Having worked in three continents and coming from an entrepreneurial family, I’ve had the privilege of being directly involved in, or being on the periphery of, several businesses ranging from cars, clothing, technology and professional services.
I’ve learned many business lessons that otherwise would take years of experience to acquire. I’ve talked about some of those lessons here and here, but in this post, I’d like to talk specifically about going global.
As some of our companies established themselves locally, it was only natural that we look for expansion elsewhere. Entering new markets in strategic geographic locations can offer your small business attractive growth opportunities that will help fulfill your long-term vision.
While that may sound exciting, it’s also easy to forget that it can be very challenging to work in countries other than your own, and navigate through cultures you aren’t familiar with. Below are a few pitfalls you’d want to avoid when ramping up your small business for global success.
Don’t get too comfortable negotiating from your office
Last year my husband bought into a company that sells women’s shoes. Like most existing companies, processes and business relationships were already cemented in place. However, after experiencing difficulty with their manufacturing agent, my husband flew to China to look for new sources. In one trip, he managed to save the company 40% off their costs, working with a new manufacturer that offered better quality goods. This has allowed the company to be more flexible with pricing, therefore attracting new distributors, and passing the savings on to their customers.
When first dipping your toes into international waters, chances are you’re doing it from your local office. After all, technology allows us to make calls cheaply, use video conferencing to “meet” virtually and use social networks to get a “feel” for someone’s personality or check out references. It seems like the perfect set-up to save money and get things done. However, by sitting back in your chair, you may be missing out on even bigger savings. Go direct to your source and get to know them.
Don’t ignore a culture’s communication style
When my father died suddenly more than 16 years ago, my brothers and I had to take over the family’s automotive business. Although we kept most of our clients and even won some new ones, at one point we decided to sell the business rather than compete directly with our manufacturer. In that situation, we were a business based in the Philippines, selling to a Dutch company.
In the Philippines, like many Asian cultures, we avoid causing public embarrassment, rejection or disagreement as this results in negativity and “loss of face”. It can be really frustrating for others, but Filipinos rarely give a direct answer of “no” and will avoid disagreement, rejection and confrontational behavior at all costs. “Yes” may mean “maybe” or “I’ll think about it.” This ambiguity means that it can take longer to get a firm negative answer.
Our Dutch buyers had a very different communication style, very straightforward and direct. To them, this implies openness and clarity between people. When we were preparing our company for sale, we made sure that we had hard facts and figures and stood firmly on Yes and No rather than defaulting to emotions and instinct to make decisions. At one point our buyers even walked away, but by understanding their communication style and what they were looking for, we eventually closed a successful sale.
Don’t rely on local contracts being 100% enforceable
In North America or Europe, we rely on contracts heavily to make sure all parties entering an agreement understand what’s on offer and accept the terms as binding. In partnerships, for example, it’s always good to have things laid out at the beginning, so that if things ever sour there’s a straightforward document in black and white that can protect both parties from a bad ending (emotions can often get the best of us).
However, in many countries, especially developing countries in Asia, South America, Africa for example, contracts are not as straightforward as they may seem. Unfortunately, the legal system in many of the countries with the most opportunity, are also the ones that may be the most difficult to navigate your way around.
In these cases, contracts may simply become road maps unless you want to spend a fortune to enforce them. While it’s important to have a local lawyer create and review your legal documents, what may be as important is the influence your personal contacts yield. Don’t do business blindly. Get referrals and try to do business with those that your close contacts have worked with or highly recommend.
We once had a defaulting customer who simply ignored our pleas for payment and threats of legal action. The customer knew we didn’t want the hassle of chasing him from halfway across the world. We had a mutual and powerful friend put pressure on the customer. When our mutual contact got involved, our customer eventually paid us. Sadly, it wasn’t the contract that compelled them to pay.
One Do: Start small and avoid the big loss
Test new partnerships, vendors or customers out with small contracts that you can walk away from, but will allow you to assess if their integrity, work ethic and values align with yours. If you have the patience to do your due diligence and take small steps, you’ll never encounter that unexpected, and sometimes crippling, big loss.
What about you?
Have you expanded outside your local market? What’s one thing you learned that would be valuable to small businesses going international?
I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.
Elena is founder of a technology PR agency that works with startups to billion-dollar companies. She is passionate about helping marketers and small business owners with practical publicity strategies.
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