Now that the contracts are signed and your company has gone international, the real work begins. Here are some tips to help make newly established international business work as effectively as possible during those first few months of operation.
Keep International Business Relationships Healthy and Strong
A new international partnerships, sales offices, production facilities, and/or client relationships need to be cultivated both before and after the deal is made. The worst mistake that a newly international company can make is to neglect a new relationship. Neglect leads to mistrust and misunderstandings. Schedule both regular calls (preferably video calls) AND visits to your new business contacts. If possible, have one or more of your own employees working for several weeks or months in the overseas office. All of this will help to cement the relationship right from the start and clear up misunderstandings before they become a larger issue. Like any new relationship, both parties have to learn how to work with the other side and how their counterpart handles conflict and where the boundaries of the relationship lie. Too often particularly Americans and Swiss businesspeople assume that the written agreement precisely describes the responsibilities of the relationship. The majority of the world views business relationships as much more fluid and flexible than what can be written into a contract.
Hope for the Best, but Plan for the Worst
It is extremely useful to develop three business scenarios for your new international operation: Best, Worst and Expected. In the best-case scenario, try to determine what demand for your products or services would be in this market if your sales reached its potential. Would you have enough production capacity or staff for service? Would internal processes be sufficient to support this new market growth? And if the best-case scenario looked to be coming to fruition, would your company have enough lead time to be ready for the increased capacity? These are all considerations for this first scenario.
In the worst-case scenario, the objective is to minimize the financial losses should sales be much lower than expected. Could newly hired staff be diverted to different tasks instead of sales and serving clients? Would there be cost savings in shutting down part of a production facility? Is there a “Plan B” where excess inventory or capacity could be rerouted to another geographic market? Planning ahead means that should sales come up short the company would already know what its plans would be to offset the disappointing results while minimizing the financial effect to the company.
Production and staffing should be based primarily on an expected-case scenario. It is best to include flexible staff that can either be added or reassigned based on whether the actual sales are higher or lower than expected.
Change may be the only certainty, but expect higher levels of change abroad. There will likely be fluctuations in currency exchange rates, changing availability of critical supplies, and new government regulations both at home and in-country that affect operations. Some changes may actual help further your company’s success such as a better exchange rate, deregulation and enforcement of intellectual property rights. Regardless of any economic or political shifts, stay flexible and prepared to problem solve as the need arises.
To read more about managing new international operations, please click here.