Before you consider Going Global, Go Louisiana and Go Texas

Going global can be a very smart and lucrative part of any growth strategy. But dealing with foreign trade laws, logistics, business practices (formal and informal), languages, and time zones can introduce substantial risks to your business model. It is because of these risks I advise my Georgia-based clients, “Before you go global, prove you can go Louisiana and Texas.” 

Why do I suggest this course of action?  By setting up the processes and procedure necessary to be successful in another state you mitigate several of the inherent risks of going global.

Delivering a product or service locally should be quite familiar to you.  If you are a successful company then you likely know your target customers well, you know the competitors you face, and how to get product to their door or how to deliver the specialty services you are known for.  All of this is familiar territory.  Now what would you do if I challenged you to be equally successful in a state a time zone away.  How would you pick the state, how would you sell your product or service there (direct or through distributors), how would you specifically deliver the product or service? How would you support those sales from Georgia?  How profitable would you be doing this?

Now what if I were to challenge you to do this yet again in a state say two time zones away?  What I hope you will do is develop documented processes for analyzing new markets.  This can be done on your own or by engaging a service provider.  And with each new state you will apply lessons learned and fine tune these “export” processes.  The same holds true for processes governing customer support, logistics (delivery of the product or service), employment, quality control and accounting procedures (state taxes).

By going Louisiana and then, say, Texas before going global you will have put in place and exercised many of the same processes and skills necessary to be successful abroad.  These include:

• new market analysis
• competitive analysis
• logistics
• new territory marketing
• new territory sales
• learning and adapting to new tax laws
• learning and adapting to local business laws
• learning and adapting to new accounting procedures (taxes)
• providing customer support after local business hours

The good news is you will be mastering these new skills in an environment where the language is the same, the business culture is quite common, the sales techniques similar, and the overarching governing business and tax laws something you are familiar with.

If, after you succeeded in doing business in Louisiana and Texas, you still feel going global is right for your business, you will only need to master a fairly small number of processes still unfamiliar to your business. Some of these include:

• doing business in a foreign language
• Foreign Corrupt Practices Act
• currency exchange
• foreign and U.S. trade laws

Don’t get me wrong these can be quite intimidating challenges to overcome and will require expert assistance.  But by now your company will have already proven to themselves it can adapt and succeed in new environments. This is just one more evolution. 

So remember my phrase, “Before you go global, prove you can go Louisiana and Texas.”  Your success will be that much more assured.

Mike Gomez is the founder of Allegro Consulting, an Atlanta-based business growth specialty firm.  He has served as a program manager and business development executive in both Fortune 100 companies as well as small businesses. He has conducted business in over 20 countries. Mike is a guest lecturer at GaTech on international business and at UGA on business planning and sales strategy. He can be reached by phone at 678-908-8433 or by e-mail at m.gomez@allegroconsultant.com. Visit http://allegroconsultant.com

3 Lessons from those that Failed - Global Expansion

I was asked to give a presentation to owners of American companies who were contemplating a global expansion growth strategy that would take them outside the United States. I decided to share with them some of the lessons I gleaned when working with foreign companies who were struggling to be successful here in America. After all, as someone once said, "Learning from your mistakes is smart, … learning from the mistakes of others is wise".

Here are my top three lessons from those who failed:

1) Exporting or Global Expansion Should be Part of an Overall Strategic Plan and Not Simply Done on a Whim

"Why did you choose to go global? Why now?" When asked these questions I was surprised that most owners did not have an answer other than to say “it was time”; that they succeeded sufficiently in their own country and now it was “time” to take on America. In some cases they came to America on the heel of or at the urging of their biggest customer – another foreign company - who also decided “it was time”.

I would then ask some more basic questions such as how well did you understand your relative strengths and weakness and the opportunities and threats associated with this marketplace before coming here? What did you identify as the top barriers (regulatory, legal, financial) to entry? What plan did you put in place to overcome these barriers? Who are you targeting first for new sales? What is the competition and how did you intend to compel customers to buy your product or service over that competition? Not surprisingly the vast majority who were struggling here in the U.S. did not have answers for these basic questions.

Growing a business in your own country is hard enough. Improve your chances of success abroad by taking the time to study the market you are about to enter. As you build your strategy get an outsider's perspective (preferably a native of the country you are thinking about entering) to make certain you are being brutally honest about assessing your companies strengths as they pertain to this new market. Bottom line - have a well vetted, LOCALIZED, and documented strategy before you launch your undertaking.

2) Don't export more than you must.

Remember, when globally expanding into a new country success will be determined by how well your product or service sells. If it is a product you will be making the case for why or how your product is better than the competitors - price, quality, and/or capability. On the other hand if it is a service you will be emphasizing your unique process and why it is better than the competitors. This is what you are exporting.

Here is what you should NOT be exporting - your country flag, your people, your brochure (see example (above) from German company - sometimes "englishizing" is just not enough), you sales approach, or even your website. The only exception is if any of these elements can improve your chances for opening a door, making a sell or closing a deal.

For example, if you are a German company selling precision machinery in America I can see where emphasizing the German aspect could be a competitive advantage. The same would hold true for France and wines. But if you are a Chinese company selling faucets or even solar panels here in America there is very little the Chinese element brings to the sale. Careful thought and scrutiny must be given before you choose to export these latter aspects (people,website, etc..) of your company because there are very few circumstances where the flagrant broadcast of the country of origin for the product or service actually contributes to the sell. On the contrary, here in America it may cause an unwanted distraction at best or negate any chance of a sell at worse.

3) Beware of ego driven, cash sucking business decisions.

More often than not the reason most companies don't succeed here in America is because they run out of the cash they set aside for this venture. You will note that I didn't say they didn't set aside enough money, because most do. Where they fail is the choices they make, particularly in the first 12 months, on what, where, and how they spend their money.

Elaborate office space, signage, furniture, leased vehicles and homes all for the purpose of "making a good impression" is one sure way to burn through a lot of cash before you find your first customer. Flailing around trying to find a sales strategy and message that works in this market is another way to consume a great deal of cash and time (one in the same). Localizing your sells and business strategy for the American market versus trying replicate the strategy you used at home is one way to prevent this. Putting tight controls on cash by delaying the elaborate office expenses until after you have had time to understand the local market and your true needs is another prudent course.

America is a magnet for globally expanding international businesses. Our large population, high medium income, high GDP, transparent legal system and common language makes it very attractive. But succeeding in America requires you to first understand how we make buying decisions - it is different in subtle ways from the rest of the world. And, like every country, you must guard against the vultures who will prey upon your naïveté. A well crafted localized strategy, a script for your business in America, will help significantly.

Going International! - The Fundamental Rules of Business Still Apply

Over the past year I have met with several small and mid-sized international businesses that have chosen Metro Atlanta as their launch site for international growth into the U.S. market. Our high consumer spending rate, low relative business cost, and significant service industry focus makes America a prime destination for foreign companies who choose to grow their business through international expansion.

Germany, France, Israel, Brazil, Ireland, and the UK are the home countries of some of these businesses and in most cases I was thoroughly impressed with their product or service offering - it was unique and I could quickly see the value proposition. But their venture in the U.S. was not succeeding. I suspect some will soon give up and return home - having spent thousands of dollars on office space, computers, staffing, advertising, corporate legal fees, and travel.

So where did they go wrong? Some of this may surprise you.

 No plan – As big a deal as it is to go international not one of these companies had a strategic plan in which expansion into the U.S. was a critical and important element. In each case, the owner either arrogantly felt they had succeeded sufficiently in their own country and/or had some international success to declare it was time to expand into the U.S. market. Some, on the other hand, were “encouraged” to make this move by their prime global customer (i.e. we are doing business in the U.S. and we want our suppliers here as well.) Regardless, it was clear that little time was spent studying the business climate, understanding and defining the short and long term opportunities, the competitive threats, and how best to take advantage or minimize their relative strengths and weaknesses in this pursuit.

 They sent their best salesperson to launch the business … who quickly found themselves making critical operational decisions such as where do we best locate the company, what size and type of office space do we need, what accounting and law firms do we retain, what are our computer hardware, software and network requirements, phones, banking, our staffing needs and the appropriate compensation and benefits, etc…. This poor person whose skill-set is sales is forced to make significant and long lasting business decisions better suited for a COO or CEO. Worse yet, that salesperson has little time remaining to pursue critically needed sales.

 “Englishizing” their marketing material and sales presentations – If the message worked in Germany or France then, when translated (by our German or French marketing firm), it should work in America, right? Wrong.

 Poor/excessive fiscal spending – Rather than preserving capital these companies spent lavishly on office space and furniture, homes, office staff, new computers and networks. Sadly, several followed poor advice or purchased higher priced products or services than needed from supposedly trusted companies of similar nationality who they later discovered did not necessarily have their best interest in mind.

 Bad local hiring decisions – No written job descriptions with qualification and expectations clearly outlined was used when hiring their American leadership or sales staff.

 Poor support, if any, from the home office – There are few experiences more deflating than when calling the home office in Europe, looking for assistance, only to find everyone has gone home for the day.

Going international is a legitimate growth strategy whether you are a U.S. company or one from Germany. But the fundamental rules of business apply. First and foremost it starts with a plan.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com