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.
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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:
- 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.
- 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.
- 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?t 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.
- 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.
- 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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Important points, concisely presented, as usual, Becky! Smaller companies with limited budgets can also put your advice to good use. For example, if the company is interested in Europe but not sure where best to start, they can set up back-to-back meetings in a whirlwind visit to several countries with distributors already selling to the relevant market. They can sign time-limited agreements (6 months usually is enough to see if the relationship is working out) with the ones who seem particularly interested and excited about the product, and whose personalities are a good match. Even with a small budget, companies can offer to share, say, some of the trade show costs. This shows commitment and will pay off in dedication. They can then determine the country focus at the end of the trial period.
Thank you for your kind words, Arlene. I agree – anytime a trip can be combined to get more out of the travel budget and staff time for quality connections is a bonus. I would always encourage doing as much relationship building before the trip as possible. I would also encourage longer term contracts to promote up front investment in relationships, but for hot market products it won’t matter. And there are plenty of high-flying tech products being developed in Israel!
Excellent comments with which I agree. Read these against the realization that we in North America, and to a large extent Northern Europeans, are the outliers in the world. We react to organizations and business cards. Everyone else will only trust relationships built over time or through very trusted intermediaries. We are the different people they are the norm. Get used to that and follow Becky’s advice. To do otherwise will lead to frustration and/or failure. And get FITT http://www.FITTforTrade.com
Thanks for contributing this comment, John. This is one of the biggest false assumptions I see smart and otherwise savvy business executives making every week. Thanks for shining the light on this one. I cannot be overstated for North Americans.