The lure of foreign shores
Expanding overseas sounds exciting but it’s scarily easy to burn money on a venture that seemed like a no-brainer in the boardroom, where exuberance can get the better of reason. There should be tombstones commemorating the fallen UK businesses that litter the entrepreneurial battlefields in the US and, more recently, China.
One entrepreneur told me how she sought to expand her highly successful travel business in the US. She recalled standing in Times Square, laughing as she felt the psychic power ‘of all those dollars’ pulsating through her. It was impossible to fail but fail she did, for a while at least.
China is especially unforgiving for the unwary and uninitiated. Business XL’s deputy editor, Nick Britton, used to work there on a magazine called That’s Shanghai. The owner, who had set up and run the successful magazine for six years, one day came to the office and found the business was no longer his own. It had been appropriated by his local partner and some of his senior executives. Apparently, he hadn’t taken the necessary legal steps to secure the brand he had spent years building up, leaving him vulnerable to the takeover.
It’s who you know
Forming a partnership with someone who’s local and knows the market you’re in is vital. In the US example, the entrepreneur only turned things around when she realised she had partnered with the wrong person and hadn’t personally kept a close enough eye on the business during the crucial first year.
Last week, another entrepreneur was saying how expansion in the Nordic region went awry, namely because a partner didn’t have the local contacts and market knowledge they said they did. Time and again, it’s the local partner that is the difference between success and failure.
It may not be the quick cash cow you hoped for, but thinking globally is important for your business and its development. Grant Thornton’s recent International Business Report (see Enterprise News, page 61) found that 63 per cent of UK companies don’t export. Compare this with Italian (63 per cent), French (51 per cent), German (50 per cent) and Irish (42 per cent) companies that do.
If the figures are right, a lot of companies out there must be seriously missing a trick, even if you do take the strong sterling into consideration. Going overseas is hard work, but it can be rewarding and new channels can only make your business stronger over time.