The "Global" element of a two prong approachEd Marsh, founder and principal at Consilium Global Business Advisors, is an experienced international business entrepreneur. Ed has founded and managed various international business efforts in a variety of industries and markets. Today he shares thoughts on how global sales diversification represents one of the two parallel avenues available to SMBs for growth in today's challenging markets.
CGBAdv - You talk a lot about global expansion opportunities. But isn't exporting complicated and risky?
EM - I normally answer that question in a couple different ways. Let's start with risk. First, I ask if a company has done a risk analysis of continuing to do the same that they have been. The answer is almost invariably no.
Then we talk about what the actual risks are. Are they different than domestic business (managing receivables risk, covering risk of loss in transit, etc)? Not fundamentally. Are there different details? Of course. FOB under the UCC is very different than FOB under INCOTERMS 2010. But there is nothing that can't be efficiently, administratively managed.
The real risk lies in plunging in as a DiY (do-it-yourself) project. You don't know what you don't know. And therefore you can't plan for that, nor mitigate risks which could be easily addressed preemptively. Studies show that companies focus obsessively on transactional details when they begin to export. When they encounter one they will seek out some assistance (often from one of the low cost government services) and will get some counsel on that topic. Rarely do they get the details that flesh out the context that's important to the business owner making the decision, and never in my experience have I found a company receives a comprehensive overview of all the strategic, transactional and positioning steps which are important.
And that brings us to complicated. If addressing a number of details that are different than the myriad which you automatically address domestically makes it complicated, then that's your answer. Alternatively, it's simply another project.
CGBAdv - Are there specific market areas you recommend now?
EM - There are. But it's important to be clear that the right markets depend on the product, the company strategy and the growth objectives. Markets should be selected deliberately rather than by default as many do. We see too many companies charge into the BRICs because of the seductive headlines - only to discover that barriers are brutal and time to profitability exceeds their runway.
Also it's important to distinguish between regions (e.g. ASEAN or Latin America), countries and major metros. The latter are becoming increasingly important units from a growth management perspective.
I always recommend that companies pursue a manageable and diversified set of markets. With few exceptions (such as natural resource or security related industries) the optimal targets are normally those where demographics favor consumption growth. The goal is to have the rising tide float your boat - so going where the growth will be is important.
With that background we talk frequently about (download our reports on regions through the hyperlinks below):
- ASEAN (Southeast Asia)
- Latin America (particularly Colombia and Mexico as entry points)
- Africa (particularly West Africa)
- the intersection of MENA and Eastern Europe (Turkey)
CGBAdv - Where do you find most companies struggle most?
EM - Companies which approach this opportunity with a belief that it's the same as their domestic business - just in a different language - struggle most. Localization is important - and localization needs to permeate every aspect of the effort.
In some cases products need to be tweaked. They almost certainly need different packaging, labeling, certification, etc. But basic business building blocks must be localized as well. International marketing success requires a top-down approach. It's vastly more than having a .com website with Google Translate and a few brochures that your channel partner translates.
Channel management is another discipline that must be adapted to local conditions.
This is a journey - it's not all perfect out of the gate. Experience dictates a lot of the changes and approaches. But companies have to accept that they must localize various aspects of their approach for each market. If they resist, they'll fail.
CGBAdv - The parallel approaches that you advocate for business growth may seem unrelated to some readers. Can you explain how the concepts of "evolutionary marketing" & "new markets" fit?
EM - It's really about a strategic overview of market conditions. Business owners are too often deep in the weeds and lack the perspective to see how conditions around them have changed dramatically. And they have!
So our approach is about identifying approaches that are feasible for companies and that leverage the opportunities which exist. It's tragic to see companies with good products stagnate as they continue to hammer on approaches that used to work....in a very different world.
We have owned companies and have substantial B2B marketing and international business development experience - and so the two fit naturally from our perspective. Companies need to grow. To grow they have to find new customers/clients. So they can make themselves easier to find and more effective selling according to the way companies now buy. And/or they can go find new groups of customers eager to buy products like theirs - especially with the valued "Made in America" tag.
We see them as two sides of the same coin. Normally the push back comes from folks who are firmly ensconced in a traditional silo role ("I'm a marketing expert!" or "No, we are direct sales. That other stuff is up to the guys in marketing.") That's simply incompatible with our view of how companies need to grow going forward - and it's similarly incompatible withe the research. (Register to be notified when we release our report "The Current State of B2B Sales & Marketing - Why CEOs should be pumped and VPs of Sales Terrified!")
CGBAdv - Any final thoughts?
EM - We've just barely scratched the surface here. I think the main takeaway should be 'mindset.' In my experience companies that believe they can and should be global succeed. And stories of typical B2B companies building 20-30% international business in 3 years are fairly common. But those who tentatively test the waters fail. The failure isn't catastrophic, but it is often described as frustration and lack of return. If you're going to do it - commit. And give Consilium a call to discuss how we might accelerate the process for you.
I can assure you that no matter how unique you think your particular challenges are, we've seen at least similar ones before. Going it alone is cheaper in the short-term, but carries huge risk and opportunity costs in the medium turn. Let's talk about how we can help you succeed internationally.