Wanna Expand Your Business Internationally?
I have this vivid memory of when my life path changed course forever. It happened when I was 28 years old. I was walking down a street in Berlin called Friedrichstrasse. On that walk, I decided this was where I was going to live—and start my own business. I didn’t speak the language. I didn’t know a single soul. But I knew I had something working in my favor. I had a desire to do well, an insatiable curiosity, and absolute confidence that I was going to be successful.
What I didn’t know was the ubiquity that global business would become today. Reflecting on my own experience launching a global business and helping hundreds of executives find their success abroad, I have uncovered three striking truths that I absolutely believe will help you and your organization expand internationally.
You don’t know what you don’t know.
This may sound obvious. But before a lot of executives expand a company, they ask questions about the business market they want to enter, such as what is the best location or what will be the ROI? Yet, they often overlook learning about other less obvious but just as important intervening factors such as political dynamics, infrastructure, logistics, family values, and culture. A recent survey of senior executives in a hundred global corporations, conducted by Worldwide ERC, found 95 percent of the respondents believe national cultures of the places they do business in play an important or very important role in the success of their business mission. Yet, an Ernst & Young survey found that many companies lacked the diversity of thought and culture needed to handle global business. Don’t make that mistake.
Let me offer an example as to why knowing what you don’t know is vital. Sub-Saharan Africa is a boom economy because of investments in the oil and mineral business. To be successful in this area, companies must have close ties with the government which is concerned about how business may impact its society and community. Thus, if you try to do business in this region without state officials and diplomats at the table, chances are your deals will be blocked.
Having a comprehensive understanding of the country you want to expand to, whether it be in Africa, Latin America, or Southeast Asia, is critical.
Don’t reinvent the wheel.
A lot of executives shy away from talking to others about how to expand globally because they don’t know what they don’t know—and don’t realize what they could learn from others. Ego and fear of lack of confidentiality also hold executives back. It is possible to maintain confidentiality and avoid learning by doing. It is worthwhile to be a bit transparent about investment intentions to learn from others that have entered the market successfully—or unsuccessfully.
In doing so, I suggest looking for unlikely experts. For instance, instead of hiring a global market research firm, look to former military or intelligence experts. The head of your security team may have invaluable experience and better insight than an expensive research group. The resources are out there to help you determine the best way to enter the market. Use them.
Think before you act.
There is a tool I developed called the Readiness Checklist which can arm you with the right list of questions to prepare for expansion. Get the right answers for those questions, check them off, and ensure you have the right people and strategies in place before you enter the new market.
Every market has little nuances that may catch you off guard and make your investment more expensive than you planned for. For example, European companies that invest in the U.S. gravely underestimate the cost of logistics because they don’t realize how big the U.S. is. In Latin America, taking time to build relationships is critically important to build trust with venture partners. In Southeast Asia you may need a third party negotiator.
Also, it is important to prepare for worst case scenario and create the right exit strategy upfront. Trying to close down an operation can be very expensive if you don’t have sound knowledge of regulations such as labor laws. Be thoughtful and mindful. Try to learn everything you can and then develop a plan.
My curiosity to learn everything I could about Germany and other countries combined with my confidence and determination set me up for success. I got comfortable taking the time to learn about the market before diving in. I strongly believe if you do the same, you will be successful in your international expansion goals.
To learn more about how to enter into the U.S. market, my book, Market Entry into the USA: Why European Companies Fail and How to Succeed (Management for Professionals), is available for pre-order on amazon.