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Hello, it’s Andrew, Plexal CEO, here with the latest edition of our six-part Growing your business series, which this week focuses on new market entry.
To date we’ve covered:
New market entry can mean many things – moving from your first to second customer; a new market for talent as you expand; another geography to sell into which requires visas and accreditations; a sector where you must learn the dynamics and subject matter.
In all cases regarding new market, it’s about having the mentality to ensure you research the opportunity, qualify it and plan for what’s required to successfully execute entry – speak to your colleagues, customers and investors. My advice for this is calmly going through a task list to ensure the fit is appropriate, rather than excitedly turning up without thinking the new market through, only to realise it’s subscale and not built for your team or way of working.
I hasten to add, qualifying your new market doesn’t mean sidelining your current market. You should still be able to serve your existing market, providing it the respect and energy deserved, but new markets are an exciting avenue to drive business growth.
The heritage of Plexal is linked heavily to the vision created for Here East post the Olympics and as a result we were born in the form of a physical innovation centre. But prior to launch, the economic analysis of the marketplace told us that to have a valuable, financially viable business, we needed a second component to it.
The outcome of this meant we were already planning a new market entry in the form of our consulting practice, which today has delivered 80 innovation projects comprising programmes, accelerators and research for government, industry and academia. This goes to show new market entry can be relevant at any stage of a company’s journey and you may well need multiple markets at day one.
New market entry will result in various milestones along the way, which can also be a matter of retrenching from ones you’ve targeted. Observing Plexal’s journey specifically, ours include:
- Technology: The first new market entry for us was a tech domain focus in the form of cyber security, which was the outcome of a long government procurement process.
- Sector: National security marked the next new market. This required learning the needs and etiquette of the sector, translating what we became known for in cyber security and making it relevant. Preexisting relationships were important, acting as case studies to validate our expertise to new customers.
- National: Expansion to the local government as a customer was led by product. Once designing our clusters product to drive regional growth, it became clear local authorities would be a key beneficiary. This allowed us to familiarise ourselves with the differences in comparison to working with central government.
- Global: Observing our work in Oman and Singapore, considerations included how to ingratiate ourselves locally with a non-fraudulent approach to ensure our arrival would augment and complement the existing ecosystem rather than trampling it into the ground. My aim was to ensure our new market entry in this regard was done with grace, respect and good spirits, while understanding everything from local employment requirements through to national holidays.
An essential lesson I would insist founders recognise is this: don’t half do new market entry. As I said earlier, calmly ensure your checklist is in place but I’d build on that point to say do enter it or don’t enter it – a halfway house leaves you exposed to risk. With geography in mind, you don’t necessarily need to be there permanently from the outset and can enter from afar, but do it with intent and a plan, including local relationships in the event you need people on the ground.
Plexal’s move into Cheltenham is an interesting one as it really tied a lot of new market entry elements together – sector, geographic, customer, talent. Having become good at cyber innovation for industry, we wanted to replicate that for government and recognised Cheltenham, home of the National Cyber Security Centre, would be ideal for that.
My first visit to Cheltenham was October 2019, at which time I met with members of the local ecosystem including government. It was fascinating – the connections felt more palpable than they do in London and as a smaller, more dense community, the subject matter flowed freely in the town. From this point, we knew Cheltenham would be important to us but just didn’t know how.
Nevertheless, we put strategic value in the town and began to position staff there in April 2021 before we had a customer, knowing at the very least that Cheltenham was a location from which we could facilitate our national demand. And this supports my comment about not being half-hearted if you want to be taken seriously. Fortunately, that customer would come, along with new partnerships, which ultimately paved the way for us to acquire a majority shareholding in Hub8, the Cheltenham network of innovation and workspaces, in early 2023.
New market entry isn’t binary, save for the decision. It can be multidimensional and once you get into the market, it becomes a constantly evolving journey for your business – so be sure you’ve checked your tyres, fuelled up and strapped in before setting off.
I’ve summarised my thoughts on new market entry below, so if you’re ever in a hurry, you can refer to these at speed. Please let me know what you think and share your experiences with me.
- Be clear on why you want to enter a new market – is a customer taking you there? Have you exhausted your potential in your current market? Is there a feature in the new market that will make the company stronger?
- Build the business case for what might be needed – skills, accreditations, corporate structure, funding, visas, professional advisors, travel, marketing
- Understand the opportunity costs
- Speak to potential customers and understand whether they’d be excited about it
- Take your stakeholders (customers, colleagues, investors) on the journey, allow them to help you shape the plan
- Don’t make the decision based in isolation of the rest of the business
- Once you decide, double down on it and make growth in the new market happen
- Don’t assume your reputation and credentials travel to the new market – act like you need to earn the trust all over again
- Enjoy the refreshed startup mentality having learned in your core market
Stay tuned for more insights and, hopefully, inspiration as I share lessons from the Plexal growth journey.
And if you want support to your next growth milestone – we’re just an email away and ready to work with you: https://www.plexal.com/growth/
