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At a certain point, growth-minded entrepreneurs will likely ask themselves if their business is ready to go global. For many, exporting makes sense if you consider that many companies are increasing their global market share and that “more than 70% of the world’s purchasing power is located outside of the U.S.,” according to the International Trade Administration.
My company specializes in bringing more U.S. startups to Russia, and I’ve found there are many reasons someone might decide to export internationally. Chief among these reasons is to extend the sales potential for existing products or services by opening up new markets to which to sell. At the same time, it might help stabilize your business by reducing sole dependency on the U.S. market.
But before jumping into global expansion, there are a few things entrepreneurs must consider.
Research which foreign markets align with your business.
Of course, the first step is to understand where the opportunities are. Roughly 300,000 U.S. companies export, many to 50 or more countries, according to 2016 report by the U.S. Census Bureau. About 5% export to only one country.
Narrow down which markets are the most viable for your business by looking at market size, barriers to trade, geography and infrastructure needs, among many other factors. A reliable market assessment tool can help you with this.
The International Trade Administration’s Top Markets Series is an example of such an assessment tool. It ”ranks future export opportunities within a particular industry based on a sector-specific methodology.” These reports analyze the competition within a certain industry, the challenges U.S. exporters are facing and more. Go-to markets include Canada, Mexico and China; however, there are many other markets that might be better suited for your business.
Beyond conducting research on foreign markets, your business plan must also assess if your business is actually ready to make this type of growth commitment. Be sure to gut check before making the leap by asking yourself some key questions:
Will your business be culturally accepted?
In my experience, ascertaining culture can be one of the most difficult things for a company. Cuisine, social habits, music and art preferences can be as diverse as the microclimates of city neighborhoods. The cultural fingerprint of a market is unique, so don’t assume your brand will be accepted by entire countries or even regions. You’ll need a hyperlocal perspective in order to have an intimate understanding of a community’s needs and what it values.
Try to partner with a strong local player that has a complementary product or service. I’ve found many companies today want to diversify their offerings, so local distribution partners are much more attainable.
Does your branding translate well?
Conduct localized market research to ensure that it will accept not only your product or service, but also your brand’s persona. It’s crucial to know if your logo and tagline make sense to international customers or if they translate into something confusing or offensive.
There are plenty of examples of nomenclatures that embraced foreign cultures — as well as a few that missed the mark — so it would be wise to have local language experts involved when globalizing your brand to avoid disaster.
Was globalization always the plan?
I’ve found that companies that are most successful at scaling abroad typically have growth hardwired into their DNA from the beginning. They gain momentum early on by building the brand and goodwill among an international audience through social media engagement, marketing and public relations.
It is also important to anticipate from the beginning which international markets will matter the most. Reverse engineer your decision based on your target. For example, if you have a social media company, you’ll want to consider which country has the largest internet penetration.
Do you have the right team in place?
Don’t assume the rest of the world does business the way the U.S. does. I believe hiring talent within the country you’re expanding to should be your top priority. But first, determining who manages that on-boarding process is critical. In order to localize in your global market, ensure you have someone in place who understands the complexities of the local market, speaks the language and interprets cultural nuances enough to earn respect and build trust.
That said, don’t staff teams exclusively with local talent. Have a mix of both U.S. and local candidates. In my experience, an ideal ratio is 1-to-9: one legacy employee who knows the company in and out, and nine local talent hires. Keep in mind that it’s important to give the local team some independence, so don’t try to control everything from your headquarters. Local success is dependent on the team’s creativity and ability to act fast based on local knowledge, so use that to your advantage.
Is the brand strong enough to transcend culture?
If an idea is big enough, I believe it will find a marketplace anywhere. Uber, for example, was determined to enter local markets around the world. Although it has had to address many hurdles, and likely still will, the company has been able to expand into hundreds of cities and markets. (Full disclosure: I invested in Uber in 2016.)
Perhaps the best way to know if it’s time to take the leap is if you’re seeing measurable demand for your brand. Is there international interest already? If the answer is yes, then it might be time for you to test the waters. Start small, and then quickly scale up as you continue to thrive throughout each expansion phase.
In my opinion, one of the biggest mistakes a company can make is to focus all of its efforts in one place, especially when the local market is not large enough. Your company might be the local whale, but you run the risk of beaching it if interest dries up. Test the waters to find new opportunities on a global scale to ensure that your business thrives beyond your home turf.
July 11, 2019 at 08:03AM
Forbes – Entrepreneurs