Business expansion is often seen as a natural milestone of success. A product gains traction, customers are satisfied, revenue grows, and the next logical step appears to be “going bigger.” That might mean entering a new country, launching in a new region, adding new distribution channels, or targeting an entirely different customer segment.

When you think about business expansion, you probably imagine bigger markets, more customers, and higher revenue. It feels like the natural next step once your product starts working.

But growth isn’t always straightforward. New markets come with new rules, risks, and complexities that can slow you down. That’s why we created this guide to break down what expansion really involves and how solutions like a Merchant of Record can help you scale without the stress.

Expansion is not simply about growth; it is about sustainable development. Many businesses fail not because their products are bad or lack market value, but because they expand without fully understanding the operational, regulatory, financial, and cultural implications of new markets. According to Harvard Business Review, one of the most common reasons international expansion fails is the assumption that what works in one market will automatically work in another.

In reality, every market has different consumer behavior, infrastructure, regulations, costs, and risks.

This article breaks down the key considerations businesses must evaluate before expanding so growth becomes an advantage, not a liability that leads to business shutdown.

Is there a real Market demand?  

The law of demand is a fundamental principle in economics that states that, if all other factors remain constant, higher prices lead to people buying less, and lower prices lead to people buying more.

Market readiness is crucial to understand, as it can be determined through proper analysis and research conducted before expansion. Before choosing a country, region, or new customer segment, the first and most important question is: Does this market actually want what you’re offering?

Many businesses make the mistake of expanding based on surface-level indicators such as population size or social media buzz. But real market readiness is more complicated than that. What are the things to consider before expanding your business to other markets?

1. Market Size and Growth Potential

Market size represents the total segment of a market willing to patronize your business. It covers the total sales opportunity present in that market. It is important for a business to analyse the feasibility, competition involved, and potential share of the revenue your business would be able to profit from the market. You need to understand how big the market is today, how fast it is growing, whether demand is increasing or decreasing, and how purchasing power is evolving or has evolved through the years.

This is often measured using:

• Total Addressable Market (TAM): This is the total demand for your product or service if you captured 100% of the market globally. It shows the full revenue potential if there were no competitors or limitations.

• Serviceable Available Market (SAM): This is the portion of the TAM you can serve with your specific product, business model, or geographic reach. It reflects the realistic market you can target.

• Serviceable Obtainable Market (SOM) is the share of the SAM you can realistically capture in the short to medium term, considering competition, pricing, and capacity. It represents your actual achievable market size.

A large population does not automatically translate into a viable market. What matters is spending power, digital access, and consumer behavior.

For example, the World Bank and IMF regularly show that some emerging markets grow faster than developed economies, but growth is unevenly distributed across sectors. A good economy does not guarantee strong demand for every type of business.

2. Competitive landscape

Expansion should not begin with adding new locations to where your business provides service; it should analyse and tackle questions like “Where can we win?” “Where can we have a share of the market value? 

You need to evaluate who the existing players are, whether the market is highly saturated, whether consumers already trust dominant brands, and identify clear gaps in the market. In some regions, competition is just getting started. This creates opportunities for early businesses looking to expand to define standards and shape consumer expectations. In other markets, competition is so intense that customer acquisition becomes extremely expensive.

Tools like Porter’s Five Forces can help you evaluate different factors like Competitive analysis, Threat of new entrants and substitutes, and supplier and buyer power. Understanding this early prevents you from expanding into other countries without knowing the risks ahead.

3.  Cultural and Consumer Fit

A product that performs well in one country can fail in another due to various reasons, such as language differences, buying habits, trust dynamics, brand perception, or communication styles

For example, some markets prefer subscription models while others prefer one-time purchases. Showmax, which is a major streaming platform in Sub-Saharan Africa, provides daily or short-term payment options alongside regular subscriptions, which have been shown to increase daily active users by 30%. This reflects a preference in many African markets for pay-as-you-go or flexible pricing models over rigid monthly fees compared to Western markets. 

In Nigeria, e-commerce platforms like Jumia are expanding beyond one-time purchases by introducing Buy Now, Pay Later (BNPL) and installment payments through partners like Easybuy and CredPal. This shows that even in markets where traditional one-off purchases dominate, alternative payment models are gaining traction to improve affordability and conversion for higher-value items.

Legal and regulatory readiness

Legal and regulatory readiness is one of the most underestimated yet consequential aspects of business expansion, especially in Africa. With 54 countries operating on more than 33 currencies and dozens of legal systems, there is no single “African regulatory system.” Each country has its own corporate laws, foreign investment rules, licensing requirements, tax structures, and data protection frameworks. What is legal in one jurisdiction may be restricted or even prohibited in another.

Without proper legal readiness, businesses risk frozen funds, heavy fines, regulatory sanctions, platform shutdowns, and legal action. This holds for both physical and digital businesses, and it has played out in real cases across the African fintech ecosystem. 

1. Business Registration Requirements

In many markets, foreign companies must register as a local entity, appoint local directors, maintain a registered address, and file annual returns

This can take weeks or months and sometimes years. The complexity multiplies when expanding into multiple markets simultaneously. 

2. Sector-specific regulations

Certain industries like fintech, healthcare, education, logistics, and telecommunications are heavily regulated. Operating without proper licensing can lead to frozen funds, fines, platform shutdowns, and even legal action.

This is especially critical for digital businesses that assume they can “just launch online.”

3. Taxation and Compliance

Expansion often creates unexpected tax exposure. You may be required to collect:

• Value Added Tax (VAT) or Goods and Services Tax (GST) on digital and physical sales

• Digital service taxes (DST) in markets with specific digital levies

• Corporate income tax registrations

• Withholding taxes on cross-border receipts

• Issuer obligations for compliant invoices and receipts

Failure to meet tax and compliance requirements can result in penalties and interest on unpaid taxes, regulatory audits and investigations, blocked payouts from payment processors, and even legal liability for the business and officers

One of the most common mistakes businesses make is assuming “digital delivery = tax exemption.” Many African governments explicitly require VAT or service levies on digital products, subscriptions, and online services delivered to local customers. Without proper registration and compliance, a business can quickly fall on the wrong side of tax authorities.

Payments, banking, and financial infrastructure

You cannot operate a business without knowing and understanding how to collect money from your customers. Many business expansions fail because customers cannot pay easily. 

When customers encounter friction at checkout, unsupported payment methods, currency confusion, failed transactions, or long processing times, conversion rates drop instantly. In markets where trust in digital commerce is still forming, one bad payment experience can permanently lose a customer. This makes understanding Africa’s payment and banking landscape very important.

1.  Local Payment Preferences

Payment behavior varies significantly across African countries, shaped by the type of infrastructure, income levels, banking access, and cultural habits. There is no universal “African payment method.”

Some markets are card-first, especially where traditional banking is well-established. Others are mobile money first, where wallets like M-Pesa, MTN MoMo, Airtel Money, or Orange Money dominate everyday transactions. Some regions rely heavily on bank transfers, especially for B2B transactions. In many areas, especially outside major cities, people still prefer USSD codes or QR-based payments that work on basic phones without internet access.

If your checkout experience only supports cards in a mobile-money-first country, you will lose most potential customers instantly. Likewise, if you launch in a market where USSD is dominant but only supports app-based payments, you are excluding a large portion of the population.

This mismatch is one of the most common reasons businesses underperform in African markets. It is not that customers don’t want the product; they simply cannot pay in the way they are used to.

2. Currency and FX Controls

Many African countries impose strict regulations on how money moves in and out of their economies. These controls exist to protect national reserves and stabilize local currencies, but they introduce complexity for foreign businesses.

Some governments regulate how local currency can be converted into foreign currency, the documentation required for outward transfers, and the timing of settlements.

These rules directly affect:

• Cash flow: You may not be able to move money instantly.

• Treasury planning: Funds may be locked locally for longer than expected.

• Revenue predictability: Exchange rate fluctuations can impact margins.

• Financial reporting: FX gains and losses must be tracked.

Businesses often underestimate how much these constraints can affect daily operations. A profitable business on paper can still struggle operationally if it cannot move or access its funds when needed.

3. Settlement and Reconciliation complexity

When you expand into multiple countries, you are no longer managing one payment system; you are managing many.

What you deal with includes multiple currencies, different settlement cycles (daily, weekly, monthly), different tax systems, different payment processors, different reporting formats, and different bank accounts.

This creates a reconciliation problem, and without the right infrastructure, your finance team must manually match incoming payments across wallets and banks, convert values between currencies, separate taxes from revenue, track refunds and chargebacks, and generate market-specific financial reports, which is a lot of manual work

As the number of markets grows, this becomes harder, errors increase, reporting becomes delayed, and financial visibility drops. Without clean financial data, businesses cannot:

• Forecast revenue accurately

• Measure market performance

• Optimize pricing

• Make confident investment decisions

Infrastructure and Operations

A product can have strong demand in the market and still fail if the operational structure cannot support it. Expansion exposes weaknesses in mission fulfillment, delivery, customer onboarding, payments, customer support, and system reliability.

When companies enter new markets, they often focus on demand and marketing but underestimate operational realities: Questions like

• Can you onboard customers smoothly?

• Can you deliver consistently?

• Can you resolve issues quickly?

• Can you scale without breaking your systems?

If you can’t answer these operational questions well, when things start failing, customers will start dropping off due to a lack of trust. Some of the factors that influence business operational activities include:

1. Internet and Mobile penetration

Digital businesses depend on connectivity. You want to ensure that wherever you are taking your business to has internet. Your product experience must align with how people access smartphones. In many African markets, the primary devices are mobile phones. Your app should be able to operate offline or only consumes minimal amount of data because heavy apps and video-heavy apps can turn people away. 

Network coverage also matters, which is why some customers come back to businesses that demonstrate a high level of speed in getting problems fixed. Evaluating the internet and mobile penetration of the market you are expanding to and designing your product experience to fit into that market will help your business grow.

2. Talent and Workforce

In the recent work labor law passed in Nigeria, the National Minimum Wage (Amendment) Act 2024, increases the national minimum wage from #30,000 to #70,000, adds paternity leave, the expatriate employment levy, the protection of domestic workers bill, and a framework for addressing gender-based violence in workspaces in the amendment. Every market has its own labor dynamics. 

Evaluating different factors like local skill availability, labor laws, hiring costs, and cultural norms affecting work structures will help you create tradeoffs. 

3. Customer experience and localization

Many companies assume localization simply means translating their product from English into another language. In reality, true localization goes much deeper; it is about adapting your product to how people in a specific market think, build trust, communicate, and transact. This includes cultural norms, purchasing behavior, preferred payment methods, and even how information is presented.

When businesses fail to localize properly, the impact is immediate and costly. Customers struggle to relate to the product, which leads to low conversion rates, higher churn, poor long-term retention, and overall brand mistrust. People are far less likely to buy from, or stay loyal to, a brand that feels foreign, confusing, or disconnected from their reality.

Localization must be reflected in both language and user experience (UX). This may involve:

• Supporting local languages or dialects

• Displaying prices in local currencies

• Using familiar date and time formats

• Adopting a communication tone that feels natural and culturally appropriate

These details may seem small, but they play a major role in how trustworthy and usable your product feels. 

4. Support channels

Customer support is not just about what help you offer, it’s about how and where you offer it. Support expectations differ significantly by region, shaped by technology access, cultural habits, and communication norms.

In many mobile-first markets, especially across parts of Africa, Latin America, and Southeast Asia, people are far more comfortable using WhatsApp, phone calls, SMS, and live chat because these channels feel personal, familiar, and easy to access. Customers expect fast, conversational responses compared to enterprise-heavy markets, which may prefer email, helpdesk tickets, self-serve FAQs, and knowledge bases, which are seen as formal, structured, and suitable for complex or technical issues.

Risk Management

Expanding into new markets increases risk, risk in all forms. When a business moves beyond familiar operating environments, it must contend with new dynamics, threats, and operational dependencies that can disrupt growth if left unmanaged.

1. Fraud and Cybersecurity

As businesses expand digitally, they face new fraud patterns and security threats that can jeopardize customer data, financial systems, and brand trust.

Africa’s rapid digital adoption has made it a target for cybercriminals:

• Cyberattacks on mobile money systems, e-commerce platforms, and payment rails are increasing as digital transactions rise.

• SIM swap fraud, social engineering scams, and malware exploitation are reported across multiple regions, with Ethiopia, Ghana, Uganda, and South Africa among the most frequently targeted markets.

• In some countries, millions of dollars are lost annually to cybercrime due to weak defenses and low digital literacy. For example, Ghana recorded over $110 million significant losses linked to fraud during 2016–2018.

Even beyond direct financial loss, cybersecurity failures can undermine customer trust, lead to legal liability under emerging data protection laws, and discourage investors or partners who view weak security as a systemic risk

In fact, surveys show that cybersecurity is now considered one of the top risks for organizations

2. Operational Risk

Operational risks arise from dependencies on third parties, infrastructure, and support systems in new markets. These are risks that often go unnoticed until they impact business continuity.

Key operational risk areas are often centered around third parties' inability to deliver properly on services to keep your business running, such as weak compliance controls and using outdated technology to power systems. For instance, issues arising from telecom systems, like frequent network interruptions and limited 4G/5G coverage in rural areas, are risks you do not have direct control over but still affect your business.

Infrastructure reliability, such as an unpredictable power supply, can disrupt operations. Take South Africa’s energy crisis, for example, where ongoing load shedding has reduced economic output and increased operating costs for businesses reliant on consistent power.

Each dependency becomes a potential point of failure that can reduce customer satisfaction and increase operational costs. These issues directly affect digital services, customer access, transaction processing, and customer support.

How Startbutton helps Businesses expand with less risk and less friction

Planning expansion is one thing; executing it without operational breakdowns, regulatory exposure, or payment failures is another.

As this article has shown, most expansion risks don’t come from lack of demand; they come from infrastructure, compliance, payments, localization, and regulatory complexity. This is where many businesses stall, overspend, or fail.

Startbutton was built specifically to solve these problems. Instead of forcing businesses to:

• Register a local company in every new country

• Open multiple bank accounts

• Integrate separate payment systems per market

• Navigate complex tax regions

• Handle FX, settlements, and local regulations manually

Startbutton provides a single expansion layer that removes this operational burden.

What Startbutton enables

1. Expand without setting up local entities

One of the biggest blockers to international expansion is the legal and regulatory setup. Traditionally, businesses must register local subsidiaries, appoint directors, and comply with country-specific corporate laws before they can even test demand in African markets.

Startbutton eliminates this requirement by acting as a Merchant of Record (MoR).

This means:

• You don’t need to register a local company

• You don’t need local tax IDs

• You don’t need local directors

• You don’t need to handle country-specific filings

Startbutton becomes the legal seller on your behalf, so you can enter markets faster, with less risk.  

2. Collect local payments the way customers prefer

As discussed earlier, expansion fails when customers can’t pay easily.

Startbutton allows you to:

• Accept mobile money, cards, bank transfers, wallets, and USSD

• Collect payments in local currencies

• Use local payment rails for higher success rates

• Offer localized checkout experiences, where you get to customize your checkout experience

This directly addresses payment friction, high decline rates, poor conversion, and low trust. Instead of forcing customers into foreign payment flows, you meet them where they already are.

3. Handle FX, settlement, and payout complexity automatically

FX controls, currency volatility, and unpredictable settlement timelines are major operational risks in emerging markets.

Startbutton

• Converts currencies automatically

• Settles in stable currencies like USD or USDT

• Provides predictable payout schedules

• Eliminates manual reconciliation across markets for your business

This protects cash flow, treasury planning, revenue forecasting, and financial clarity

4. Built-in compliance and tax handling

Tax and regulatory exposure is one of the fastest ways to derail expansion. Startbutton automatically:

• Calculates and collects VAT or consumption taxes

• Handles local compliance obligations

• Issues compliant invoices

• Files required reports

This reduces legal risk, audit exposure, penalties, and operational overhead

5. One Integration, multiple markets

Instead of integrating a new payment system for each country, Startbutton provides:

• A single API

• A single dashboard

• A unified reporting system

• Centralized compliance and settlement

This removes fragmentation, the biggest hidden enemy of scale.

Why does this matter?

Expansion is not just about entering new markets. It’s about staying alive and growing in them. Most companies fail because their operations break, their payments fail, their compliance collapses, and their systems don’t scale

Startbutton exists to absorb this complexity so that businesses can focus on product, distribution, and growth.

Got any questions about expanding into Africa?

Contact us at sales@startbutton.africa or sign up to get started today.