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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 it would. They were right about the need for their product in the market and the company was now hurdling forward at rapid pace – doubling 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 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 so quickly sold product 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, 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 to the overseas location, logistics can be a costly part of the sale. Once a market is established, often shipping costs can 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 will they 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 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 to 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 DeStigter

 

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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? well? 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 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 top?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 greater 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 ? Interview with Safeguard World International?s CEO, Bjorn Reynolds

Bjorn Reynolds, Safeguard World International, GEO, global HR, This week I have?the pleasure to interview company founder and international entrepreneur, Bjorn Reynolds. Bjorn started his international payroll and HR management company in the UK. Now the company has grown to serve 165 countries.

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The International Entrepreneur (TIE)- Bjorn, since many may not know about Global Employment Outsourcing as a fast track to foreign market entry, can you describe how it works??

Bjorn Reynolds (BR)- GEO allows our clients to outsource their international employment responsibilities. From local employment contracts, to paying the actual employee and managing the statutory payroll deductions and managing and providing guidance on any HR issues ? all managed through our network of carefully vetted and in-house partners in over 165 countries. What this means for the end client is that they can outsource the entire employment responsibility and process to SafeGuard, all without having to register a local entity and navigate the bureaucratic headaches that such a process typically brings.

 

TIE – As the originator of the GEO employment model, can you tell us how you and your team at Safeguard World International found this market need and innovated the GEO solution?

BR – Our identification of the GEO market was primarily two fold:

1)??????We observed a demand from our clients for contingent labour that they could deploy on their medium and short term projects. Historically multinationals have turned to Independent Contractors, particularly in countries where they do not have an entity established, agreements of which frequently fell foul of employment law due to unfamiliarity with local rules and regulations. We devised the service to help our clients hire individuals on a temporary basis and in a compliant manner, removing them from any potential risks and fines associated with the utilization of IC?s.

2)??????Clients were encountering difficulties going global and expanding their business into new countries. Expansion into new territories if often a daunting and complex task ? setting up bank accounts, registering entities with the local authorities and navigating local rules, regulations and cultures is a considerable undertaking for any organisation, no matter their size and amount of available resource.

 

 

TIE – ?What is the biggest challenge you currently hear from companies expanding their global talent teams?

BR – The biggest challenges that we continually hear pertain around ?how to? and navigating the local rules and complexities that are frequently encountered when expanding into a new country for the first time ? even for large multinationals. From an appreciation and understanding of cultural, time zone and language barriers to understanding what needs to be provided to employees both from a statutory and customary perspective in order to attract and retain the best talent. Coupled with the daunting prospect of completing all the necessary registrations and tax remittances, companies are often deterred from following through on their intentions to expand into a new country.

 

TIE – As a leader in your field, can you give any advice to companies who are planning their first international expansion?

BR – Many organisations often feel like expanding internationally is out of reach ? they don?t have the resources or expertise in order to grow their business on the international stage. This simply isn?t true. While it?s certainly worth noting that international expansion should be a carefully considered and evaluated decision, especially when exploring the time it would take to expand and register your business in a new country, by partnering with the right expert, such as SafeGuard, SME?s and startups should no longer fear taking their business into new territories. With GEO the world becomes truly borderless and I love helping companies not only make their first foray into foreign markets, but also reap the benefits that international expansion can bring to an organisation.

 

About Bjorn Reynolds

Bjorn is the Founder and Chief Guardian of SafeGuard World International. A recognised industry leader and strategist for the global payroll markets, Bjorn?s passion for payroll is the driving force behind SGWI?s vision, strategy and culture, instilling his enthusiasm for Service Excellence and success throughout the organisation. His?entrepreneurship led SGWI to a prominent?position in the U.K. Sunday Times ?Virgin Fast Track 100? and he has been personally recognized in the ?Payroll Top 50? by?Payroll Magazine?and?as a ?Game Changer? by?WorkforceMagazine. During his early career, Bjorn worked for HFC Bank (part?of the Global HSBC Group) where he was quickly promoted to branch?manager after one year in post ? the youngest ever Branch manager at HFC?in its history.??He later?ran marketing and channel functions within the HR and payroll space for one of the top three global payroll and HR service providers.

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The International Entrepreneur ? Keeping Your Global Project Staff Locally Compliant

global HR, international compliance, international trade, GEO

Tim was a chemical engineer just starting his career. ?He was working for a beverage additive company in Milwaukee, USA. Having already studied abroad for a year at the Instituto Tecnol?gico y de Estudios Superiores de Monterrey (M?xico), Tim was open to the idea of moving to east Germany when his company proposed it. He and his four engineer colleagues went to investigate setting up a production facility near Dresden. Why Dresden? The German government was providing incentives to foreign companies to invest in the former East Germany to build up the economy.

Tim was excited about this opportunity to help his company expand internationally, but one thing kept nagging in the back of his mind. The company hadn?t done any paperwork to get Tim and his colleagues work visas for Germany. Even as a novice to the work world, the lack of proper documentation was a clear risk to Tim as a project engineer. Tim brought it up to management and to the HR department. ?We?re working on it? ? was the response.

Tim stayed in Germany for six months helping the team to evaluate facility options. But the company still didn?t seem to care about the glaring compliance issue. Tim decided it was time to move on to another job at a company where he wouldn?t be put in this type of compromised position.

Later that year, the German authorities confronted the American team, asking to see work visas and other registration paperwork. The company was issued hefty fines. A few of the staff?had returned to the U.S., but the German government caught up with the last two engineers as they were leaving. They were initially detained and individually fined and required to leave Germany.

 

Why would a company not issue work visas to staff working overseas?

This beverage additive company was obviously negligent of their duties under local laws as well as to their employees. But up until a few years ago, companies had to form an in-country subsidiary to legally employ workers in Germany or any other country for that matter. That involves registration processes, a series of fees, legal work, and who-knows-what-else. It can be a time-consuming process that also locks a company in to doing business in that market until the entity is dissolved (which also costs time and money).

The Milwaukee company was not sure if the Dresden project was going to even be successful. It turns out that it wasn?t. ?So they took a chance with their employees to avoid registration. But it was a big risk not only for the company, but for those employees as well. This was in Germany ? a country of clear-cut rules. What if this had been Bolivia or Egypt where government application of rules is not so consistent?

 

GEO can keep your global project staff compliant

Now companies don?t have to register a foreign entity to send their project engineers and other staff to work overseas. They also don?t need to know the exact local employment laws either. A few years ago a new service was born ? GEO (Global Employment Outsourcing). In this service,?the GEO company hires your employees in the foreign country where they?ll be working and assigns them back to your company. The GEO company is the Employer of Record, providing payroll services. The employees are paid in the local currency and your company pays in one of the major world currencies like US dollars, British pounds or Euros. The GEO makes all the proper payments to local government for any social costs and stays fully compliant with local requirements.

The?cost of GEO is typically far less than country subsidiary registration and eventual country exit. It?s ideal for implementation projects and researching a new potential foreign market. GEO was pioneered by Safeguard World International, and has spawned a new industry.

 

Final word to internationally deployed project staff

If you don?t already know, be sure to check your employment compliance. All countries have rules related to how much time someone can stay in country working without applying and receiving the right work permits. Most companies do not yet know about the GEO compliance/payroll option, I encourage you to share that with your employer if you suspect a compliance issue.

Tim, the young chemical engineer, did the right thing. He told his superiors and HR department. In the long run, it?s not worth working for a company that would put you at financial and legal risk in a foreign country.

 

As a footnote, today Tim is a successful Vice President of Marketing and Sales for a growing US Midwest engineering firm. He travels extensively for work around the world.

 

Becky DeStigter, The International Entrepreneur

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