Expanding Abroad: Will It Really Accelerate Your Business Growth?

If you're like many of our CEO clients, you regularly toy with the idea of expanding your business to new markets abroad - where you can sell to new consumers or businesses. Or perhaps reduce supply chain costs by sourcing in developing countries. The possibilities and opportunities really are endless.  But of course they are also fraught with risk.

Most entrepreneurs assume that the international space is too complex and challenging to incorporate into their strategic plans. Sometimes this is right. But other times it can significantly hinder your business' potential for growth.

So how do you determine the right time and reason to go abroad and when not to?

Below are some examples we've lived through with clients who have successfully made the jump abroad, what we did to plan and prepare, and how we executed on the plan.

Keep in mind that according to the US Department of Commerce, over 97% of US exporters are small and mid-sized companies like yours. But you have to have clearly defined objectives, the right strategy, and the right team in place to execute it and regularly revise it when you inevitably encounter hurdles.

Key questions to ask yourself - if you are not yet satisfied with clear answers to any of the below, don't make the jump until you have first sharpened them:

1. Objective. What are your specific objectives in expanding abroad?

2. ROI. What is your expected Return on Investment (ROI) and what is your estimated timeline to achieve this return? How does this compare with your domestic efforts and is it worth it?  Why?

3. Differentiation. How does your product or service provide value within that market that is truly differentiated?

4. Partnerships. How will you build integrity-based relationships with your partners abroad that effectively align your self interest with theirs, and employ clear communication and common goals, such as co production, co marketing, and/or co distribution?

5. Risk. How much risk are you willing to absorb, and at what point in your timeline will you revisit your goals to determine whether you will continue forward?

A defense contractor we advised understood their metal bending core competency was nearly non-existent in the global marketplace within their industry.  Our objective was to apply the clients' aluminum core competency to the highest potential markets with the least current competition. 

We call this the "global funnel" method.  Begin with where you are strongest at the top of the funnel, and sift through information on all possibilities to then narrowly apply it to markets where your value against competition is most strong. With no international infrastructure, the client had to clearly define timing, growth and profitability metrics which added enough additional sales and profitability to justify global investments. The company grew and was later acquired - but the model exists to this day.

Do you understand the ins and outs of your target markets enough to explain where you are truly different? Product differentiation and a strong brand are one of the most critical factors to successful expansion abroad. We advised a family-owned company that started as a garbage bag importer, and then extended into plastic gloves for the food industry. With plastic gloves, they innovated a specialized product with a superior value proposition, where they could more profitably brand and differentiate. 

We developed a global sourcing strategy to identify and enlist the right international partner manufacturers - who could provide products uniquely specified to the clients' branded product line. Of course the strategy is only one component.  Implementing is the hard part.  We then developed integrity-based relationships with the clients' vendors with incentives aligned with our own.

In some cases, the big win abroad is the opposite of what everyone else does. A t a time when so many manufacture in China and ship to the US, a pharmaceutical company we advise ventured to do the opposite.  It manufactures its products in the US and exports them to China - where their "made in the USA" status are perceived as higher quality, safer products, and command a premium price and very high volumes.  The brand is now #2 in its product category.  And we are looking at potentially helping them identify their next big blockbuster product for export into the Chinese market.

Consider your response to the above five critical questions.  They will directly feed into your written global plan, timelines, and expected milestones.  If you do not yet have clear answers, consult with  experts who can help you develop a strong plan before you assume any major risks.  And wherever possible, test the waters through small low-risk trials.  With a well-developed and informed plan that can support a clear ROI, expanding abroad can open up exciting potential to accelerate your business growth.