SEVEN WAYS TO EXPAND: FROM LOCAL TO GLOBAL

Being a small business doesn’t mean you have to think small. Technology makes it possible for many small businesses to expand globally.

Would it work for your business? Here are some reasons to consider going global and some steps to take if you decide you want to test the international waters.

Breaking it down, here are five benefits:

1.     Diversify your markets and customer base.

2.     Extend the sales life of current products. What’s already established here could be a hot new item elsewhere.

3.     Reduce dependence on current markets by spreading your risk.

4.     Counter seasonal fluctuations. If you sell a seasonal product, when it’s summer here, half the world is experiencing winter and vice versa.

5.     Learn how to compete and grow, and you may want to expand from market to market.

1.    INCREASE YOUR SALES AND PRODUCTS IN EXISTING MARKETS. This is obviously the easiest and most risk-free way to expand. This tactic may require a bigger location, different pricing strategies, new/improved marketing techniques - but it will be in a customer group with whom you already have a relationship. If you get off track, your present customers will let you know!

2.    INTRODUCE A NEW PRODUCT. You have a successful product/service that you have been offering for some time and have been collecting data, customer feedback and doing the tinkering on your newest product. This is a normal evolution in business, not just an expansion tactic. When positioned as adding value and being responsive to customer needs, this can be a relatively risk-free way to expand.

3.    DEVELOP A NEW MARKET SEGMENT OR MOVE INTO NEW GEOGRAPHY. Both of these areas require cost outlays and uncertainty. Moving your products into new categories or demographic segments requires market research, beta testing and new marketing strategies, i.e. a message for a 16-year old will differ that one for a 60-year old. Management of new remote locations may absorb significant time and attention. While the risks are more, the payoffs are large - and for most businesses looking to expand, these two methods of expansion are inevitable.

4.    START A CHAIN. A restaurant, retail or service business that's easily reproduced and can be run from a distance is all you need to launch a chain. But, you must be cognizant of what made the first location a success - was it location, your staff or you? If it is just you, then duplication is only possible through detailed operations plans and sharing staff between locations. You will need to duplicate the plan of your first location while meeting increased customer demands. Starting a chain gives your current staff a crack at "management" duties, training opportunities and an opportunity to expand their horizons.

5.    FRANCHISE OR LICENSE. While it's a quick way to grow, a franchise agreement can cost (minimally) $100,000 to prepare. You will need to be a good teacher, be able to prepare the training manuals (preferably in more than one language), be very organized and willing to travel. Licensing can carry less risk, but demands giving up a certain amount of control. Licensing a patent, trademark or industrial design means that you sell manufacturing, distribution or production rights.

6.    JOIN FORCES / STRATEGIC ALLIANCE. A merger or acquisition combines the best of two companies, expands your customer base, increases intellectual capital and delivers operational efficiencies. The trick is finding the right partner. These partners may be new distributors, but be forewarned large retailers exact heavy performance expectations. Can you perform to the letter of your promise? Can you meet high standards of quality (ISO, or the like) and adapt your procedures to meet just-in-time delivery? Due diligence and strong contractual arrangements are essential here.

7.    GO GLOBAL. You can decide to go global in a number of ways. Growing markets, rising consumer spending, improved business climate--sometimes the only place to find these things is overseas. Doing business internationally can take the form of exporting, licensing, a joint venture or manufacturing, but whatever form you choose, the basic business rules apply: assess customer demand, gain legal and accounting assistance, protect intellectual property and obey regulations.

More difficult to understand than the regular business affairs may be the cultural nuances - ignore them at your peril. In some countries, particularly those in Asia, a local partner is virtually a requirement.

Your first stop should be your target country's economic development agency, which can help marshal local resources to get you on your way, possibly with a small financial boost. Be patient. Growing your business globally can take more than one "sightseeing trip" to the region. Here are some steps in going global, from easiest to hardest.

EXPAND INTO NEW GLOBAL MARKETS WITH THESE 5 LESSONS FROM MARATHON RUNNING

People like to use analogies to help communicate big ideas. Having spent some time in the automotive industry, my colleagues were always quick to equate everything to a car analogy.  They could relate almost anything to certain car brands, models, and the marketing strategies the leading automotive manufacturers used to sell their products. As annoying and comical these analogies became, I do appreciate the value of finding similarities between two diverse industries. As an avid runner, I see a lot of opportunities to equate global market expansion to running a marathon. Here are five lessons I’ve learned from my experiences in marathon running and managing the global business expansion of various entities.

LESSON #1 – DO YOUR RESEARCH

You would never jump into a marathon without fully understanding the scope of your endeavour. What’s involved? How long will it take? What are the conditions like in the location where you’ve chosen to run? Perhaps the race destination has not been chosen; therefore you must weigh your options.

Similarly, you must do your market research in order to determine not only your target market(s), but the existing potential for global expansion in those markets. Perhaps you’ve had a few export sales to a specific country and you’d like to determine the viability of the market for your products/services.

What other regions offer specific market opportunities for your products? Perhaps this is the time to attend some events focused on global market expansion. There are a multitude of entities that conduct seminars to educate local businesses about the export opportunities in certain regions of the world.

This is the time to tap into organizations such as the three levels of government, export financing institutions such as EDC, trade associations, manufacturing and exporter associations, local Boards of Trade and Chambers of Commerce, etc.

Key Take Away – Understand the scope of your endeavor and start your research.

LESSON #2 – HIRE A COACH

Not all runners require a coach, but the elite ones do.  Coaching allows a runner to achieve his or her goals and avoid some of the pitfalls the self-coached runner encounters. A newbie marathon runner must navigate all of the complexities of marathon training on their own; nutrition, injury prevention, equipment, etc. 

A coach with vast experience can help a runner efficiently navigate through these complexities and stay focused. As a business, perhaps you have identified the need to expand globally in order to mitigate losses from decreased domestic demand, but do not have the time to dedicate to international business development. Or maybe you are afraid that the time and resources required will take away from the core competencies of the business.

This may be the stage where you consider hiring a coach, a Certified International Trade Professional (CITP/ FIBP) who is well versed in the intricacies of international trade, and a great asset to the company. An international trade professional has the core competencies required to not only execute the fundamental research, but also to navigate through all of the complexities of global expansion, while keeping the business on track with their goals.

Key Take Away – Hire a coach whose focus is to get you to your destination in the most efficient manner.

LESSON #3 – HAVE A PLAN

Fortunately for runners, there is an endless supply of training plans to get you to your target race.  It is true that you may have to tweak some of these to fit your schedule, requirements, and current level of fitness, but a general outline is available to help you achieve your goals.

Conversely, there are very few detailed guides available to businesses to lead them into the global trade arena. An international business plan is a key factor contributing to a successful market entry strategy. 

This should clearly outline the human resources required to carry out the plan. It should include relevant details about the target markets such as the political and economic outlook, legal/regulatory issues, labelling requirements, business customs and practices. It should also include the market entry and marketing strategy, outline operations, global supply chain, order processing and terms of payment, shipping, packaging, documentation required, and, last but not least, the financial and risk management strategy.

It is worthwhile to note that unforeseen circumstances do arise, such as an injury which would require a change to a runner’s training plan. In the same way, the international business plan should be modified to reflect changes in the organization/operations of a business or conditions in the target market(s).

Without a plan, I have seen companies lose their focus just as I have seen runners lose their focus before race day.  They may be attracted by the low hanging fruit in an emerging market. The effort is lost when a company jumps from one target market to another and abandons the plan prematurely.  Entering new markets can take a lot of time, resources and an abundance of patience.

Key Take Away – Plan, plan, plan, tweaking if necessary, but maintain your focus.

LESSON #4 – DO YOUR TRAINING;

Execute Your Plan In the same way you can’t jump into a marathon without any preparation, why would companies think they can springboard into global markets without having done their homework?  Training specifically for a marathon can take anywhere from 16-20 weeks.

The “training” phase for global market expansion can take several months, if not years. This is the phase where you follow your international business plan and try to establish the desired win-win relationships in the target market(s). In this phase you can apply for funding to government entities to help support your market expansion goals. This might include submitting funding applications to attend a relevant trade show in your target market, creating market-specific marketing collateral, or hiring a consultant to assist with the arrangement of B2B meetings.

“Training” could also include participating in incoming buyers missions from your target region, or outgoing trade events to your target market.  In this phase you want to reach out to all the resources available to you in order to identify potential strategic partners in the new market. If certifications are required in your objective market, now is the time to focus on obtaining these approvals.

This is also the phase where you determine packaging and labelling requirements and other regulatory compliance issues. Explore your channels of distribution and go-to-market strategy, and determine how you are going to market your products in each of the new regions. Analyse the financial risks and determine a risk mitigation strategy to guard against them. There are so many factors to consider.  A coach can certainly be a valuable guide to help you navigate through this phase.

Key Take Away – Do your homework; your coach can be a big asset in helping you prepare.

LESSON # 5 – RUN THE RACE AND EVALUATE THE OUTCOME

Congratulations, you’ve crossed the finish line and completed your marathon!  In most cases, the goal is not just to finish, but to execute the race according to your plan.  Did you hit your target?  Are you happy with your results? In the global business world, you never really cross that finish line.

You’ve done your training, executed your plan, and achieved some success but the finish line keeps getting extended. Take a moment to congratulate yourself for the milestones you’ve achieved.

Then get right back to work because now is the time to re-evaluate your goals, and learn from the mistakes you’ve made. You have new relationships to forge, new markets to explore, new distribution channels to establish. 

Whether you are endeavouring to run a marathon or break into a new market – it’s always a journey.

Key Take Away – Embrace that journey and remember the race is not always to the swift but to those that keep on running….

Which stage is your business in with its efforts to expand into new global markets? How can you apply these lessons to improve your approach?

10 RULES OF EXPORTING

·         Identify the specific market niche you intend to target.

·         Be honest.

·         Be professional.

·         Be diligent.

·         Be prompt.

·         Be respectful of cultural differences.

·         Plan for long lead times.

·         Be patient.

·         Maintain your sense of humor.

·         Partner early in the process.

·         Additional Equity Investments or Loans