CHAPTER 1
Getting Started
The Case for Going International
Your business, big or small, can absolutely thrive as a global entity ... if you do your research and develop a rock-solid plan.
MOST ENTREPRENEURS UNDERSTAND THAT starting a new business can be an enormous undertaking. And after that, at least for a while, your goal may be merely to survive. The countless pitfalls and roadblocks entrepreneurs face when opening their doors for the first time are uniquely daunting, regardless of your skills, preparations or current market conditions. However, when the dust settles, the ultimate goal of every business, large or small, should be not only to survive but to actually prosper.
And that may be why you are thinking of going international now. Just as when you launched your company, this new, multifaceted development process will require exhaustive research, an organized approach, and a plan of attack that will raise your odds of future success abroad.
Follow the signs
It seems almost every business is entering or already playing in the global economy now. It's natural that you've begun to ask exactly how your small business can prosper via international growth. Of course, you have numerous questions and can see nearly infinite factors you will need to focus on. Let's look at a few initial questions to put your thoughts into perspective. You are probably asking:
• What indicators prompted me to think about international expansion?
• Am I (or are we) up for the challenge?
• Do I have the right people in place?
• Is this the right time? If so, how will I know?
• Where is the logical location for expansion?
• What are the costs involved?
• Is there an immediate need for my products or services elsewhere? Or: Are there suitable, reliable vendors or service providers out there that will make my business grow better or faster back home?
• Do my products or services adapt well in the international marketplace? Or: Do the goods and services I plan to buy need adapting for my purposes back home?
• Where do I begin?
These questions are by no means the only ones you need to investigate. They're just the starters. However, your answers to them can set the stage for those in-depth discussions with your partners, investors and out-sourced personnel in determining the viability of this important next step in the evolution of your business.
Steps you don't want to sidestep
The biggest question, one we are constantly asked by entrepreneurs when the subject of international expansion and growth is brought up, is "Where do I begin?" And it's for a good reason. Having that rock-solid plan of attack is vital to your success, and the research behind it is no less important. Although all of this will be broken down as you read further, the following five steps will help you get this exciting process pointed in the right direction and assist you in determining the proper timing, the best approach, and the necessary steps involved in taking your business to the next level.
1. Know what you don't know. We all like to think we know everything, but sadly this is never the case. Expanding into another country will carry an entirely new set of circumstances with it. Having qualified and professional people and organizations to help you navigate through the labyrinth of legal, accounting, real estate, logistic, economic, and cultural factors will be essential to your success.
2. Determine the viability of your products or services on the international stage; vet your potential suppliers. You may be selling record numbers of your products or services locally. You may get the highest marks for customer service in your hometown. You may even be the local market leader in your industry. But does it translate elsewhere? Will the same marketing and advertising approaches be effective outside of your current market? Alternatively, if you are going global in order to expand your supplier base, you'll need to apply all the questions you'd typically ask a prospective vendor back home. Either way, it may be necessary to work with local experts to be sure you're getting valid, reliable information.
3. Research the best fit for your expansion. Countless factors will present themselves when you begin researching potential locations for your initial expansion. Be mindful of aspects such as the economic stability of the surrounding region(s), currency exchange rates, the ease (or difficulty) of import/export requirements, language and cultural considerations, demographics, the actual need for your products or services, the already-present competitors for your potential customers, local laws and the legal elements attached, and overall costs to operate in the region. If you plan to buy goods or service abroad, you can add questions about the reputation of vendors, the infrastructure, safety testing and so forth. Again, there are many other things to consider, but these elements will help shape the discussions regarding this particular step.
4. Fire up that biz plan. An absolute necessity for every entrepreneur, a fully-executed business plan is essential for putting everything into perspective for your future international growth. It will serve as a road map for your success; and it will demonstrate to investors, lenders, landlords and others your well-thought-out intentions and plans for your new a new market or source.
5. Bring in others to help you get "in the know." Every market and source of supply is unique, and often they can vary greatly, even over very short distances. Assembling a resource team of professional entities (legal, accounting, etc.) as well as locally-based individuals (residents, local businesspeople, agents or consultants, new referral sources, etc.) will help you understand everything from buying trends to cultural and economic aspects of operating a business abroad. Joining local business guilds and getting involved with several networking organizations in advance of your expansion will also help ensure success.
Make the case
In addition to expanding your flourishing business, crossing the threshold into an overseas market can help stimulate a sluggish or even stagnant enterprise. Working in new surroundings, experiencing a different culture, and discovering an untapped market or source of things you need can inspire you to take your business to even greater heights back home.
The case for going international should be one that stirs excitement and anticipation for you, your partners and your investors alike. Keep in mind that even though there will be pitfalls and challenges, a well-executed launch, based on proper research and a rock-solid plan of attack, can yield a sound and profitable business decision for everyone involved.
M.P.
How to Do Your Homework, and Who Can Help
Homework, research, and analyzing every facet of your expanded new business abroad is the key to surviving ... then succeeding.
IT'S NOT GLAMOROUS. IT'S DOESN'T MAKE YOU ANY MONEY at the time. It's time-consuming and often complex. But doing the necessary groundwork, and then laying the proper foundation for your expansion efforts, is absolutely vital for surviving and succeeding in a new market abroad.
Of course, the official starting point of expanding your business internationally begins with a plan. And that plan is the fruit of extensive groundwork: the preliminary fact-finding that you do, the results of which you then organize as the basis for your expansion plan. This initial step sets up all the other elements of your expansion that will be used to measure its viability. Once your groundwork is complete, and your findings are validated, you'll have your rock-solid foundation for success.
Laying down your groundwork
Every aspect of your current local business gives you a template for your groundwork in preparing for expansion abroad.
Think about that business. There are certain features that you routinely analyze, review and adjust for its optimal performance. These features include, among others:
• The financial status of your company
• The current (and estimated future) status of the economy
• The line of products and services you offer
• Pricing structures
• Sales, marketing and potential growth strategies
• The performance and price/quality ranking of your vendors
• The opinions and viewpoints of your investors
• Expenses, revenues and taxable events
• Shipping, receiving, inventories and returns
• Customer service
• Competitors in the marketplace
• Market and consumer trends
All of these features will (eventually) be present in your target country if you are going there to sell or buy, and need consideration or projection when you expand internationally. And if your target market happens to be halfway around the world, there will be additional features to examine. You'll need to address them to determine if your business can establish traction in the target region. When you have acceptable answers or estimates for these items, then your next level of groundwork can start.
Go deeper
Your findings will help you to begin focusing on a certain region (or a small number of them). Then, you can ascertain their viability for the products and services you plan to offer or buy. The findings may indicate that things will be very similar to your original location or to others you are already present in.
However, the findings may point to vastly different offerings due to consumer needs, cultural aspects, pricing or other factors. If so, and if you feel the rewards are worth it, you'll need to dig deeper, and do more comprehensive groundwork before you move forward. At this point you should work out rough timetables showing how long it may take to accomplish this work (or when it is feasible to implement a stage). A partial list of those research undertakings includes:
• Seeking out the best location(s) for success
• Uncovering the best product sources or vendors, or discovering the best means of selling
• Learning and understanding the specific marketplace
• Grasping the local culture and respecting it
• Establishing an image and a presence
• Finding customers or specific vendors
• Determining the type of initial marketing/advertising you'll need to do, or what it will take to establish strong relationships with the vendors you've discovered
Immerse yourself locally
Ideally, you've been performing Internet searches, reading trade publications and attending trade shows and related events in your target market. Actually traveling to those locations will be useful; do so if possible, as part of your initial groundwork.
Such scouting visits can be an invaluable means of making that final decision in moving forward (or not) to the place(s) in question. In fact, for some, it's a mandatory step. But this particular phase of your groundwork can also be an adventure and a lot of fun. Immersing yourself in the local scene can unearth countless factors that research can't provide. You can much more easily answer varied but important questions like these:
• Do weather patterns or cultural traditions influence the market?
• What time do shops have the most foot-traffic?
• What is transport or parking (or other infrastructure) like in the area I am considering?
• Are local or regional politics going to be a factor for my business?
• Who are the key players (suppliers, competitors and such) I need to consider?
You can relatively easily come up with a hundred or so questions like these to tailor your research further. It all helps lay the proper foundation for future success.
Even simple people-watching can provide incredible insights into how you may want actually do business in a particular place.
• How do people interact with each other on a busy day?
• Where do they gather after a day of work?
• How many different cultures are represented?
• How many languages are spoken?
• What local trends am I noticing (fashion, food types, etc.)?
These sorts of questions can add real human dimensions to the data you've already uncovered. Their answers can provide unique perspectives that can give you a substantial edge when launching in an area that's unfamiliar to you.
And if you've had some experience in international expansion already, you may know that even a neighboring, seemingly very similar culture will have its particular quirks and customs. It can pay off well if you try to research such places with the same care you'd give to an "exotic" prospective market so you really can identify the nuances and work with them productively.
Help ... please!
One of the single biggest downfalls of entrepreneurs is their reluctance to ask for help. Maybe it's a pride thing. Maybe most of us feel as if we know the answers or can get them without assistance. Truth-be-told, the answers to those vital questions can often be answered by local contacts (sometimes even entrepreneurs in the immediate area) who have a direct history and association with the location you are investigating. Many people can give you a head start on the groundwork you need to do if you simply ask good questions. And a long-time resident or shop owner's local perspective can deliver straightforward information that you could not obtain otherwise. Additionally, local governments, visitor and tourism bureaus, business guilds, trade or other associations, the press and similar resources can also supplement your overall research to help paint a comprehensive picture for your expansion plans. So don't be shy, and don't be too proud to reach out. It's part of the fun of international business.
M.P.
Market Research and Data Collection
Doing your homework, through extensive research and analysis, is essential in laying the proper foundation for your expansion to new markets.
IT'S PROBABLY SAFE TO SAY that most of us hated homework as school kids. It took a lot of time away from other enjoyable activities and seemed tedious and unnecessary at times. Today, as an entrepreneur researching a new market abroad, you may feel like you've traveled back in time, doing your homework. Performing endless research, analyzing data, following up on inquiries, and then evaluating the information once again can seem tedious at times. But the result of this exhaustive process should garner invaluable facts, figures and market trends you'll need to know when devising your international growth plans. And hopefully you'll also have some eureka moments, when you discover something exciting and promising for your business.
Understand the terms and their importance
If market research is a relatively new activity for you, don't worry, just get started. It's basically a well-planned process to help you assemble a working picture of specific target markets and/or the consumers or vendors within those markets that matter to you. The amalgamation and then analysis of that information can then help you assess the likelihood of your products and services succeeding there.
In your data collection, you will probably use multiple sources (interviews, email, phone calls, surveys, questionnaires, the business press, online information, etc.). Those sources can deliver either quantitative research (numbers or quantities) or qualitative forms (impressions, interpretations or images, rather than numbers). Assuming you are tapping reliable sources, you can digest and analyze the results to fill in more and more areas of your map of the local business landscape.
Why is all of this necessary? Think about it a minute: You're quite possibly talking about doing business halfway around the globe, in a culture, language and business world you may know little about today. Unforeseen obstacles could be waiting in the wings. You can't expect to know what you need to know about a new target market unless you do the proper research and analysis. Everything, from logistics to location and from market trends to demographics, needs thorough investigation to ensure your international business plans are on the right track. Investors and banks alike will want to review your findings in the form of reports, charts, graphs and narratives within your business plan as well.
Formulate questions ... then go get those answers
Let's quickly assemble a few key questions to demonstrate how vital your homework is regarding your target market, assuming for the moment you sell products. If you sell services, or if your target market is going to be a source of supply or an outsource location, you can adapt the questions and add others accordingly.
• What are the current market conditions for my products there?
• How do the current (and projected) demographics correlate to my products?
• Do I need to have a physical presence? If so, where should I locate?
• What does the real estate market look like and how much will I have to pay to operate in the areas I am considering?
• What are the transportation options in these locations?
• How far will a customer be willing to travel to my business?
• What do the employment and earnings numbers look like in the region?
• Can I find quality employees in the locations I'm considering?
