Establishing yourself in a foreign country is never easy, but the payoff can be huge. For one thing, your firm won’t have to rely on only one market, says Robert Koffler of CEO Inc., a Montreal-based firm that helps Canadian companies expand abroad. “In case one [market] fails, you still have a backup.”
Be forewarned: success overseas doesn’t happen overnight. “Do not cut short before three years,” says Koffler. “That’s the minimum to be recognized in any country to be stable.”
In for the long haul? Here are some tips to get you thinking global:
- Start with a plan. “Take inventory of where you are right now,” says Koffler. Ask yourself, ‘Why do I want to expand?’ Once you come up with the rationale, look at your existing market for other possibilities. Then turn to markets in developed countries. Finally, assess opportunities in the riskier developing markets.
- Investigate the markets. Once you decide where you want to expand, investigate the market size for your product. Estimate your possible share in this market. For example, if your goal is to sell 10,000 units of electric motors and the total consumption of the country falls at 100,000, your share would have to be 10%. “Be conservative,” advises Koffler. “It’s always more difficult to penetrate the market than you’d think.”
- Learn export and import procedures. For example, if you’ve developed a computer program and would like to offer it overseas, make sure you’re not bound to one customer. “You might be restricted by a contract or confidentiality measures,” says Koffler. Conversely, each country has its own set of standards and restrictions regarding imports. Make sure your product or service fits in to what is allowed.
- Think strategy. Just how are you going to break in? Trade missions, according to Koffler, are usually geared towards big companies. Contracts made are often in the billions. Smaller companies should attend trade shows, seek out distributors or appoint sales agents.
- Allocate financial resources. A good rule of thumb: the amount you allocate should be proportionate to the sales expected. If you made a million in revenue and expect to earn $100,000 abroad, allocate 10% of your total expenses to develop this market.
- Establish reasonable benchmarks. While you should allow yourself three years to become established, evaluate your foreign venture every six months to ensure you’re on track.
Read other pointers on How To contribute to your business success!
© 2003 Karen Kelly
Originally appeared on PROFITguide.com
FILED UNDER: exports international trade ProfitGuide