You have a pretty good business and things are growing nicely. If you have a Board or some advisors or even a relative living abroad, then someone has said to you that your business will absolutely work in another country. You recall that you noted international expansion in your original strategic plan, and you continue to bring that forward as a line item for the future.
What you may have failed to realize is that your business is already international.
The United States represents 4.4% of the world population. Your business has an Internet presence, which was developed with only a certain segment of the US population in mind. What you may have forgotten to factor in is that your website, and therefore your business, is accessible by 2.4 billion Internet users around the world, of which only 245 million live in the United States.
Just monitor the IP addresses visiting your website on Google Analytics and you will see how international you already are. Every now and then you receive an order or a request from someone in another country to join your service. Should you act on it?
The decision to expand physically into another country in not for the feint of heart. If you choose to follow this path, you will automatically increase your stat- ure and possibly your market capitaliza- tion in the eyes of others as they realize that your product is sought after by a wider audience.
If you are a smaller business, sub $25 million in revenues, then expanding internationally will put a significant amount of stress on both you personally and your organization. A checklist as outlined below will give you something to think about.
This is the key to the success of any international business. Parachuting one of your current executives into a foreign locale and saying go get it will not get you far.
Network for Trusted Resources. You need to search your current network including LinkedIn, Facebook or other professional networks such as an industry trade group or through your accounting and legal firms for local contacts in your chosen country of expansion. Then you need to network through them and find someone who you believe can be the point person to run an operation locally for you. Even once you find someone, you need to investigate him or her thoroughly as you are going to have to trust them with the crown jewels. Due to local ordinances, these individuals may have complete control over your foreign bank account and often will be able to sign and bind agreements on your company’s behalf. Your first fact-finding mission to that country should be to meet as many candidates or people as possible that may be of help.
2. CHOOSING A TARGET COUNTRY
Everything is relevant when choosing your location from pure market opportunity to infrastructure to whether or not English is spoken all the way down to intangibles such as, Do you enjoy traveling there? Sometimes opportunity dictates the location but everything is in play. Here are key variables:
Piggyback off Another’s Infrastructure. Be opportunistic by finding a partner or a supplier in a particular location that has a similar or complimentary business, and you can piggyback off their infra- structure, advisors, suppliers, etc.
Language is huge. If possible, find an English-speaking country or choose a country that is bordered by many other countries. The best known example is Switzerland because it borders France, Italy, Germany, Austria and, yes Lich- tenstein. Countries bordering many others are more accommodating to other languages and cultures.
A Good (not great) Locale. Finally, as you will be travelling there more times then you or your family want to recognize. You should make sure it is not a place that you absolutely detest visiting, although it should not be your favorite vacation spot either, but rather a sizable city.
Just as this plays a more then sizeable role in your US operations, so it will in your new operation. If your company culture is important to the success of your business, and more often then not it is, then you need to work on that from the get go.
Values Matter Everywhere. Hire leaders that as much as possible share your values and that of your company. That is not to say they wont have their own personal and country culture they bring to the table, but certain leadership styles cut across boundaries to some degree including morals and ethics, vision, empathy and servitude.
In Germany, a formal business tone will exist between people that have worked together for many years with them con- tinuing to address each other by their last name.
In China, you will always need to greet employees at a gathering by seniority and in England, politeness and restrain is admired and should not be taken to be rude when you are working in a group situation. Cultural clichés abound and are important to understand. This will impact how your worldwide teams interact with one another and more im- portantly how they speak to customers that may deviate from your home country playbook. Most importantly, do not think people from a foreign country that do not have the best command of the English language are somehow less intelligent, and just as important, because they have mastered the English language they are not necessary superstars either. You need to do your homework.
Picking the right law firm is key. Forming a company, opening a bank account and hiring people could not be more different from what you are used to. Paperwork takes an inordinate amount of time, often you need one approval before the other. If you do not have a company registration number stamped in triplicate, then that means no bank account, which means you cannot hire employees. Getting funds into certain countries is also difficult and can take time. Not surprisingly getting money back out is just as difficult until you are really established. In many cases you need various approvals and licenses to start actually running the business from a whole host of alphabet soup ministries and government departments. Intellectual property protection may be non- existent and trying to implement patents across multiple countries gets really expensive and may not be worthwhile. You may have to sit idly by as local com- petitors copy your website and cease and desist threat letters have little effect.
Your website was not built for SEO in multiple organizations. You may show up on the first page of a Google search in the US but what about Google.com.au or Google.co.uk? You will need a qualified translation house to help with your website translation and then it will need to be proofed and proofed again.
Many will perceive the company as culturally illiterate and therefore having inferior products if you spell color with- out a “u” as in colour. In some countries, the color scheme on your home page will be important. In China the color black is considered to bring bad luck while in Japan it is the color white. You will invariably need a content manage- ment system to manage your website so that local marketing teams can display information relevant to their home mar- kets.
Showing the next US trade show you plan to attend to someone resident in Paris is completely of no value and may make you seem parochial. Choos- ing the language of your website is also important as you continue to go global. Portuguese and Spanish in Europe is significantly different from that of South America. Making your website country specific rather then language specific is a decision you will face.
6. HR POLICIES
You need to pay particular attention to internal policies with respect to Human Resources as well as local laws. Employees can absolutely not be hired and fired at will. If you do not hire and fire in accordance with local regulations you will expose your company and possibly yourself to a significant amount of liability. Use it or lose it vacation policies or 15 days PTO in the US have not bearing internationally such as in Europe where six weeks vacation is the norm. Your US teams will need to be briefed beforehand as to why these exist in certain countries most notably those with punitive tax rates before bitterness arises on why their global counterpart has gone silent for a full month. Paid leave after the birth of a child in the US is 3 months of unpaid leave, in Sweden it is as high as 22 months of paid leave.
7. INTERNATIONAL INCIDENTS
While the intent is to avoid these at all costs, invariably many things will not work as planned and will be a learning opportunity. The trick is to minimize these as much as possible. These include things like whether your name translates into the chosen foreign country language. Coca-Cola for example when written in mandarin reads like ko-ka- ko-la but this translates to “bite the wax tadpole”. Getting to know your employees and customers and eating at local establishments which they fre- quent rather then always choosing the American chain restaurant that is always up the street is important. If you need to feign dietary restrictions then do so but still find something neutral to eat while you are there. Also, unlike here, eating at your desk is generally not done. You also should not get upset when a waiter seems to be taking an inordinate amount of time to get to your table, meals in many countries are considered part of the overall experience and it is consid-ered rude to rush through these.
8. CULTURAL TO-DO’S
Some best practices include ensuring it is not just US based C-level executives that travel to the new country of operations. Have staff at all levels do this and do it both ways. Use Skype to break down communication barriers and have worldwide personnel join each other on LinkedIn, Facebook and other social media. Hold English speaking classes in your non-English speaking offices. Possibly hold foreign language classes in your US operating company. Encour- age sharing of ideas. Some of the best ideas will come from your international operations. Make sure you are culturally sensitive to their holidays whether public holidays or religious holidays and understand their sports and read the local newspaper when you are there and when you are back in the US.
You need to understand the pressures and opportunities your business and people including both employees and customers constantly face just the way you understand what happens at home. Most importantly enjoy the ride and the experience and you and your teams will be richer for it.
Sherwin Krug is a TechCXO Finance & Operations Partner (read his full bio here). Sherwin was the Founder/CEO of AppointmentCity.com a funded internet start-up that enabled prospec- tive patients to book appointments with physicians in a real time setting. He was also the COO of MFG.com, where he led European acquisitions and the set-up of operations in China. Prior to that Sherwin was the CFO for Tectonic Network.
Sherwin spent the first 10 years of his career with Ernst & Young in both its Johannesburg, South Africa, and Atlanta offices, where he focused on entrepre- neurial growth companies including positioning them for successful IPO’s.