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The International Entrepreneur – How to Respond to International Business Opportunities Outside Current Markets

Business Opportunities in New Countries

 

Michelle looked up from her computer monitors and directly at her business partner, Brian.

“Japan? Do we even know anyone in Japan? How did they find out about our company?” asked Michelle.

Only 9 months ago, Michelle and Brian had launched their software startup. Things were going better than they ever dreamed they would. They were right about the need for their product in the market and the company was now hurdling forward at rapid pace – doubling in size roughly every month. It was all that Michelle and Brian could do to keep up with the growth.

There had been some sales in Canada and then Ireland, but Japan? That meant non-English clients and many more unknowns. This would be a large client, but was it the right time to expand to a market not yet covered?

How do you respond to a sales lead in a market you do not yet know?

As with most international business questions, the answer is, it depends.

Companies that seek out products and services not yet offered in their country are normally seeking a competitive advantage that they hope your product or service will provide. This is also true for distributors wanting to represent your product in a new market. They often want your product as is with little or no negotiated concessions, no trips to their country for sales presentations or other costly outlays. They are willing to pay in your currency and sign your contract terms. That’s probably how Michelle and Brian sold product so quickly to new customers in Canada and Ireland.

There are clear business risks for selling products to clients in markets where your company has no presence. Entrepreneurs need to watch for risks, including these:

  1. Intellectual Property Protections. For anyone relying on newly developed technology or a brand with growing market recognition, protecting your IP is paramount to long-term success. Trademarks, copyrights and patents can still be infringed upon, but at least if they are internationally registered you have the means to legally defend them. Once the damage has been done, it’s too late to register and try to recoup any losses.
  2. Compliance with Regulations. Sure, you can sell products or services into a country. But that does not mean that it was done in compliance with local, national and regional laws. International trade is governed by trade agreements and your own country’s laws, as well as the rules governing your customer’s location. Rules may govern your product’s packaging, tariffs, import restrictions, computer server locations, etc. This is an area where arming yourself with knowledge is smarter than learning through fines, penalties and bans.
  3. Logistics and Support. For products that need to be transported or assembled at the overseas location, logistics can be a costly part of the sale. Once a market is established, shipping costs can often be reduced with larger volumes and long-term contracts. But for early sales, be sure to fully understand logistics costs and build them into your price quotes. For Michelle and Brian looking at Japan, they need to consider how they will support their product with this customer. Will time difference be a challenge? Language? Discuss these issues up front so that there are no misunderstandings.

There are more risks, but this is a list of some of the most critical early considerations.

Entrepreneurs tend to approach their early international sales opportunities in one of three ways:

  1. Throw Caution to the Wind. This is a very common approach for young companies. The pressure to quickly show top-line company growth outweighs the perceived risks. Michelle and Brian assumed that all would be fine in selling to Canada and Ireland without checking for any issues. Normally this subsides around the same time as the first foreign fines are levied or IP piracy surfaces.
  2. Stall the Sale & Do Your Homework. This is a smart approach IF the sale’s margin is larger than the cost to pay for any in-country trademark registrations and to check for any cross-border regulatory issue. TIP: check your own country’s exporting resources first because they are often free or nearly free. Arming your company with knowledge also prepares the company for its impending growth into new markets. If further international expansion is imminent for Michelle and Brian’s company, this may be the best approach.
  3. Stick Your Head in the Sand. Ignorance can sometimes be bliss, if you need to focus on a critical path to success that has no room for deviation. International can be a catalyst for intense revenue growth. But if your staff is tiny and your product development list is large, you may not have the bandwidth to research Japan or any other remotely located opportunity until your company grows larger. It’s not ideal, but sometimes it’s temporarily the smart choice. Since Michelle and Brian seem to have a market-ready product with traction in their home market, they should try to learn all they can about how to intelligently move forward into new markets.

No matter which approach a company takes with leads from new markets, it is important to start learning about where to find new high-growth markets overseas, how to enter those markets, and how to stay steps ahead of the competition.

Good luck to you in all of your international business efforts!

Becky Park 

 

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The International Entrepreneur – 5 Tips to Motivate Global Telecommuting Workers

International Entrepreneur - Tips to Motivate Global Telecommuting Workers

 

Sam checked the time on his phone – 5:00am. As he sipped his coffee, Sam prepared for his phone call with Chloe in Ireland, his EMEA Regional Director. Since his software company expanded globally last year, Sam needed to manage new employees in new markets.

Sam’s problem was that he never felt like he could trust these new workers like he could his on-site staff. Sam had tried to solve this by implementing a detailed reporting process. That way, he would know exactly what Chloe and her counterpart in Hong Kong, Yang “Oliver” Jun, were doing with their time. He also invited them to daily leadership conference calls, which they both regularly attended.

Sam wanted these foreign employees to feel included as part of the team, even though meetings were well outside of regular business hours. Sam felt the bristled tone as he and Chloe exchanged greetings. But how could Sam motivate his global remote-based workers to the productivity levels of his home office staff?

 

The Promise & Perils of Global Remote Employees

International employees in remote offices around the world present interesting opportunities and challenges. Companies are realizing that they can access a much larger talent pool when they offer telecommuting positions. When expanding into new international markets, remote-based staff can be incrementally added based on a growing understanding of a new market’s potential for market access, supplier access, capital access, etc.

As Sam is discovering, managing from afar is not as simple as it appears. A leader does not have the same level of access to their telecommuting staff. Throw in a half dozen time zones to cross and timing becomes an additional hurdle to online collaboration and supervision. The trick is to focus productivity and performance outcomes. With that in mind, here are:

 

5 Tips for motivating your global workers:

1. Set Clear Expectations and Stretch Goals. This is particularly critical for global employees because local business rules and culture are always different than at the home office. For instance, American companies have to set strongly worded company policies that comply with the Foreign Corrupt Practices Act (FCPA), else American company offices could face harsh penalties and criminal charges in the United States.

Setting quantifiable goals for all staff that takes the focus off of  “how” things are done and instead focuses on “what” needs to be accomplished. In other words, build whatever type of boat you want, but sail it to Port A by Tuesday.

2. Hire employees overseas with a successful telecommuting track record. Add it to the job requirements and to the interview questions for candidates. Working remotely takes self discipline and independence. Not everyone is meant for this work environment.

3. Conference Calls and Complicated Reporting do not increase engagement, only resentment. Conference calls take away people’s ability to read non-verbal communication signals. When navigating between work cultures, these signals give international staff instantaneous feedback so that they can make real-time adjustments to communications. Without that, remote staff are flying blind and likely frustrated.

Reporting can be a helpful management tool. But more reporting rarely improves results. One EMEA Regional Director complained to me that he spent every Friday just creating the complex reports for his American home office. The extra reporting not only reduced his productivity, but his motivation as well.

4. Face-to-Face Video Conferencing builds trust and fosters problem solving. Time and again, a 1:1 video conversation with an employee is the best forum for asking and answering questions, setting expectations and reacting to updates – both positive and negative. To make the most of video time, send updates ahead of time for staff to read and digest the information. Regularly scheduled video calls several times per week are best when it’s practical.

5. Don’t set your foreign employees up as independent contractors. Most countries do not allow employees to work separately as contractors because it circumvents local labor laws and employer taxation. Imagine what it would feel like when your company’s first request of you is to do something illegal on their behalf. Instead, either register an in-country subsidiary or hire them through Global Employment Outsourcing (GEO).

Back to Sam, our software company CEO and his new Asian and European Directors. He needs to call back Chloe using a video call to allow for face-to-face dialog. This will help him build greater rapport. Sam can ask questions about her progress on building her region for the company, as well as how it’s going working remotely. By asking the right questions, now much of the extra reporting can be eliminated, adding to Chloe and Oliver’s productivity. By receiving the review of yesterday’s management meeting, Chloe will have had time to think about how decisions would affect her region and is able to formulate better questions for Sam. Now both Sam and Chloe feel like their conversation is moving issues forward and improving their working relationship.

In time, a successful director will need to add local staff in an overseas market. But these first few employees are critical to long-term overseas growth. Their engagement needs to be a leadership priority.

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The International Entrepreneur – What’s Missing Globally in the Connection Economy?

International Entrepreneur Global Connection Economy

A few years ago, Seth Godin famously introduced the Connection Economy into our lexicon to describe how connecting people, companies and resources was a source of increasing value creation in our world.

Since you’re reading this article, that means that you are part of this global technology revolution and probably interact with it frequently. Here are just a few of my own examples of engaging this Connection Economy from this past week:

  • I collaborated via email with my client’s Malaysian country manager to reach her target leads using calls, emails and social media.
  • I took a call from a company in New York looking for an Uruguayan business culture expert. They found my website through Google. I referred them to an Uruguayan contact whom I have never met face to face, but regularly network with in social media.
  • I Skyped to mentor a Canadian rising star in the international marketing field, who is building a consulting practice.

On a personal level:

  • I sent my teenage son, Nathan on a foreign exchange with AFS Intercultural Programs. That means that he will stay with a host family in Italy for 5 weeks whom we have never met before, but were vetted locally by AFS.
  • My Brazilian exchange student, Matheus came home safely from a gathering with friends via a ride from an Uber driver.
  • I took a few daydreaming moments and surfed AirBNB for a nice house rental near the beach in San Diego for Labor Day Weekend in September.

 

When Seth Godin originally described the Connection Economy, he said that it required four pillars:

  1. Coordination. This may be coordinating between people as in the case of Uber. It could coordinate the exchange of money as is the case of crowdfunding. And often it’s the coordination and exchange of information.
  2. Trust. The parties involved need to have a reason to trust each other. Trust is normally built on a foundation of consistent words and actions by people and companies. Now we are trusting partners and vendors whom we may have never actually met before in person.
  3. Permission. In the Connection Economy, we voluntarily surrender our information, but only after trust is established.
  4. Exchange of Ideas. This blog (and everyone else’s blog) are part of that exchange of ideas. So is a review site that tells me what current and past employees think about working for a company I’m considering as a partner.

 

Without these pillars, companies like Amazon, Google, Facebook, and countless other Connection companies including my own would not exist. But let’s get out of the American-only point of view and expand to…

 

Bringing a Global Context into the Connection Economy

This may seem confusing to some. After all, isn’t the Connection Economy by its very nature borderless, allowing for seamless access to markets and resources from anywhere in the world? Ideally – yes, but in reality – no. Here’s some context:

 

Access to Connectivity is Far from Universal

 As of 2019, 4.4 billion people in the world had access to the internet.  This still leaves  almost half of the world population still without access.  There are some sizable barriers to improving access to conduits of information and opportunities that include education, disposable income to buy the necessary tools and services, and even interest.

 

Language and Culture Create Information Silos

The Connection Economy had the perfect solution to bridging language gaps and reaching new markets: Google Translate and other translation widgets that could quickly convert English content effortlessly into dozens of other languages. How clever! Those who tried it soon learned that language is much more nuanced and complex than first thought. Literal translations yield some major mistakes that have cost companies dearly.

Culture is even more complicated. It underpins what determines whether a company or person is worthy of Pillar #2: Trust. Cultural rules run deep and when someone unwittingly violates these rules, the business relationship might never resume. Think of it another way. For all of the interactions you have had over the years with international contacts where you thought the other side was being unreasonable and disagreeable – 90%+ of those negative reactions were probably cultural misunderstandings. The solution is to hire a culture coach to help navigate the norms in key markets and relationships.

 

Regulations Often Protect Entrenched and Local Interests

The Connection Economy has displaced more than a few cab drivers and telephone book printers. It has upended whole industries. In many places around the globe, those who profit from keeping things as they are have invested in supporting laws that protect their interests. Before doing business in a new country, be sure to consult with country specialists who can advise you of any problematic restrictions.

 

Expect the Next Great Connecting Concepts to Come from Anywhere in the World

While we tend to see many Connection companies rise out of industry clusters like Silicon Valley, London, Boston, Santiago, Mumbai and Tel Aviv, ideas can come from anywhere. As part of the exchange of ideas, we need to encourage and support new startups with great concepts with our patronage and investment capital – regardless of location.

 

As the beneficiaries of the Connection Economy, it’s important to keep in mind that there is no global standard. We need to increase overall access to the Internet worldwide, providing new opportunities to billions of people. It’s important not to mistake your home market’s perspective, language and cultural rules as the world’s norm. Be prepared for reactions to change in various corners of the world. And watch for the next great advancements in our technology revolution.

Onward & upward

Becky Park 
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The International Entrepreneur – Trump and other Branding Issues in International Business

 

International Entrepreneur, Branding Issues in International Business

Prime Minister David Cameron of the United Kingdom, President Barack Obama, Chancellor Angela Merkel of Germany, Jos? Manuel Barroso, President of the European Commission, and others watch the overtime shootout of the Chelsea vs. Bayern Munich Champions League final (Official White House Photo by Pete Souza)

I was waiting on the platform for the train from Bedford to London Heathrow. It was October 2004 and I struck up a conversation with a local businessman (staying true to my American stereotype of perpetual friendliness). After a few minutes, the gentleman asked me what was really on his mind.

What could Americans be thinking to not only have elected President George W. Bush once, but to be poised to reelect him for a second term?? To most Brits, it seemed ridiculous.

I remember standing on the platform trying to explain how our media had splintered into audience segments where an American could hear and read literally only the point of view that they already held. That the United States was politically split in half – sometimes leaving friends or family members on the other side of the opinion divide. My new British acquaintance seemed generally satisfied with that answer. But I was left to ponder about the effect that my country’s leader was having on American business in overseas markets.

Four years later, I was in Beijing and was surprised by the adulation the Chinese openly felt for Barack Obama. I see the same widespread enthusiasm for leaders like Canadian PM, Justin Trudeau and Pope Francis. It’s the type of branding that helps to open doors to new diplomatic relationships and in the case of the pope, new ideas.

This country “branding” issue/opportunity is not universal. Larger countries garner more regional and international attention than their smaller neighbors. Every country has local and regional issues, whether they be fishing rights or an upcoming presidential election. As Americans traveling internationally, we notice that our presidential elections receive press coverage literally all over the world. When a candidate like Donald Trump says something controversial meant to keep him as the top news story in the U.S., it is heard around the world and interpreted in many ways.

 

If all of this sounds like a distraction to most international business – it is.

 

Most of us avoid talking about politics, religion, and certainly any hot button issues when doing business abroad. We want to achieve our business goals. And alienating potential clients or partners with strongly-held contrary opinions is a recipe for disaster on any continent.

 

Here is advice on how to manage country branding in business:

  1. Most important: Do no harm. Don’t bring up controversial topics that need not be breached. No conversations about the refugee crisis with Europeans. No conversations with Brazilians about their recession. No AIDS talks with Africans. The list goes on, but this is where controversy stays in personal conversations rather than in business talks.
  2. Don’t take offense where none was intended. The temptation to react to statements about your country’s leaders or issues is understandable. It’s much more personal to a German to talk about Angela Merkel than for me to bring her up into conversation. Your German counterparts likely had a vote for or against her party’s election. When you would normally react, stop and first gauge the intention of the offender.
  3. Ask about the filters that color someone’s opinion. When an entire business dinner in Jordan stops talking and eating to hear your opinion of gun violence in the U.S., you can answer with the universal truth – it’s complicated. Then immediately start asking questions to learn what your fellow guests have heard and what they think about the issue. This will help you to carefully frame your answers to stay true to yourself and diplomatic to your fellow guests. If this sounds like too much hassle compared with a direct answer, remember that media, culture and personal experiences frame all of our perspectives. Do I know what a Jordanian thinks about this issue? Not until I ask.
  4. Always learn a country’s basic information before travel and doing business. This includes the country’s leader, their economic and social topics, and hot button issues. This takes the pressure off of your own country’s branding (if it’s negative) because you can ask questions about topics that your hosts should appreciate. It also is a signal that you have a basic respect for places where you do business (for more on showing local respect, please read my articles on Respect and also Social Corporate Responsibility).
  5. Pull the conversation back to how the subject impacts business and trade. As business professionals, this is usually a common area and one with less friction. And most leaders and topics can usually be tied back to it. For example, Are new immigrants helping the U.S.? Immigrants represent a significant number of working adults in our economy. Most are bilingual with the capability to serve multiple markets. While there are adjustment issues, the U.S. has always absorbed immigrant populations successfully. So I would answer yes. It’s a business answer to a question that has social, political and cultural implications. If the topic is a tricky one, then this business focused answer is a helpful bridge into another business topic that furthers building the business relationship.

 

No matter your political, cultural, social or economic views, managing key conversations helps further your international business dealings. Remember to (1) do no harm, (2) avoid taking offense, (3) ask for others’ opinions to understand their perspective, (4) know a country’s basic information and (5) pull conversations back to business topics as needed.

For more information about growing and supporting your international company, join the International Trade Tribe:

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The International Entrepreneur – Tips for Being an International Distributor

Tips for Being an International Distributor

A Kenyan distributor recently wrote to me asking for advice to build an in-country distributor business. He was interested in representing more products in the Kenyan market and wanted to find the right suppliers for his business. That is a great topic especially given both the opportunities associated with reselling globally-branded products and the risks of working with new supplier partners. Here is my advice:

 

Specialize by Client Profile and Seek Related Products

I remember traveling once in Italy and visiting Pisa with its famous vertically-challenged tower. The sky filled with clouds and all at once a heavy shower drenched every tourist in sight, sending everyone running for cover. The nearby Ethiopian entrepreneurs tucked away their packs of postcards just in time and switched to selling umbrellas covered with images of famous Italian sites. I still have my emergency Pisa umbrella purchased that day. These Ethiopians knew their target market: tourists like me. Our changing needs were their new opportunities.

This is true for business-to-business markets as well. All companies look for resources to help them find smart solutions to their challenges. Whether your clients are hospitals, schools, young tech companies or any other profile, learn what they need through conversations in order to identify the types of products you should be representing. If your company wants to expand to serve more diverse sets of clients, consider adding staff or even teams to address this new market rather than spread resources too thin across a disconnected base.

 

Define Your Geography

Distributors normally cover a specific region. In a large country, this may be a handful of states or provinces or even as small as a metropolitan area if the local product demand is high. But in some areas of the world, a distributor may be able to cover a much larger area because clients are located far from each other. In the case of Africa, a distributor with headquarters in Nairobi may hire employees or contractors in neighboring countries like Rwanda, Uganda and Tanzania to help him sell products in those countries. But whatever the size of the distributor’s covered territory, it is vitally important that they are able to support sales throughout the whole area with local language, on-site visits, etc.

 

Focus on Business Relationships Over Transactions

As a reseller for an international product, your business depends on both your relationships with both your suppliers in another country as well as the relationships with your clients. Transaction-based sales assume that you do not care if you do business with this client again. Relationship-based selling includes:

  • Building Trust. It takes time to earn a client or supplier’s trust. One of the most important components of trust-building is consistently delivering on what you say you will do.
  • Building Reputation. Your reputation is how others would describe you and your business. Do they see you as someone who delivers product on time? Do you work hard to find new potential clients? Do you contact target accounts regularly to find out their needs? A good reputation always leads to referrals to new suppliers and clients. It is a key long-term investment.
  • Caring about both suppliers and clients’ success. Long-term relationships as a distributor and supplier always should focus on how to help your suppliers and clients succeed. If you serve the hospital market, then how do your clients define success? What keeps them from being more successful in your market? Even if you can’t solve a problem like the need for investors, a lack of qualified medical staff or new government health regulations, it shows great concern and understanding to acknowledge challenges they face and to be looking for ways to help them be successful.

 

Find Suppliers You Can Trust Now and Later

Start on the right footing by carefully choosing companies and products you want to represent. Have a clear explanation about how each supplier and their products fits with the rest of your product offering to your clients.

Build international supplier networks with those you feel you can trust. Even the best product fit must also be met with a trustworthy staff. Does the supplier take time to talk with you? Do the company employees follow through with what they say and do?

Before signing on as a distributor, be sure to check a company’s reputation in both their country and yours. A third party investigator can verify this for you. Also, you can ask to talk with other distributors currently working with the company.

 

International distributors is a popular option for growing companies to reach new markets. It is equally beneficial for those companies in the overseas markets wanting to represent new offerings. As a distributor you will want to focus on a specific client profile and geographic region. Focusing on identifying and building business relationships with overseas suppliers is more important than those early sales. Only work with those you can trust!

The International Entrepreneur – Improving Employee Engagement in Your Global Workforce

Improving Employee Engagement in your Global Workforce

I knew from the way that Pedro in the Mexico City office answered the phone that something had turned for the worst. Pedro’s voice sounded low and muffled – preoccupied and low energy compared with our recent interactions. Pedro and his colleagues had recently been missing key details in our shared projects. They just seemed disengaged from their tasks. I picked up the phone to call someone I knew from the company’s leadership team.

A Pandemic of Disengaged Zombie Workers

Pedro and his colleagues are not the exception. They are unfortunately the norm. Studies by Gallop, Deloitte, Dale Carnegie and others all point to the staggering lack of employee engagement in the United States. These studies all show 70%+ of workers surveyed consider themselves unengaged at work.

As a company breaks through from startup to growth stage, its leaders often discuss how to preserve that “entrepreneurial culture” – its key success factor. Translated:

We don’t want to lose that sense of individual employee contribution and drive to beat the odds.

We’re talking about the essence of employee engagement. According to Dale Carnegie Training, U.S. companies with engaged employees outperform non-engaging companies by 202%.

Globally The Disengagement Issue Compounds

Most growth-stage companies eventually start taking global markets seriously, opening overseas offices and hiring local staff. Here is where the employee engagement challenges start to compound. A disappointing 13% of international employees feel engaged in their jobs according to Gallup’s State of the Global Workplace.

There are factors to consider to improve global worker engagement, productivity and accountability:

  1. Motivators Vary – Money is often a strong work motivator world wide. If paid what we feel is a fair, market rate for our efforts, then we are likely motivated. But most of us want more than that. We may want opportunities to learn new skills, job stability, and career advancement. Most of us want some work-life balance and a good work environment.
    But beyond that, motivators may be quite different. For instance, in group-oriented cultures team projects are preferred to individual efforts (Japan). Some cultures expect a relaxed atmosphere (Jamaica) while others want intense work time and a shorter workweek (Germany).
  2. Management Styles Vary – For most Americans, the most energy-draining management style is being closely supervised while also verbally reprimanded in front of peers over seemingly minor mistakes. Yet this is common in India. Indian managers overseeing non-Indian staff learn to modify their style via coaching or negative results. Likewise, American managers are not always viewed in the same way as they would be in an American-only environment. Engaged employees normally trust their leaders, but building trust changes based on culture. Know what’s expected.
  3. Language and Communication Styles Vary -“Are you sitting in your seat?”, is a curious question at the onset of my colleague’s international team calls. While an interesting way to ask if everyone is ready, there are other linguistic challenges that cause breaches in trust and motivation. One of the bigger challenges in communications is between indirect and direct communicators. Direct communicators (ex. Dutch, Israeli) often say what they are thinking and value sincerity. They find indirect communicators annoying. Indirect communicators (ex. Japan, Ghana) typically avoid saying anything embarrassing to themselves or the other party. They value courtesy and respecting others. They often find the direct communicators to be rude and untrustworthy. Working with those you can’t trust reduces engagement.

Who in the Organization Should Fix This Issue?

Disengagement is often a company-wide issue, affecting operations, financials, customer engagement and other key functions. It needs to be discussed at the executive level. The Chief Human Resources Officer (CHRO) has a key role to play in offering solutions in terms of hiring criteria, employee onboarding, cross-cultural communications training and conflict resolution. And finally, local office managers need to be coached on global management skills.

How to Increase Employee Engagement Worldwide

All is not lost to office zombies! Here are my ideas to re-engage:

  1. Hire the right people overseas. Even within an overseas market, there is always a wide candidate pool variance. If your company values high energy staff or a connection to your mission or customer focus, then search for that match in international hires too.
  2. Ask the right questions and then listen to the answers. When an office or staff member seems out of alignment with the rest of the company, it’s the time to ask: “What do you think about…?” “Can you see a better way to do….?” “What would help you to feel more engaged in your job?” If it’s possible to fix the situation by conversation, then it saves the company the cost of replacing another employee.
  3. Learn the cultural basics of your global offices. Instead of assuming sameness, find out what the differences are to head off future conflict and energy drains. An easy Internet search will provide basic information on a country’s business culture.
  4. Take input from all locations for company goals and employee reward systems. Part of employee engagement is ownership in the company’s outcomes and processes. Solicit input and credit great ideas from outside of the HQ office.
  5. Explain why decisions are being made and how a decision fits into the long-term strategy. Since business rules change from country to country, it helps to explain that context in which your company leaders make their decisions. Decisions that don’t seem to make sense are a major demotivater.

Often executives of growing companies assume that global offices and employees are all from the same home culture. Few international employees will speak up when they feel that internal culture clash for fear of losing their jobs. Disengagement sets in. Instead of accepting zombie employees as an inevitable byproduct of company growth and success, it’s time to use knowledge and communications to engage and inspire throughout your organization.

Onward and upward,

Becky Park

 

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The International Entrepreneur – Setting up Your International Distributor Program for Success

international distributor partner representative

 

Your company may use a partner, channel, distributor or representative (rep). They all may follow slightly different selling structures. But call them what you want. If they are bringing in new profitable clients, then you love them.

I’ve talked with many young, growing firms who manage an international distributor program as a way to quickly expand into new international markets. There is a strong case to be made for this approach. The costs are low – much lower than setting up a local subsidiary, hiring staff, making local connections and managing local compliance and tax regulations. Distributors already have local network connections. They know how to sell into their local market. It can be a great early-stage market entry approach to help rapidly expand your company’s global footprint.

Now that was the Disneyland Version of international partners. For most companies, their distributor outcomes are more mixed with some partners performing beyond expectations, others selling literally nothing, and some requiring high levels of staff support that eat through any profits they may have produced. While I cannot guarantee your success with all partners, here is my advice to improve your partner success rate:

1. Proactively recruit your international representatives.

Once a company signals that they are doing business internationally, foreign agents of many types will want to be your exclusive distributor to their home country or region. But just because a Brazilian agent approaches you does not mean that they are qualified, connected or otherwise the best representation available.

It make take a little more work upfront, but it is definitely worth the time and energy to proactively seek out Brazilian rep options. Then it is just as important to properly vet these potential partners for their reputation, connections, legal standing, etc. As I’m sure you all know from your own experiences, partner turnover is costly.

 

2. Develop a close relationship with your partners.

This may sound counterintuitive to some. After all, the less time spent with a rep means less support costs. But that’s the Accountant’s Approach to international expansion and a self defeating one at that. Strong channels mean much higher sales potential, which normally outweigh the costs by many fold.

Instead, try to arrange to visit each rep at least once a year in their home market. This will set you apart from the majority of other companies your distributor represents. A rep likely represents a few dozen to a few hundred products. You want to make sure that your products are top of mind when he or she is talking with potential clients.

It also helps greatly if your business relationship with a rep grows in complexity and integration between your companies. If the relationship is basic and remote, then when either side falls on tough times or the first sign of challenges, they will leave the arrangement. It is much better to have reasons to stay and strengthen your channels.

 

3. Work together to decide on the right in-country messaging and supporting materials.
International representatives have every reason to help you figure out the best way to communicate with local potential buyers. It is not unusual for buying and selling patterns to shift significantly from market to market.

The place to start is with your company’s current marketing assets. What can be used without any alterations? Is there anything that can be easily created by you or your country rep to suit their selling process? It may be something as simple as a localized phone script or a few slides changed in the sales slide deck. Try to keep any localization changes simple at this stage and plan for more involved marketing if your company eventually sets up a foreign subsidiary.

 

4. Find individual (and group) motivational tools.
As business leaders, we already know that our employees are each motivated by different triggers. Joe, your customer service manager, may want an extra week of vacation time instead of its equivalent cash bonus OR he may prefer a paid executive coach to mentor his career as reward for professional success. Partner-specific motivations is an area of channel management where creativity pays off.

You may have two competing distributors – one in Sydney and the other in Melbourne – who have a cultivated rivalry. Buy an obnoxiously large trophy and offer the trophy plus bragging rights to the distributor who sells the most of your products by the end of the fiscal year.

Your rep may be motivated by title promotion. Honestly, I would call a rep a Chief Selling Officer of Thailand if they doubled their Thai sales this year. It’s relatively easy to change and costs nothing. This may be useful in combination with other incentives.

Sales departments have been using the “President’s Club” motivator for years. Those who exceed quota are invited often with spouses to a luxury trip paid for by the company. There may be some creative version of this concept that could work for high performance channel partners.

 

Regardless of your approaches to building your international selling team, I hope that you find some of these ideas useful. It’s best to just keep an open mind and an eye towards creative solutions. A strong network of international sales will help propel your company towards greater growth and profitability.

 

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The International Entrepreneur – Is your company still an Accidental Exporter?

Accidental exporter, international entrepreneur

Joe rolled his chair over to company founder, Mary’s desk with a quizzical wrinkle in his brow. “Can we sell our security product to someone in Romania? We just got an email basically ordering 50 software licenses from somewhere called Timisoara?”  said Joe as Mary looked up from her multiple computer monitors.

Mary was just as surprised as Joe. The company had launched only a few months ago. How could someone from Romania have heard about their product, much less have decided to buy it? Their small team of developers were focused on a few potential clients in the United States.

Mary hadn’t even considered when the international would enter into the company’s plans. But 50 licenses was an order that was difficult to ignore. So Mary and her company became Accidental Exporters, taking orders from foreign clients without any real understanding yet of their global markets.

 

International Clients Always Arrive Before You Expect Them

A byproduct of the world’s Digital Revolution is that anyone anywhere can read your company website. As a consultant, I don’t travel to over 200 countries but this article will. Businesses and consumers now have access to product options and pricing information allowing them to make more informed choices. If you have something of value like Mary’s security software product, then clients from other parts of the world will begin to make contact.

Mary and her team will likely weigh the revenue of 50 licenses against the risks of doing business with these Romanian clients. Will the clients pay in dollars? How much interaction is needed for software implementation and service?

If like much software today the delivery is a SaaS model, then allowing access is easy. But are there any regulations related to doing business with Romania in terms of taxes, data location requirements or other restrictions? Most companies ignore compliance issues at first and focus on the money. (Tip: Always know what you’re getting into before you just move forward.)

 

Timisoara, Romania (photo courtesy of wikipedia.org)

Timisoara, Romania (photo courtesy of wikipedia.org)

 

Accidental Exporting Becomes the New Normal

Mary and her company take on the Romanian client, then soon a Canadian client, and on it goes. The company figures out ways to serve these foreign clients in the same way that they serve the domestic base; in the home country language, home country currency, home country customer service hours, and home market expectations. In my experience, this directionless approach is the international growth path for about 98% of small and medium-sized companies.

The surprising part of reactionary-based international expansion is how long this phase typically lasts: for years and sometimes decades. Companies often seem content to continue building their international client collection with little thought to the larger markets left untapped.

An extension of Accidental Exporting are overseas distributors who find your company through the website or a trade show; and offer to represent your product in their market. Now you have a distributor based in Australia who gets to build business for you in the APAC region for a 25% discount margin. Most companies just accept this new extension to the reactive model without any visit to the distributor’s offices or 3rd party background checks on their reputation. That’s just crazy and irresponsible.

 

What’s the Alternative to Accidental Exporting?

International expansion planning is the answer. And it needs to start almost as soon as your company initially opens its doors for business. In the start-up phase, a company needs to decide what it can and cannot handle in terms of orders from international clients. Can you convert foreign currency? Can you deliver your product compliantly using the Internet, air or ocean freight? Are there regulations for your product or industry that you should be aware of? For instance, you may decide that Canada is a market you can serve but that Germany’s laws regarding cloud data residing in servers located on German soil rule that market out for now.

Despite anecdotal evidence that startups can be “born global”, few are actually capable of true international market entry from Day 1. Instead, internationalization works best when a company plans for overseas market entry years before the first foreign subsidiary office is opened. Incorporate international considerations into:

  • Product development: Are there any additional product requirements to be compliant internationally (CE Marking, etc.)?
  • Company talent recruitment: Are we looking for candidates who also have international and cross-cultural experience?
  • Key outside resources: Can our accountants, attorneys, bankers and PEO providers also advise on international tax, legal issues, foreign exchange and international payroll?
  • Financial capital: Are we budgeting for our initial global market research and first market expansions?

Preparing for that eventual international rollout will make the transition much smoother.

 

When Should We Get Serious About Internationalizing?

There is no specific milestone that marks when a company should proactively begin its international expansion. But here are some general guidelines:

  • If you have a profitable company providing value to your home market clients
  • If international clients have found you and you are able to successfully serve their needs
  • If your home market is a small one, then you will need to internationalize earlier than large home market companies
  • If you have 100+ employees (this can vary by industry, but IT companies should heed this criteria)
  • If you have earnings, loans or outside equity to fund early expansion efforts

 

My hope is that by writing about accidental exporting it will prompt business leaders to examine their own company’s approach to international markets. With luck a few more “accidental exporters” can reach their greater global potential.

 

Onward & upward

Becky Park, The International Entrepreneur

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The International Entrepreneur – How to accelerate global expansion

accelerate global expansion, international entrepreneur, international business

It’s ironic. Anyone who has spent time and energy expanding their company into international markets can tell you that the process is anything but fast. Global expansions are notoriously slow, especially when compared to what American and Canadian companies are used to as their domestic time to establish a new business. Registering a new business in some American states can take 30 minutes online and US$50. In contrast, some business registrations overseas can take over 2 years and cost US$20,000+.

In North America, we build our business processes and expectations around speed. Speed to market. Speed up the sales cycle. Speed in product development. Anything that slows us down is the target of constant complaint. Ask anyone who has been through a U.S. Food and Drug Administration’s approval process.

Despite frustrations, there are many compelling reasons why a company would still choose to expand internationally. There are new markets and customers overseas. The market may be global and market share requires doing business internationally. Global markets may balance out seasonal or economic cycles to keep the company’s revenue and growth on a steadier path. There may be strategic advantages for global talent, cost savings or a whole host of other reasons to go global.

REALITY CHECK: No matter how compelling the reasons to keep expanding into new global markets, you still need to expend the necessary time and resources to bring success. If you can’t commit to at least 2 years worth of work to get a new market off the ground, then I recommend that you don’t take your company global.

 

Here’s my advice for speeding up the international expansion process:

  1. Consistent Commitment. Nothing (and I mean nothing) will slow down your company’s global expansion more than the mixed messages of wavering leadership and financial support.
    This happened earlier this month to an international expansion director in the southwest United States. He had made all of the arrangements to meet with potential Middle East partners on a crucial trip. His company’s Board of Directors froze all travel and other international expenses for a short-term gain.  Now when this director can finally return to this high-potential market, he won’t find the same level of welcome or interest in doing business.
  1. Travel to Your Markets. If you truly want to expand quickly, then put your company leaders and expansion staff on planes to your chosen target markets. Face to face meetings with potential partners, clients and other influential stakeholders in country dramatically speed up the time taken to form these key relationships.
  2. Consider Strategic Partnerships or Mergers & Acquisitions. While partnerships and M&A take substantial time up front to establish the relationship and agreement terms, they can expedite market entry where they already have established client base. So for instance, let’s say my company wanted to enter the Thai market. I don’ speak Thai or know this culture which is quite different from my own. But if there were a compatible partner company, I could reach potential Thai customers by piggybacking on the partner’s products or services as a point of entry. I could learn from my Thai partner about the market and the best ways to sell my offering.
    On the M&A side, buying or merging with a company in a key market means that you buy their assets and also their internal processes and market knowledge. This, of course, is also dependent on keeping existing staff happy post-M&A so that the knowledge stays with the company. Obviously M&A requires support from your current and future financial resources.
  1. Laser Focus Normally Beats the Shotgun Approach to Market Entry. Many companies take the reactionary approach to international markets, they wait for foreign clients to find the company online and approach them with business. I am not saying that this is necessarily a bad starting point, but at some stage serving customers in 13 countries is less efficient than focusing on the 3 best markets and doing it at higher revenue and profit margins.
  2. Practice Agile Processes in Your International Expansion. Instead of starting and stopping every time there is a new challenge in a global market, I recommend using an agile process. Agile is a leading approach in software development where changes are made to code frequently to constantly improve the quality of the product. Marketing adopted agile because it allows for incremental performance evaluations and changes instead of annual reviews. I think this applies just as well to global expansion, where incremental changes can vastly improve results and speed up the process rather than waiting for a review from a large country roll-out.

While international expansion is an investment for companies with a longer investment time frame, there are definitely steps that can speed up the process. Consistency in support is a required foundation. Armchair expansion is much slower than sending staff into the field to meet and develop relationships with key in-country contacts. Focusing on key markets and partners is faster than waiting to see what drops in your lap. And always be ready to make changes based on the new insights you pick up during the new market entry.

I wish you all the best of success in all of your markets.

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The International Entrepreneur -The Globalization of American High Tech

international trade, information technology, globalization, international entrepreneur

This week I wrapped up a 3-week project researching American IT companies that expanded into international markets. Normally my clients hire me to focus on markets outside the U.S., so it was interesting to study the industry I serve.

Honestly, I thought I knew all about the American IT industry. I have spent the better part of the last 22 years working for American IT companies as an employee and contractor. What I learned about my home market and industry surprised me and I wanted to share it with my readers.

 

Market Insights from Studying American IT Firms

I identified 200 American IT companies that had less than 1,000 employees worldwide and were actively internationalizing into new foreign markets. Most of the companies picked for my study were recruiting staff both in the U.S. and in overseas offices. I did not choose any companies that were clearly locked in a 2-country model for outsourcing or similar purposes, with no plans for global domination. I did not target specific states or metro areas. I understand that this is not a study with full academic rigor, but still it was hard to ignore the trends.

Here’s what I discovered:

  1. Not all American IT industry clusters are producing internationalizing companies. Almost HALF of the internationalizing IT companies were based in 2 metro areas: Silicon Valley/Bay Area (68) and Boston (26).
    Then came Tier 2 Clusters of internationalizing tech companies: Los Angeles/San Diego (18), New York City (16), Seattle (8), and Chicago (6).
    What was just as interesting were the metro areas considered to be strong in IT companies that are disproportionately low in internationalization: Denver/Boulder, Phoenix, Portland (Oregon), Philadelphia, North Carolina, Twin Cities and Washington DC.
    Two notable additional bright spots were Manchester, NH and Salt Lake City, UT both coming in with 4 internationalizing IT companies apiece. Here is a map showing where the U.S. high-tech markets are. Clearly the internationalizing clusters are a subset of the whole.

  2. Internationalization seems to take place between 100 and 200 employee counts across a wide variety of IT markets. This includes companies doing everything from developing gaming platforms to offering SaaS business processes to security networks to storage technologies. There are 2 noteworthy exceptions: healthcare IT and B2G (business-to-government) industries. After reviewing dozens of both types of companies, neither internationalize until much later in their product cycles. It’s a shame, really, since both government and healthcare technologies are bought and sold all over the world.
  3. IT services offshoring companies rarely made the list of 200 companies even though their entire business model is based on globalization. The truth is that these companies may have Indian or Mexican operations, but they don’t sell into any market except the U.S.. Opportunities are being missed.
  4. There is no standard international expansion market pattern. Companies literally had a patchwork of offices and operations around the world. While there are definitely popular overseas office locations: London, Singapore, Toronto, Sydney, Amsterdam; companies seem to be weighing options in various markets instead of following a predetermined step-by-step rollout. In my option, that’s proactive and positive.

What is internationalization?

For quick reference, here’s my practical definition of company internationalization:

  • A company that is PROACTIVELY entering new foreign markets to sell products and services. This also applies to the supply management side sourcing materials and services from around the world.
  • A company that is actively engaged in understanding the market potential in various parts of the world.
  • While many companies begin their international expansion using in-country local representatives or distributors, I think true internationalization is when companies begin to expand directly to new markets with new offices and hiring in-country staff.

Why is internationalization important?

Globalization is a defining force of our time. Its momentum rides right along with the other primary drivers, technology and entrepreneurship, as changes that will affect our grandchildren’s grandchildren.

For companies, internationalization is a game changer. It means:

  • Having the choice to expand into international markets (internationalize) at much earlier stage than ever before.
  • Increasing your overall market size by somewhere between 100-500%.
  • Learning industry advances and operational efficiencies in one market that can be applied to the rest of the company’s markets (called “arbitrage”).
  • Access to investment funds and other resources not necessarily available in your home market.
  • Country portfolio risk reduction. Not all markets go through downturns and upturns at the same time. Multiple markets balance out the risks.
  • Access to the global talent pool to help drive smarter decision making and better leadership and management.

As I often discuss with IT company leaders, internationalization is like your planet developing “warp drive technology” on the TV/movie series Star Trek. Pre-warp-drive planets have a single planet view of what is possible. But once the planet’s scientists and engineers develop this high-speed capacity for travel, Star Trek sends an envoy to meet your leaders and welcome you into the larger intergalactic realm. Internationalization in a similar way opens up the business environment to the other 95% of our planet?s population.

So if you are an IT company leader or someone invested in a local IT cluster’s success, what does all of this mean for you?

  • It means that clusters like Silicon Valley and Boston have investors/VCs who expect internationalization as a company’s “Warp Drive” when they reach their growth stage. These industry clusters cultivate available resources to help make that happen. This can be developed in other markets as well.
  • It means that if your company has a headcount of 200+ and you don’t yet have international operations in at least 2 foreign markets, you may be late to internationalization and should actively be researching the advantages and risks involved. To expedite this, hire outside international business expansion consultants.
  • It means there is no one best way to expand internationally. Use your own competitive advantages and market research to optimize this process.

Now, in the immortal words of Star Trek’s Mr. Spock: Live long and prosper!

Becky Park, The International Entrepreneur

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