Global expansion may be every enthusiastic business owner’s dream but is your business truly ready to expand? Cultural, political, social and logistical differences can impact on your product’s success, as well as simple mistakes, such as neglecting to check your trademark, patent or intellectual property status in new markets.
In this week’s Let’s Talk, we speak to experts about ‘What can derail a businesses’ plans to launch their offering into an overseas market?’
According to the experts, a lack of cashflow, failure to plan for the future, neglecting to check branding, cultural barriers, poor communication, and new regulatory requirements, are all factors that can contribute to derailing your business in an overseas market.
Colin George, National Director Business Development, Efic: Lack of planning. Making sure you have a detailed export business plan is key. Having a successful domestic business doesn’t guarantee success overseas. There are many factors that can impact the outcomes of an international launch. Some of the key things businesses should be thinking about are:
Target market: Your domestic business may be booming but is your product/service going to be the right fit for your overseas customers? Do you need to think about tweaking it? Are there colours you should steer away from? Is your brand name suitable?
Risks: It can be daunting, but really looking at the risks associated with exporting is critical. From contracts and legal risks, to currency and political risks. Having a deep understanding of your new export environment will help you prepare for potential bumps along the way.
Finance: Growing your business overseas takes investment in time and resources. This means your business cashflow needs to be in a position to handle new opportunities. If you’re new to exporting, banks may not be able to help out because of lack of security or creditworthiness. There are alternatives – Austrade has a number of grants including the Export Market Development Grant scheme to help with marketing costs. Efic can also provide finance solutions to complement what your bank offers or when your bank is unable to help out.
Sabri Suby, Founder and CEO of King Kong: A lack of cashflow means limited options and the inability to be quick and agile – which are essential to launching overseas. For example, if another competitor gets the first move advantage, cashflow is necessary to make that a minor set-back rather than a crippling move. Or if cashflow is inconsistent or low, you will not be able to dedicate the necessary resource into not only a successful launch, but also the time it takes to see a return on that overseas investment.
James Mawhinney, Managing Director, Mayfair 101: If a business is successful in one country it doesn’t necessarily mean it will succeed in another. There can be cultural, social, political and logistical differences which mean your product or services are received differently in overseas markets. Perhaps the most important step is to conduct market research and follow this up with a pilot program to see how your product or service will be received, and then fine-tune your offering prior to launching in any new market. Consideration should also be given to the challenges associated with remote teams, exchange rate risk, language barriers, and the amount of time and commitment required to gain traction in overseas markets.
Trena Blair, CEO of FD Global Connections: You have spent months planning your international expansion and completed all the right steps:
- Go-to-Market Strategy: Tick.
- Scalability Assessment: Tick.
- Budget Approved: Tick.
- Launch Schedule: Tick.
- Operating Model: Tick.
Everything is ready, and you have flown 22 hours to secure a meeting with a global CPO of a major international corporation – a potential partner. They ask you, “Great to see you here. So, when you return to Australia, what’s your ongoing commitment to this market?” You go white, look around the room searching for an answer. Because you know, that when you return to Australia, you have no ongoing representation in the new market and have not considered what this looks like other than “Fly-In-Fly-Out”.
Too many businesses don’t plan for this critical question, which often leads to failure to secure partnerships and stymies growth.
Rhys Taylor, ANZ regional director, Aerohive: Companies often times forget to check their trademark, patent or intellectual property status in new markets they plan to enter. This is a very basic yet common mistake made and many have paid a hefty price for it. It’s important to ensure that your company or product(s) name in the local language isn’t offensive or already snapped up. If this is the case make sure the branding is well sorted before trying to make any moves into the new territory.
While it’s important to have a business case for entering an overseas market, don’t let ‘analysis paralysis’ be a burden. Organisations can sometimes spend too much time poring over countless reports and lose precious time actually starting and building a business in the new area. Don’t try to do everything at once – be patient and grow your business incrementally.
Be careful when choosing a local partner as the bigger the name doesn’t always mean the better. Smaller partners can be more hungry and deliver actual outcomes for your business.
Mark Fletcher, CEO and co-founder, Cohort Go: Poor communication can easily derail a business’ plans when determining the roadmap for international expansion. Geographical distance creates challenges for building meaningful and quality business relationships. Engaging trustworthy local experts in the market can significantly help overcome this challenge. It speeds up the decision making process when you have a person on the ground that knows the culture, speaks the local language, and operates in the same time zone.
By the same token, managing your staff in overseas markets is just as important to ensure your expansion plans stay on track. It is vital they know what is expected of them, what their roles and responsibilities are, and how they contribute to the overall.
Simon Banks, Managing Director, Asia Pacific at Hyperwallet: Global expansion presents a unique set of challenges, with businesses required to acclimatise to a new regulatory environment that has different payment standards. This is especially true for two-sided platforms that deal with both inbound purchases and the disbursement of payments to sellers, freelancers, or contractors. To avoid derailing your business offering in an overseas market, it’s important to keep the following factors in mind.
First, launching overseas without offering locally preferred payment methods (both for payment acceptance and payout disbursal) will be a limiting factor on expansion plans. Be sure you thoroughly understand your payment partners: their capabilities, their history. Are they new local connections, or are they established in these regions? The more payment partners you engage, the more complex your integration will be, ultimately increasing business processes and costs.
Andrew Joyce, Co-founder of Found: One of the best examples I’ve seen of a poorly thought-out product launch is share-bikes in Sydney. This business model has been phenomenally popular in overseas countries, particularly where there is high usage of public transport (particularly trains), flat terrain, and no helmet laws. In this case, using share-bikes becomes a daily exercise for ‘last-mile’ commuters. Sydney has none of these characteristics. Anyone launching into a market without an adequate understanding of why they’ve been successful in their home market (or without being able to identify at least most of these characteristics in the overseas market) is likely to struggle.