to commit when venturing into the international community.

1. Braving the waters without full understanding of the local culture

Culture is the “invisible thread” that weaves a successful international business enterprise. It is composed of diverse attitudes, beliefs, traditions, and psychologies. Culture influences the perceptions of people in personal and professional situations. In any business objective geared towards the global, the importance of understanding foreign cultures cannot be emphasized enough. However general this portion is, it is important that a start-up business already gears its plan towards inter-cultural understanding. A wise restaurateur would think twice about establishing a burger joint in India, considering that cows are sacred to the majority of its population. Perhaps, in preparing the business plan, he or she would alter its burger recipes to suit this cultural issue.

A general appreciation and understanding of cultural variances will help a start-up business in addressing specific cultural concerns, such as the ones listed below.

2. Not understanding different spending habits

Spending is not just a simple matter of needs and wants, because big and small aspects of culture influence what a person thinks he needs or wants. Nielsen conducted a study on spending habits and brand loyalty in 2013, where it was revealed that European shoppers base their purchase of toiletries and cosmetics on price while Latin American shoppers display the most apparent loyalty to a brand. A study of spending habits in various cultures will help a start-up entrepreneur which part of their product they can tweak to appeal to a certain market.

3. Taking communication styles for granted

In many instances, how you say something matters more than what you say. Even the nuances of communication can make or break a start-up business. A start-up business venturing into foreign territory needs as much backing as it can get from its foreign counterpart. Americans may be comfortable with calling colleagues on a first-name basis, but the Japanese consider this as a sign of disrespect.

4. Not matching management practices to cultural variations

The importance of understanding foreign cultures should also include the organizational culture a certain nation is used to. The dynamics of power in Philippines and New Zealand, for example, are different. In the Philippines, power distance level is very high. In New Zealand, egalitarianism is very observable in interactions, even between the supervisors and subordinates. In Asian countries like South Korea and Japan, career advancement is largely influenced by seniority in age.

5. Not having a respectable list of clients from the native country

As a start-up in another country, you can build your clientele by attracting natives of a specific country who are residents in your own country. That way, when you establish your start-up overseas, you will become more attractive to that market because they know that you have already worked or serviced citizens from their country. In a highly competitive and globalized environment, one of the best ways to earn trust is by building a solid track record.

6. Employees not understanding organizational objectives

A start-up needs to work hard to prove its worth in a foreign land, and not communicating objectives properly will trigger uncertainty from your foreign counterpart. If you are a start-up employing workers overseas, operations will run smoothly if your people know what their role in the organization is and if they are assured that the people they are working for and with are duly authorized and competent.

7. Lack of research on competitors abroad

As a newbie in the business field and the foreign territory, research and development should constitute a large part of your efforts. By researching on local competitors and studying their direction, you can observe and infer what makes stimulates or drives away their market. After all, their market will be your market too.