For some businesses, expanding overseas is considered a vital component to their growth strategy. And it’s not hard to understand why. After all, they’re opening the door to a new [and often much larger] pool of customers and revenue. But if only it were that simple. Sure – the sky is the limit where those expansion plans have rolled out smoothly; but for some, that door gets jammed half way, while others walk in having failed to understand what’s on the other side.
‘There are many reasons why businesses fail overseas’
There are many reasons why businesses fail in their international expansion efforts. Dynamic Business speaks to Christelle Damiens, Managing Director of Exportia, who has made it her business to understand why. Exportia is a growing business consultancy that provides expertise for Australian technology companies launching in Europe.
Christelle said: “There are many reasons why businesses fail overseas: they sign exclusive distribution to anyone that comes to them; they go to a specific market because their mother-in-law lives there; they try to launch a brand new product they have no track record in; or, they send one of their staff there without having any understanding about the market, putting them in a difficult position with remote management issues.”
While a necessity for many, international business is risky business – even the Australian government is stepping in to help entrepreneurs and their start-ups navigate the murky waters of new markets. Under the National Innovation and Science Agenda, the government will be spending $11 million to establish five landing pads in Tel Aviv, Silicon Valley and three other locations across the globe.
The Minister for Industry, Innovation and Science, The Hon Christopher Pyne MP, said in a statement:
“The five landing pads will provide market-ready start-ups with a short-term operational base in global innovation hotspots.
“The initiative gives companies access to entrepreneurial talent, mentors, investors and a wider connected network of innovation hubs.”
‘Any international expansion project is a long-term project’
But while Christelle comments that these landing pads will certainly put selected start-ups on the right track, she says businesses need to recognise that any international expansion project is a long-term project where persistence is key.
Given that businesses are limited to a period of 90 days under the government’s ‘landing pad’ scheme, Christelle says that it’s imperative for leaders to have a clear objective on what they want to achieve during this time – “before they jump on the plane.”
Others walk in having failed to understand what’s on the other side.
“Landing pads can only be leveraged if the company does the preparation work. The central question is: is the country that holds the landing pad the correct market for the business? The whole strategy must be robust before going in,” said Christelle.
“If companies have already assessed that the country it is going to is right for their business, and there is a landing pad; great, use it!”
‘There is great opportunity for any start-up with a unique value proposition to each specific country market’
With Exportia facilitating expansion into Europe, and landing pads announced for Silicon Valley and Tel Aviv; how do you know where is right for your business?
Christelle said: “The question is; who is in that city that I quickly need to reach out to to grow my business significantly? And what challenge does my product solve for my potential customer in this country?
“There is great opportunity for any start-up with a unique value proposition to each specific country market.”
With specific experience assisting Australian technology companies launch into Europe, Christelle says that technology companies typically consider the European market over the US and China because they specialise in highly technical products:
“There are great opportunities in Europe at the moment around health, notably eHealth including medical devices, and aged-care.
“More traditionally, European manufacturers have fully embraced innovation to keep their position on a global scale,” she said.
So while there is a hand available to hoist your business up on the international stage; there are no magic formulas for success. The decisions, execution and persistence to continue is very much down to the individuals at the helm.
“Small businesses must understand it’s not a one-off show but a 3 to 5-year plan,” said Christelle.