Entering a new country or expanding operations in an existing international market is rarely straightforward. Yet in an ever-connected world, international business is really just business as usual.
Missing out on opportunities because they’re outside of your domestic market simply doesn’t make good business sense.
In a survey earlier this year, we asked 300 leaders of UK mid-sized businesses who are successfully trading internationally what they’d learned from their experience. On average, the businesses we spoke to attributed 40% of their annual turnover to overseas customers. We asked them what they did well, what they could have done better and what they would do differently if they could start over again.
The top three things UK mid-market businesses would do differently if they could start again with international trade were:
Based on feedback from the survey and input from our specialist international advisers, we explore four areas people wish they’d known more about when they first started trading internationally:
Build from a strong domestic base
Experienced traders know that strong domestic operations form a vital platform for international growth. We sometimes see businesses looking to new territories as the solution to or as a distraction from long-term or endemic problems in the core business. Though it might not be as interesting or have the same potential for returns, ensuring that domestic operations are stable and properly resourced provides the right platform for successful growth in new markets. It will also ensure that if things don’t go quite to plan in new territories, or additional investment is required in terms of time or finance, you have the resources to react accordingly.
Localise before you launch
Nearly all the respondents to our survey said that they localise products and services for new markets. Just over half did so thanks to results of market research completed in advance of entry.
Being clear about the value your business has in each different market is critical to success. Understanding why your customers are choosing you over your competitors, what they value about your service or product and what the factors are that drive growth in the specific market are key to success.
Alignment is also important in terms of local culture for both how you sell and what you sell. According to Simon Littlewood, head of Growth Services, “companies looking to sell services in Texas are often better served by using local Texan salespeople, rather than bringing in a sales team from the UK, or even from a different area of the States”.
Tailoring the products and services being offered to local customers is also vital, as buying habits differ from market to market. For example, some cosmetics businesses sell smaller sized formats of their toiletries in India given the lower purchasing power in the country, allowing them to compete on the ground.
Make long-term plans that include contingencies
Taking a long-term view will help organisations prepare solid foundations to withstand and prepare for the unexpected. The need to develop plans that account for the future is intrinsically linked to the need for exit strategies. Over three quarters of the respondents said they now have an exit plan in place when entering new markets, with 80% saying they develop contingencies. While it may seem counter-intuitive to plan for things not working out, failing to do so is a common mistake and is clearly something our respondents have learned from.
You can’t have enough information to help you plan your overseas strategy, so it makes sense to seek as much support as possible. This could involve speaking with other exporters, the Department for International Trade or professional advisers, who can be a good source for information and contacts in international markets.
We have a team of specialist advisers who can connect businesses with local contacts and organisations in the marketplace, and our member firms operate in over 135 countries around the world.
Professional advisers not only have the technical ability to navigate regulatory and operational environments, reducing the time and complexity involved in overseas business, they also have people on the ground who have native or first-hand experience of the business culture in the market. Examples of this type of insight can be found in our Insider’s Guides to China and India, produced by our specialist country desks.
Experienced international traders understand the value of professional advisers, with 86% saying the support they received had a positive impact on their business. Half of respondents found that specialist consultants gave useful advice or insight that they couldn’t have found on their own.
Rise to the challenge
We know that overseas expansion is a preferred priority for growth but also a key challenge facing the mid-market. Benefiting from the experience of experts who have grown global businesses and have specialist knowledge of international markets can make a real difference to success.
Our Growth 365 international service, supported by the Department for International Trade, draws on our global network and experienced growth advisers to help businesses leaders research, plan and execute entry into new markets or get more value from their existing operations.
If you would like to discuss your international plans and find out how we can support your business, please get in touch with Andrew Howie.