For every successful SaaS company that has grown over 50% year over year — including such well-known companies as Zendesk, Box, Hubspot, and New Relic — there are thousands of startups that have failed.
In fact, according to a recent McKinsey study Grow Fast or Die Slow,
“If a software company grows less than 20% annually, there is a 92% chance of failure.”
— McKinsey, Grow Fast or Die Slow
When you’re a startup, it’s fairly easy to double revenues in a month (for example, going from $10K to $20K). As you start to grow, you can expect to double revenue in a quarter, then in a year. But as you get larger, it’s very, very difficult to double your revenues in these same time frames — after all, how many companies grow from $50M to $100M in one month?
So how can SaaS companies grow, grow fast, grow efficiently, and keep growing?
In working with hundreds of SaaS companies, we’ve learned that the solution to sustaining a high growth rate is to diversify your approach to growth and embrace multiple growth strategies.
We’ve boiled it down to the top 10 essential growth strategies: this article highlights the ninth – International Expansion.
With a cloud product, there’s no geographical limits to where you can sell your product.
But while going global is a clear growth opportunity for SaaS, it poses myriad operational challenges.
To go international, SaaS companies need to consider and be prepared for legal and regulatory requirements, potential taxes, local payment methods and currencies, different payment gateway partnerships, and data residency requirements. And individual offerings need to be tailored for each new geography in terms of payment options, pricing, etc.
STAR EXAMPLE: Zoom
Cloud-based video communications company Zoom has won over more than just the U.S. with its reliable, affordable, and easy-to-use product line.
Zoom, the darling communications SaaS company of the COVID-19 pandemic, is supported in a wide variety of countries — in fact, they excel in remote regions due to the product’s ability to handle low bandwidth really well. And in addition to their U.S.-based data centers, they already have data centers in various locations around the world including India and China.
But up to 2016, they were mostly focused on direct sales in the U.S., with the majority of their total revenue coming from inside the U.S.
In 2017, they set their sites on international expansion as a strategic priority. With plans to launch in multiple countries they expanded their currencies to include the Euro, UK pound, and Australian dollar in addition to U.S. dollars.
Amidst the global pandemic, as Zoom provided the essential platform for businesses and schools around the world, and reached a whopping 12.92 million monthly active users (an increase of 21% since the end of 2019), their international presence continued to grow. As recently as March 2020, they announced general availability of their Zoom Phone cloud phone service in 11 additional countries, for a total reach of 17 countries (and 1 territory) with beta service in 25 new countries.
To become a truly global company, SaaS businesses need:
1. Ability to accept multiple payment methods in different local currencies
2. Automatic tax calculation to avoid tax issues
3. Different payment gateways to maximize local payment offerings
4. Accurate reporting on foreign exchange gains and losses
5. Ability to run multiple financial entities separately