Expanding abroad - Step 1:
This is the first part of a series on steps to take while planning and starting your expansion abroad.
As mentioned in the header of my blog, I would like to share the experiences we gain at Hull Speed Associates as we assist our clients in expanding abroad. The experiences I share are real situations of how we encourage our clients, and the pragmatic steps we take to help them in this process. I urge you to share your comments by clicking the comments button below. Oh, and please subscribe to the blog if you have not done so already; -).
The first step in all successful business moves, besides the odd luck which may cross your path, are planning and preparation. This point I cannot stress enough. I can hear it now, “Bill, of course, now move on… ” Actually this is the first step and believe it or not it is a step that a lot of companies who begin this venture miss to do or miss completely. Along with a solid go-to-market strategy, by starting off with at least a budget - and I mean a realistic budget - you quickly watch the financial and time requirements emerge while reality ebbs in. Here are a few things to consider as you prepare your expansion plans.
Setting realistic goals – What is your motivation? What do you want to achieve in the short-term? How will the move to expand abroad help your company short-, mid-, and long-term? Does expanding abroad actually complement your overall company strategy over the next 36 months? These are just a few of the questions you should ask yourself before planning. Yet, most importantly, set realistic goals. Don’t make the mistake so many companies have made over the years, telling yourself what you want to hear and not being realistic about what it will take to have a successful expansion abroad and the amount of time to achieve them.
Location – “can we manage our expansion abroad from home or do we need to have local people on the ground? ”. Without getting into a lot of examples, of which there are many, the short answer is local. No one knows their market better than the people who live and work there day in day out. So learn from others who have failed, “Kids, don’t try this at home…”, go local!
People – employees vs. contractor. This will dictate when you make the commitment of opening a legal entity. Most discussions we have with clients or prospective clients start with this topic. The most common questions we have encountered lately are: “Can we hire people without committing the capital and expense of founding a legal entity before we know if we can gain traction or not? ”, and “Can we do this on the cheap? ”. The answer is yes you can, but it comes at a cost. Most of our clients over the past few years have started off hiring a contractor who will focus on gaining traction to prove that your go-to-market strategy works. You will, however, find that unearthing that right person who knows your market, who has the experience and network to begin quickly and hit the ground running, and who is willing to do this as a contractor - at least in the beginning - will be hard to find no matter what country you start in.
Financial commitment – We consistently find that companies underestimate the financial commitment required to gain traction and become successful in their expansion abroad. Two fundamental elements in expanding abroad are consistently underestimated: the time it takes, and the money that is required. Both go hand in hand. Prepare what you think is a realistic budget, then double the time you think it will take to gain the traction you want and add a 20% buffer onto what you think it will cost. Then take a step back and look at what you see and ask your self this one important question: “Can we really afford to do this? ”. Whether it is the time it will take or the financial commitment required, never underestimate the time and related costs involved for you to gain the traction you want.
These are just a few of the basics to consider as you start planning and preparing for your expansion abroad.