Small Businesses Going Global
By: Don DePalma (Common Sense Advisory)
07 September 2006
The globalization, localization, and translation industry is full of small businesses offering their products and services across borders. As such, the following article is designed to help you know if your business is ready to branch out overseas. Specifically, who is a good candidate, who is not?
A few GALA members have the luxury of million-dollar deals with big buyers of language services like Microsoft, General Motors, and Sony. Many more make their money off several smaller deals, most with small and medium organizations doing business internationally. Language service providers will typically find themselves in a consultative role with these smaller clients wondering whether they should go global, which markets they should consider, and how to do it right.
Whenever I speak with anyone looking to do business outside their domestic market, I always start with a few basic questions: Who needs what you sell? Whether it’s a physical product or a service, is there some demand for what you offer? If there isn’t any demand today, can you think of why someone might buy what you sell? Can you translate that potential demand into some kind of marketing campaign that you can afford?
Once an organization has decided that it wants to take this big step to any international market, I walk them through a three-step process focused on demand and their ability to fulfill business requirements in other markets. First, we need to resolve whether there’s a need in other markets for their offerings. Second, we have to determine whether their products can actually be sold outside their home market. This concern is about specifications (for example, 110/220 volts, right-hand drive, etc.), national regulations and laws, cultural applicability, local competition, and so on. Finally, we need to figure out whether they can promote, sell, deliver, and support their offerings beyond their domestic markets. This last point is critical. A company might have a great product, but how do you get it into the hands of willing consumers? Laws about distance selling, privacy, and logistics may also get in the way.
Pros and Cons of Going Global – Critical Issues and Concerns
The decision to go global may be in reaction to increased web traffic from another country, opportunities that your client sees while vacationing outside your home market, or by active research into other markets. Your customer may have a product that interests only a small percentage of the population in any given country. However, once they aggregate those small populations across many countries, there could be a big increase in potential buyers.
But caution your clients that their globalization business plan should consist of more than just posting “buy now” in three languages and waiting for the credit-card payments to start flowing in. Selling globally is not as simple as selling domestically. When they market to someone down the street or across the country, they don’t have to think about how customers will pay for it, who will ship it, whether customs will intercept it, and how the customer will contact them if they have a problem.
At home it’s all very straightforward – for example, in the United States, the sale is made in dollars via credit cards or checks and shipped via UPS or the U.S. Postal Service. Any problems can be dealt with in English via phone or email. Interstate sales may not require any taxes. They face three major problems – language and a whole cultural framework associated with that, currency and logistics, and legal systems:
- When you go global, you have to deal with the language issue, even if the person is in another English-speaking country. I regularly talk with colleagues in England, Canada, and New Zealand, and learn some new difference every day. If the buyer doesn’t speak English, they may not find you. So you also need to market in other languages, thereby increasing the complexity of your advertising, website content, and search engine optimization.
- The transaction you offer may be denominated in dollars, but your customers will pay using their credit cards for which they will be billed in their currency. That is often a problem. When you ship to them, your products might be held up in customs until they get it cleared. We recently had to pay 140 euros to get a box of marketing flyers out of Spanish customs. If there are any problems, you have to deal with those problems across language, time zones, currency, and different legal systems.
- And legal systems will be an issue. European countries have strict regulations about what you can do with customer information. Besides privacy, you will also encounter laws about selling over the internet, by telephone, or by fax.
The bottom line is that it’s not a simple case of just advertising your products in other countries. You need lots of advice, planning, and execution skills.
Key Critical Success Factors in Going Abroad
There is one incontrovertible fact: Every business will face the question of global marketing or sales in some fundamental way, whether it’s through buying from suppliers that rely on an international supply chain, working with customer service centers that have been outsourced to China, or doing their own offshore manufacture. Whether they like it or not, everybody’s business already relies on an extensive network of global suppliers.
Have your clients think of going global as a business problem not unlike a decision to build another store in a nearby city or build another manufacturing facility. They will run through a cost-benefit analysis and determine the return on investment (ROI). They should do the same for any global expansion – what do they expect to get out of it? Can you quantify the benefits? Then do the math to see if there is a sound business reason for going global.
Going global is a strategic business decision just like the ones your clients make every day. If they approach it with the same rigor, discipline, investment, and commitment as you do those other decisions, they will dramatically increase your chances of success.
Don DePalma is the founder and chief research officer of the research and consulting firm Common Sense Advisory, and author of the premier book on business globalization Business Without Borders: A Strategic Guide to Global Marketing. For more information visit www.commonsenseadvisory.com or contact Don at don[at-NOSPAM]commonsenseadvisory.com.