DILEMMA: We're a small but growing business tempted by exciting opportunities in Asia. Our worry is that if we take them, we could be betting the company. When is it right to develop abroad?
ISSUES: If this is your first move overseas, congratulations. Growing a business internationally can be tremendously rewarding. It forces you to be more competitive, to clarify your business model and raise your management game.
It's fascinating to see why companies expand internationally. For some, domestic markets have limited growth, or there's a strong pull from existing or potential customers. Many, particularly those in the technology sectors, have to be international right from the start. Occasionally the logic is defensive - a competitor expanding overseas, or entering the local market.
Why Asia? Is it the best place or your first thought? Think about market opportunity, the risks and your team's capability. Asia comprises a large number of countries, very different cultures and languages, a range of time zones and huge distances. The maturity of markets and relative costs vary enormously, as does the local competition. So choose your country/ies carefully.
What is the appropriate market entry strategy - a 'big bang' entrance with a value proposition well ahead of anything local, or a collaborative 'beneath the radar' approach? It depends on how much extra financial risk you can accept and how you will fund it.
People selection and motivation is where things can go wrong. Do you send out talent from the home market, recruit locally or do both? How will you reward them? And do you want to create 'a one-room company', the same feel in different countries? If so, how will you achieve a balance between consistency and local flexibility?
To succeed, you need an international mindset, to be prepared to learn and adapt, and to invest huge amounts of time.
- Make sure your domestic business is in good shape first.
- Be clear on why you are expanding internationally and on your market entry strategy.
- Choose somewhere comparatively easy to gain experience.
- Be realistic about how much time it will consume.
- Focus on the people and the market and keep tight control.
- Get good professional advisers, but most of all have a clear idea why people should buy from you and why they should work for you.
Patrick Dunne works with 3i.