SME businesses evolve in various shapes and sizes and some grow large enough to want to venture selling into international markets. The process of going international has to be combined with the spirit of entrepreneurialism and structure. Very often SME’s tend to venture into international markets on a trial and error mode resting on hearsay and adopting make shift strategies that lead to all kinds of expensive mistakes during the journey.
Here are six SME must do’s before going international to make their passage easy:
#1: Be Market Ready: When going international, it is important to have built a fair market reputation in your own country before thinking of venturing out. If you make chocolates, people must have heard of you; if you make a magic balm people, must swear by it in your own country. In other words, you must have a successful story that can resonate with your international audience. And please remember SME’s accountants do not determine international business readiness, the market does! Accountants help manage funds.
#2: Have Investment Funds: Whatever format you choose of market entry – soft to the big bang you need to have investment funds clearly earmarked for an international market exercise. There are two areas of funding requirement a) Pre Investment i.e. before you have launched into the international market b) Post Investment, which is after you have agreed to launch in the market. Many SME’s try and address this in hindsight which is a waste of time for all involved. It is good to line up funds from your own Reserves, Bank or Equity Investors in advance and have a fair sense of it.
#3: Engage a Cross Border Consultant or Trusted Advisor: SME’s build their business through their own enterprise. However, while going international, it pays to work with a consultant or trusted advisor to avoid costly errors. Engaging a Consultant is initially difficult for many SME’s. The fears are costs and/or loss of control. In actuality, a Consultant acts as your international right hand who works on your brief giving you all sorts of inputs from managing your understanding of the market, return on investment to getting you off to a sound start or even telling you not to go ahead. In many successful SME companies, the Consultant can eventually become a full-time board member given the value brought to the table.
#4: Understand the International Market Environment: When going international, a solid understanding of the chosen market is a must – you need to know the market dynamics in play – people, pricing, products, competition, distribution and all the regulatory loops that need to be overcome. Each international market has its own peculiarities. This is an important part of the pre-investment work.
#5: Partner with whom you are comfortable: If you are not planning to enter the market on your own or see it as too risky, then partnering with a local partner through a Joint Venture is a viable option. Partner search and selection needs to be done. The best selection is a partner with whom you can relate to most and someone who shares your goals. Good partnerships are where both see themselves as contributing and winning; a win-win relationship even though it comes at the end of a commercial negotiation.
#6: Plan for the Long Term: International Market tests your willingness to understand a different culture, build relationships and eventually establish the market. This requires a long term investment perspective of the market. Be prepared for the long haul, rather than a quick win and exit. Successes of SMEs who operate internationally are replete with examples of long term commitment, willing to test, learn and adapt their product and service, based on market conditions and consumer demands. They are willing to play local and think global to win.
Knowing these six things will help you firm up your resolve to venture into your international business with confidence!
Sanjeev Nandkeolyar – Managing Partner, GCX, which provides advisory services on Cross Cultural, Multicultural and International Marketing. You can contact him on firstname.lastname@example.org