Going Global – How To Get Started

by George Kennedy on August 24, 2011

 
 
Going Global – How To Get Started

Taking your small-to-medium sized business (SME) and your home-based-business (HBB) into global markets today is as natural a business objective as it was unnatural a little more than a decade ago when I began to write on this topic. Going global, in simple terms, means to think, plan, and act strategically with a global vision. That is easy to do with the technologies available today.

Several years ago, I authored a series of articles published by the Houston-based Black Business Journal (www.USAfricaonline.com) describing opportunities for SMEs, not HBBs in overseas markets. The compendium of articles formed the basis for a handbook: “The 21st Century Executive: Making Opportunity Work For You.”

My emphasis then on where to invest was on the key Big Emerging Markets: Chinese Economic Area (HongKong and Taiwan), South Korea, the Association of South East Asian Nations, India, South Africa, Poland, Turkey, Mexico, Brazil, and Argentina. Even in the late 1990s, there were enough success stories out there to mitigate the risks of going global for the small business owner. Today, new opportunities to buy or sell products and services abroad proliferate for the savvy independent business owner. If you are concerned about language barriers and this is your first attempt to expand into a foreign market, look at English-speaking countries like the U.K., New Zealand, Australia, and Ireland.

Personal relationships and technology lower barriers and facilitates direct contact with prospective customers, suppliers, and potential partners.

Some risk factors are still there, however. Performing due diligence is still key to identifying the right market for your product; understanding local cultural norms and their impact on doing business abroad, securing working capital from lenders; creating the right internal company mindset for going global, and finding that all-important right overseas partner or representative. On this latter point, there is only one way to select a distributor or partner: carefully, very carefully.

One of the relatively new and more dynamic entrants to global business is the Network Marketing industry and their legions of home-based-business owners. Most of the unknowns about building a global network of active members have been eliminated for this group by their parent companies. The largest of them, the serious billion-dollar entities, offer high-quality, affordable products and are currently established in multiple countries around the world. The XanGo Corporation, for example, has distributors in 34 countries. The risk factors are practically negligible and you benefit from strategically-placed offices and distribution centers, and representatives. The ubiquity of the Internet and other social media facilitate building a network of contacts worldwide to present your products and your business opportunity.

Moreover, there are more readily available and accessible Internet-based resources today (SUCCESS Magazine) than a decade ago. Visit the Websites of The Foreign and Commercial Service of the U.S. Department of Commerce, the International Trade Administration (ITA), and the Small Business Administration’s (SBA) Office of International Trade. One service offered by the U.S. Commerce Department is the Agent Distributor Service (ADS) which works with commercial specialists in American embassies and consulates overseas to locate potential agents and distributors, for a nominal fee. Also, they can be helpful in researching the business record, the criminal record, and the business relationships of a potential agent or distributor. They also help you to learn more about the standing of a potential agent in the local civic and business community.

Visit an international trade show if one is within a reasonable distance from your location. At a trade show, you find products, manufacturers, and brokers to help you with the intricacies of international sourcing. You can never be too prepared. There is a Website listing the major international trade shows worldwide: www.tsnn.com Following these steps will get you started in the due diligence phase. Do your homework!

Communication and trust are very important when working with a foreign client. It helps to have a unique product; it opens doors. Above all, be willing to travel. You will want to be on the ground to discover the process by which others will handle your product upon arrival. You will also want to be familiar with the laws and procedures applicable to contracts for agencies, distributorships and joint ventures in the country you have selected. Moreover, you want to be familiar with local custom regulations, preferred packaging for your product, and the demand for it. Now, let’s get the process started.

How to get started. A good place to begin is with a strategic plan that responds to the four basic questions an overseas customer or partner might pose:
Who are you? Why you are in business, the parameters of growth you allow, your relationships with your employees, your business community both locally and nationally,and your commitment to ethics.
What do you do? Explain precisely what your company will do for your customers and the benefits your customers will derive when they purchase your unique product.
Why do you do what you do? This section of your plan would be important to a lender or potential strategic partner. Here, you show how your company under your leadership will accomplish its goals. Tip: Err on the side of offering more detail rather than less. You are building confidence.
How do you do what you do? Here, you explain the process you will insist upon to fulfill your company’s mission and the goals you have set with your team.

Phase two: Identify your market and do your research.

Phase three: If applicable, determine your capital needs. Meet with lending officers at several lending institutions. Research federal and state organizations for business loans at lower interest rates.

Phase four: Find the right overseas representative or partner now that you have made the decision to go global.

It is important to keep the process as simple as possible. Follow the steps outlined by business consultant Rieva Lesonsky in the June 2010 issue of SUCCESS Magazine. (Order the back issue.) Her “5 biggest do’s and don’ts” are as important as they were a decade ago – especially for those entering the global marketplace for the first time. The amount of information available through the Internet can demystify the whole process of how to take your business global. Here are just a few of the resource sites available to you: Alibaba.com; BuyUSA.gov; and Export.gov; Globetrade.com; Trade.gov; and SBA.gov/international trade/index.html

When the diligence phase is completed, be prepared to travel. Spend some time in the country you wish to invest. E-mail and Skype are ubiquitous so reach out and make the initial contact; lay the groundwork for your visit. Set up a meeting. Get to know your prospective partner and, by all means, visit their operation. The visit is for your peace of mind. You need to confirm that they can provide the facilities they represent to you. Do this carefully. Much is at state in selecting the right partner – perhaps the future of your business in a new market.

Ask the right questions and seek the right answers to your questions. Understand the logistics and costs of moving your product from the U.S. to your customers abroad. The more you learn before boarding the plane, the greater your confidence in your ability to negotiate a comfortable relationship with your foreign partner.

A word of advice: Arrange a meeting beforehand with representatives of the embassy representing the country of your prospective foreign partner to get an understanding of those distinctive foreign customs that impact business. Once on the ground, by prior arrangement, meet with the representative of the Agent Distributor Service (ADS) that helped you during your diligence phase.

Small-to-medium-size businesses and HBBs are well positioned to expand into markets abroad because of the explosive growth in communications technology and a weakened economy. That first contact, that first successful negotiation induces a “high” unlike any other in business. By being prepared, you avoid costly mistakes.

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George Kennedy

George Kennedy was a business advisor to small technology companies in the Washington DC Metropolitan Area. Currently, he serves as the Chairman of the Economic Development Committee of the Marana, AZ Chamber of Commerce and is a board member of the United Way of Tucson organization. He also serves as an advisory board member to the School of Social and Behavioral Sciences at the University of Arizona in Tucson. Mr. Kennedy is a retired senior Foreign Service officer with extensive international experience. He holds a B.A. from the University of Oregon and two graduate degrees from the Johns Hopkins School of Advanced International Studies in Washington, D.C.

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