A common question when building presence abroad is the number of employees needed at the start. Based on the available literature, there is no definitive calculation, providing the number of employees required when establishing such a presence in a new region. While in the initial (2) years, the focus probably is on achieving the first successes and this may limit margin and profit.
Although not academically proven, a practical rule-of-thumb is to have one resource for every projected $500k in annual revenue. For example, if the goal is to generate $2M in revenue within the first two years, an initial team of four employees would be a reasonable starting point. This team can be a mix of sales professionals, sales engineers, and even senior management.
The ‘Global Presence – $500k rule-of-thumb’ offers a practical method for estimating the number of resources required.
If the timeline extends and more intensive business development activities are required, adjust the number of resources! By reflecting the expected revenue. To estimate the required number of resources over time, it is recommended to build a five-year business plan with a realistic revenue forecast. The plan can then be adapted as needed based on actual results.
Once the business reaches maturity, this rule-of-thumb may no longer apply, and revenue per resource should increase significantly. The purpose of this guideline is mainly for initial investment calculations. Usually it remains applicable until the third to fifth year of establishing a remote presence.
Interested in the full story? Read “Global Expansion Go-to-Market Strategies for Scale-Ups”. Available as Paperback and eBook.