Ask the Expert: Going Global - 5 tips for buying, selling overseas
In this age of globalization, doing business internationally is not the exclusive domain of large conglomerates anymore.
To compete and grow, going global is becoming a necessity for even small and medium-sized businesses including start-ups. While the prospects of selling your products in the Scandinavian market, or buying components from a manufacturer in Thailand may seem daunting, the following five tips should make your journey a bit easier.
1. Plan and set reasonable goals. Like anything in business, your chances of success are much better if you plan ahead, do your homework, and set reasonable expectations. If you are selling abroad, which countries are the best fit for your product or service? What are the immediate barriers to entry? How big is the market? If you are looking at overseas procurement, which countries currently supply what you are seeking?
How is the political and economic climate there; is it stable? Fortunately, much of this research can now be done online. Once you have done some research, and identified some targets, you must set some goals for what you want to achieve. The key here is to make sure that the goals you set are achievable, and when achieved have a sufficient positive impact on your business.
2. Network and find a guide. Just like a good Realtor can help you learn about and move into a new neighborhood, a good local business partner such as a local sales representative, or if you are buying products or services, a business consultant who can represent your interests, can be invaluable. While such reps or agents are not free, they will be your guide as you navigate this unknown territory, and can protect you from many of the pitfalls that come from dealing in an environment that is different from home.
The best way to find such partner is to network. Ideally, you will find someone you know who can recommend a business partner in a given territory. If not, industry associations, government agencies (both from the U.S. and abroad), are a good next step. Other avenues to explore are international trade shows and conferences, as well as industry events.
3. Go. Once you have found a local partner, get on a plane (or train, or boat, or bus) and go. Business is all about relationships, communication and trust. See how your prospective customers would use your product; experience the local sales process; visit the factory and watch how workers handle products. Even more importantly, interact and form real relationships with the people you will be doing business with.
4. Structuring a deal. Now that you have a plan and a partner, and have firsthand knowledge of what you are getting into, it is time to put together the business deals and the contracts that govern them. Some things to keep in mind are:
. Tie incentives to your desired outcome.
. International contracts are not easy to enforce. Therefore, the focus should be on the major items and the spirit of the agreement rather than on the minor details.
. Have an out clause. Despite the best intentions, some deals just won't succeed. Always have an out clause that allows any deal to be terminated reasonably and equitably.
. Use U.S. dollars. While most countries have their own currencies, the U.S. dollar is the standard for international transactions. Currency rates are volatile; don't take any unnecessary risks.
5. Be patient, and have fun. If you make it this far, the real work now begins. Undoubtedly there will be disasters that come up, and conference calls in the middle of the night to resolve them. Things will always seem to move slower that you want. Be patient; this is to be expected in a new business relationship that spans distance, possible cultures, and language. But once the obstacles are overcome, and positive results start coming, you will hopefully realize perhaps the most important takeaway - doing business with people in other countries is fun. It is very rewarding to collaborate with, and form friendships with, people around the world, so enjoy.
In the end, business is all about people, and that is the same whether you are dealing across town or around the world. Going global can help you meet your business goals, and gives you a chance to enrich your life along the way.
I look forward to answering your questions and/or responding to your comments at www.unionleader.com/expert or http://abihub.org/ask-the-expert/
Hiro Kataoka is the co-founder and CEO of HoGo Inc., a Manchester based start-up that is developing a cloud-based service to copy protect, distribute and manage sensitive PDF documents. Since 1991, Kataoka has successfully founded and run technology companies on both sides of the Pacific, and has done business in more than 20 countries around the world.