Considerations when going global
Joining the ranks of the UK’s 232,000 SME export businesses offers huge and exciting opportunities – and unexpected challenges. So, what are the key things you need to consider when making the move?
There’s lots to think about if you want your business to go global. How do you select the right overseas market? What’s the right business structure? What kind of team will you need in your chosen territory? How will you keep an eye on your turnover and profit margins?
First you need to carry out in-depth research on potential overseas markets and set out your growth strategy. But if you want to be a really smart operator, it pays to learn as much as you can from other entrepreneurs and business leaders with practical knowledge of expanding overseas.
Four people who really know their stuff share invaluable experience and top tips for going global.
Joe Boyle, CEO of Belfast-based business communications specialist SaltDNA – a business that has expanded into 30 countries since launching in 2013 – emphasises the importance of getting high quality advice from outside the business.
“We had to go international from the outset to reach a large enough market and we were able to move fast with good advice. Our best decision was to seek external support from other trusted business people and networks.”
Joe also thinks it’s well worth looking around you to learn from the knowledge and experience of others, who can also make connections that you might not be able to on your own.
“We knew some really great people with a track record in start-ups and high growth businesses in a wide cross-section of industries. They knew the journey we had to make, enabled us to see things we might have missed and challenged our thinking.”
Most entrepreneurs agree that international expansion involves more time and money than they anticipated, so how you fund your expansion needs to be worked out carefully.
SaltDNA’s international growth, for example, has been backed by venture capital (VC) from Belfast and the US. “You have to demonstrate you’ve got a strong product, a world-class team and a demonstrably large market,” says Joe Boyle.
“That’s worked well for us, but you’re expected to give away a lot of ownership of the company to attract funding, particularly if it’s a high risk business. Some big investors prefer to keep you close by and have a presence in the same city as them.
VC investment is about finding the right balance between giving up ownership and keeping you motivated. And once you’ve got strong demand and a healthy pipeline of work going it’s easier to get investment on better terms.”
In contrast, Rory Brannigan, CEO of business communications solutions specialist ISDM, says his company took the decision to fund its expansion purely through sales growth.
“We’ve never borrowed, just invested everything back into the business, but that’s relied on us successfully maintaining growth organically. To achieve that we decided to avoid lower ticket price projects and targeted larger client organisations with longer sales cycles, offering us greater opportunities for expansion.”
However, Rory doesn’t rule out external funding for future expansion if continued organic growth isn’t viable over the longer term.
Ready for launch?
Another challenge facing businesses looking to grow globally is working out if and when their products or services are ready for their intended new markets.
“If you keep waiting until your product is perfect, you may miss out on opportunities,” says Nancy Brown, Lecturer in Management Development at Ulster.
“The market will keep changing so your product has to change with it – you need to be agile and keep delivering new iterations. It can really pay dividends to physically visit a territory you’re planning to target to discover more about it and decide if your product is going to work.”
Mark Dowds, co-founder of Trov, an on-demand insurance platform, takes a slightly different view. “Australia was the launch market for our product, which we then effectively duplicated for the UK and US markets.
We focused on the launch, and it was undoubtedly a success in Australia, but retrospectively I think we could have developed the product more fully before introducing it elsewhere, to avoid duplicating any weaknesses.”
Choosing a partner
For many businesses, working with partner organisations is essential to get a product into new markets, so it’s vital to choose your partners very carefully to avoid wasting everyone’s time.
Effective partners can deliver a pipeline of new opportunities and open doors to conversations with potential customers, but it may be necessary to appoint local managers or establish an overseas presence to manage those relationships.
“If you want that relationship to succeed you need to be expanding and getting good traction and know how to sell the product well yourself before engaging a partner,” says Joe Boyle. “In my view, a good return from a partnership model is getting 10% of your partner’s contacts to do business with you.”
Any company expanding overseas needs have to have a good understanding of the cultural values of the territories it’s operating in.
“It seems deceptively obvious, but it’s always a big learning curve and you’ll make mistakes,” says Boyle. “There are differences in social, legislative and financial cultures around tax and customs you need to be well-informed about.
For example, how do you get money in and out of a country or move it around? Do you need a presence in-country and does that mean setting up a local legal entity? You’ll have a million questions coming in at you and your knowledge will increase all the time.”
Focus on your core values
The internal culture of a business also plays a major role in international expansion, says Rory Brannigan.
“You need to drive a strong message through your business that’s embraced by everyone from top to bottom.
We have five key operating principles: drive for sustainable outcomes, involve the right people, think beyond the now, focus on equality, and commit to customers. Each one means something in the way we approach any work, and we use them as measurement KPIs.”
For Mark Dowds, the core values of humility, wisdom and courage underpin all the work his company, Trov, does.
“When you’re innovating and reliant on heavy external investment, core values and clear KPIs act as guide rails to help keep you on track. However, when you’re in the process of growing you have to get the balance right between expanding and looking after the core business.
Don’t jump on every expansion opportunity without considering the implications first… sometimes it can be better to say no.”
Top tips for going global
- Create a detailed strategy and action plan to understand your new market and plan your growth
- Get advice from people with hands-on experience
- Think about your funding options carefully, particularly if you’re considering giving up any ownership
- Consider whether your product is fit for market, but remember it doesn’t always have to be perfect
- Choose your overseas partners carefully
- Do your homework on business practices in your target market
- Stay focused on your core values and preserving your business culture
- Don’t spend time and effort on every opportunity – and be prepared to say no where necessary.