The whys and hows of
going global
Your business may be ticking along nicely, focused on the
domestic market, but if you want to take it to the next level
and grow your profits, often the best option is to move into a
new global market.
Exporting makes good business sense on many levels: it
diversifies your risk of relying on a single market economy; it
creates opportunities for greater profit; and it ultimately makes
your business more competitive.
Diversify to grow your profit
When the recession hit the U.S. in 2008, many North American
companies took a beating. Domestic U.S. businesses saw
their markets shrink dramatically, and companies in Canada
that exported primarily to the U.S. also took a big hit. Those
companies that thrived were the ones that looked beyond
North America for market opportunities. In fact, statistics from
the U.S. Department of Commerce show that more than 70
percent of the world’s purchasing power is located outside of
the United States, but less than one percent of U.S. companies
export. That’s a huge amount of untapped market potential.
Governments in the U.S. and Canada have both jumped
on the export train and are undertaking aggressive trade
agendas, including ongoing negotiations with the European
Union and the Trans Pacific Partnership. Both countries
and the European Union have multiple bilateral free trade
agreements (FTAs) in place, which eliminate tariffs, reduce
trade barriers and create more stable and transparent trade
relationships. Expanding exports to countries where FTAs are
already in place is a natural first step in developing a global
market.
But there is a right way to diversify, according to David
Merritt, practice leader, global trade consulting, Livingston
International. Just because you’re successful in a single
country, that success may not translate easily. “You need to
have a plan and check points to move forward, and you need
a clear understanding of what that plan is going to cost,” said
Merritt.
Risks to consider include your banking and financing
arrangements. “If the bank you are working with has a limited
global footprint, you will need to consider other financial
partners,” recommends Merritt. He also suggests that you
do a careful analysis of the rules and regulations surrounding
business in your new market including FTA qualification.
“Non-compliance, either due to ignorance or deliberate, will
have significant reputational repercussions and costs,” said
Merritt.
Employee opportunities
Learn more about how reaching
out to global markets can help grow
your business.
1 Product: Export Process
As with any significant change, you’ll need to do a careful
analysis before you start shifting your employees. You’ll need
to assess your people as you expand to international markets;
some employees will be willing to move abroad, others may
not. You need to analyze who your key people are and how
best to maximize their capabilities to meet your business
needs, both those at home and those overseas.
You will also need to be prepared to deal with personnel and
staffing issues in your global markets. For instance, how will
you sell your products? Will you use an agent? Hire within
the country directly? Send one of your current employees
overseas? Hiring locally can be a good idea, but again, you
need to consider the differences in the workforce. There
will be cultural differences that could include issues, such as
working hours and appreciation of safety compliance, as well
as variations in skill levels, noted Merritt. All of these are issues
can be difficult to assess ahead of time, so you’ll need to be
flexible and open in your planning to include the specifics of
the countries in which you are hoping to expand.
Keys to success when
going global:
• Conduct a risk analysis
• Establish a plan with checkpoints
• Bank with a global financial
institution
• Carefully consider overseas staffing
needs
Exporting diversifies your risk of
relying on a single market, creates
opportunities for greater profit,
and ultimately makes your business
more competitive.
Planning leads to success
Ultimately it all comes down to careful planning. Don’t make
the mistake of only planning for success, cautions Merritt. “You
need a plan that challenges positive expectations. It’s easy
to believe everything will go well, but you need to prepare
for problems and difficulties as well.” This should include an
export program that expands in controlled stages in order
to measure your progress, and you should check the plan
constantly against your expectations. “You can’t over plan.
You should constantly assess the profitability of the business
and ensure that you are meeting your established benchmarks
before moving ahead with the next phase,” Merritt explained.
It may take years to develop a truly diversified export
program, but with good planning, it will be worth the time and
effort. Companies that plan effectively will see their markets,
profits and competiveness increase, providing a robust multieconomy business platform from which to operate.
Contact your Livingston account executive
e-mail us at solutions@livingstonintl.com
or give us a call at 1-800-837-1063
Visit www.livingstonintl.com
2 The whys and hows of going global