How to replicate a successful business abroad
UK SMEs are increasingly being encouraged to look internationally for new market opportunities. A recent report by HSBC found that three quarters of small businesses would like to expand internationally but said they are held back because they lack “international business experience and knowledge.”
Many entrepreneurs still feel nervous at the prospect of expanding internationally. Without experience with different regulatory or legal environments, determining a starting point can be daunting.
At Campaign Monitor, a global company founded in Sydney and headquartered in San Francisco, we have recently opened our European headquarters in London. As a truly international business we’ve experienced many of the common successes and growing pains fast-growing businesses experience when expanding into new markets.
Where do businesses trip up?
Even large multi-nationals can face unknowns when expanding out into new geographies, and even household names can get stuck in while navigating local culture, legislation and the differing needs of international customers.
Many British businesses look ‘across the pond’ to U.S. expansion, enticed by the potentially huge market on offer there. However, as they soon find out, things aren’t as easy as setting up an office and waiting for the money to come in. A few British supermarkets have tried to expand to North America, but have often failed to take into account the different spending habits of European and American consumers. While Europeans prefer an urban convenience model of frequent small shops, Americans sometimes prefer to buy in bulk: supermarkets that fail to take this into account can, and have, encountered significant difficulties.
Likewise, U.S. companies seeking to expand into European countries often underestimate the additional EU regulations around labour, opening hours and data residency requirements.
What can we learn from this? To fully understand your new business environment it is invaluable to spend time in the new location and meet with as many of your local stakeholders as possible. Set up meetings with prospective sales leads to find out what their pain points really are, as there is a strong chance their needs will be different from the needs of your customers at home.
If some of the world’s largest businesses struggle, it’s understandable that SME owners can feel intimidated by the prospect of expanding abroad particularly when it comes to hiring. The most successful businesses find that employing local talent from an early stage is essential. It can be tempting to hire inexperienced workers, or simply relocate a team from your HQ, but this can quickly lead to issues. Treat any new office the same way as you did when you started out: hire the best, most experienced person you can afford and, perhaps most importantly, allow them the freedom to make the right decisions.
The most important part of every business is people. You may be uncertain about how your product will fit with market demand, but if you have a solid team your chances of success are much higher. Hire people that you feel will bridge the gap between the established company culture, and the culture of your new market.
Crucially, make sure you maintain strong communication channels. Once you find yourself in another country, and no longer having chance encounters with your colleagues, it’s important to maintain connection so that the flow of information and communication doesn’t break down.
Where do we go from here?
Reaching a milestone like opening an office overseas can be a hugely exciting prospect for an SME, but trying to emulate local success abroad doesn’t come without significant challenges and a degree of risk. In a political and economic environment that is increasingly unpredictable, it’s essential - now more than ever - that companies hoping to scale internationally have teams with on-the-ground, local expertise and experience in each new market.
By Craig Shull, Chief Operating Officer, Campaign Monitor
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