How should executives think about aligning their companies’ capabilities behind exporting and global expansion? Here’s what it takes for an organization, big or small, to go global or expand further.
1. Get a companywide commitment. That companywide commitment involves you alone if you are a sole proprietor, or in the case of a large corporation, the executive committee, finance, operations, marketing and sales, logistics, research, technology and culture.
Once you recognize the resources available to you and what it takes to export, import or outsource your product or service, prepare a list of what is required from each of these functional areas of your company. Then you’ll need to build your team. As globalization advances, more companies consider importing and exporting to expand their reputations, market reach and revenue sources. Meaning, the global reach is not always to purely import or export a product or service. Whatever your desire, you still need good people to make it happen.
2. Be in the ready state. Are you in the ready state to take your business global? Take stock of both yourself and your business to see if you have the personality, mindset and business that can benefit from exporting (or importing, outsourcing, so forth). Do you have a global mindset, the ability to deal with the unknown and venture out in the world and adapt as you go? A global mindset starts with self-awareness, reflects an authentic openness to and engagement with the world and employs a heightened awareness to the sensitivity of cross-cultural differences.
3. Choose a market. Pick a market that’s easy to get in and out of, has minimal red tape, the country’s government promotes international trade, there’s a Free Trade Agreement in place—but most important of all—choose a market where you know there are customers for your product.
Oh, and just because your product’s in demand here in the States doesn’t mean it will be well received in a foreign country. Always check with your customer, local foreign consulate or Export Assistance Center (EAC) for help determining sales potential.
A couple of global business intelligence companies can help you check on movements of products or services similar to yours: Datamyne, PIERS, Import Genius and Zepol. What you are looking for is data that indicates there is a need for your type of product/service but competitive analysis indicates no one is “on it” yet. You can be a frontrunner.
4. Develop a market entry strategy. What will it be and what is it based on: direct exports, indirect exports, joint venture, foreign office, global strategic alliance and so forth? If you are new to expanding internationally, exporting is a great first step because you can test the waters without a big upfront investment.
5. Establish a payment plan. Hey, we got a sale, and the product is on the way. Now ask yourself this: What payment plan did you set up with your customer? Structure the deal in such a way that the product gets sold and you get paid. Ask your banker for help.
6. Price thoughtfully. Be competitive but ultimately, when it gets down to the bottom line, prove that your quality and consistency win out every time. Some customers may try other products, but eventually they come back to yours because of superior quality and consistency of manufacturing.
7. Make sure you are financially sound before you go global. So often folks think they can rely on the profitability of their existing local business and some can, but you don’t want to weaken the state of your successful domestic business to satisfy the requirements to sell your products overseas. Analyze your available resources (human, material and financial) to determine how you will support global initiatives. Confront your finances squarely. You want your global business to be sustainable over the long term.
8. Tailor your products to the overseas marketplace. I’m exporting my products, but I’ll be darned if I am going to make any changes in them. That’s what a lot of folks say. However, you must tailor your product to meet the needs of the customer. Trying to force a customer to buy what you have available, with little or no willingness on your part to make improvements, is not only insensitive but also downright hostile.
9. Protect intellectual property. Intellectual property should be protected well before you begin selling to overseas customers to avoid losing ownership and subsequent revenues. That includes all your Internet platforms that you own—websites, blogs, etc. Consult with a good international lawyer.
10. Get information well in advance of your global initiative. Many clients say this to me: “Our product cannot compete overseas or locally because the tariffs are too high.” Get information well in advance on tariff and tax obligations for your products or those of your supplier in the country in which you are about to do business. You don’t want to erode your profits or, worse, impede your ability to compete just because you found out way later that tariffs are so high it is impossible to price your product competitively against local firms.
11. Ask distributors what they anticipate selling. Oftentimes I hear this from a business owner: “We appointed an exclusive agent, yet didn’t get any sales.” When exporting a product, ask distributors what they anticipate selling in the first year. Then monitor and exercise good control over a distributor’s sales. Find out in advance what products distributors sell to ensure they do not sell brands that compete with yours. And keep an escape clause in place just in case things don’t work out with a distributor.
12. Meet with your customers. Yes, we have email, Skype and Google Hangouts, but you can’t afford not to meet with your first customer because without face-to-face contact, there will be no repeat business. Your first customer should be treated like a king or queen who sets the standard for all future customers.
13. Diversify at some point—later on, after you have achieved some reasonable success. Don’t put all your eggs in one basket. Meaning, diversify your customer base, diversify your offerings and diversify when you can into other overseas markets. This way, when one thing goes wrong, everything doesn’t fall apart on your global strategy.
14. Provide customer service. Service brings satisfaction, and satisfaction brings repeat orders. Keep in constant touch with your customer. And make sure the plane or ship delivers the goods on time and in good condition. Too many global businesses overlook the logistics of supplying an overseas market.
These 14 factors are all part of the process of turning your vague ambitions into a concrete strategy based on market realities, so the more smart questions you ask and answer, the better your chances of success.
This article is adapted from a presentation Laurel gave to UCLA Anderson School of Management — Kati Suominen’s class — on February 21, 2015: http://www.slideshare.net/ldelaney/ucla22115-delaney All photos in the presentation are courtesy of Laurel Delaney and taken in Chicago.
Photo courtesy: ©2015 Laurel J. Delaney. All rights reserved. Rogers Park, Illinois near Pratt Beach.
There are more than 8 billion potential customers in the world looking for your product or service. Are you ready to serve them?