The dream of taking a local business and going global is something many entrepreneurs have, and a few are successfully realising. I took the giant leap of introducing our homegrown ERP software solution for SMEs into several countries this year, and have been pleased with the response. So, what made me do it?
The concept of global expansion for SMEs made popular by Thomas L. Friedman in his book The World Is Flat, in which he argued that the pace of globalised trade, outsourcing, and supply-chaining was speeding up and that its impact on business organisations and business practices would continue to grow in the 21st century.
For me, the fact that our South African market was stable, and our client base steadily growing, coupled with the growing enquiries from other countries, made me realise it’s time to grow. For most SMEs the desire to expand is great, but the risks and strain it can place on a young business is something that business owners and CEOs need to take into account.
How to penetrate a foreign market
- Local first. Before you go overseas, make sure you have a solid local foundation first. This foundation will support – and probably fund – your overseas endeavours, so make sure it is solid, well taken care of, and supported.
- Get a global vision. This is dream time. Go away for a few days and expand your vision for this new market. Explore, research, read, ask international experts, feed your vision.
- Do foreign market research – Identify the following:
- Do your customers exist.
- What are their points-of-pain.
- How saturated is the market.
- Who are your competitors.
- Where are the gaps in the market.
- How can you differentiate yourself.
- Prepare a business plan
- Define a short, medium, and long-term strategy with reasonable goals to measure progress and ROI.
- Define goals, objectives, and success metrics, with assigned task owners.
- Complete the business model and structure. Decide if you set up a separate company, a branch, or a sales office.
- Develop a top-down annual budget.
- Develop a tactical project plan with commit dates.
- International business consultant – Meet with an international business consultant or coach to advise on the local business climate, opportunities, and channels to market.
- Define a go-to-market strategy
- Evaluate and select the best channels of marketing and distribution.
- If you have a limited budget, take a narrow approach first – eg focus on one city or one country, instead of one continent.
- Determine your optimum sales model and methodology.
- Determine if a new brand will be created or whether you will use the parent brand.
- Develop a comprehensive marketing plan and KPIs. Package and label your products according to international regulations.
- Evaluate your pricing model – Consumers in less-developed countries are more price conscious and your product may not fit the local economic environment. Also, be aware of tax and legal implications.
- Government support – Find out if South African government has any funds or programmes that can offer support.
- Establish a launch team – Use proven senior executives or outsource experienced subject matter experts during launch so that the company can hit the ground running. It gives you time to hire the right senior management team while the company drives deliverables.
- Product readiness – Based on the product gap analysis, take the necessary steps to make your offering market-ready.
- Review government- and industry-specific regulations to ensure that you have the right compliance and certifications.
- How does your product and branding translate in that market? Pay attention to the translation of the name of your product in the local language.
- Initiate a patent and trademark review.
- Initiate testing and quality assurance review based on local standards.
- Find local distributors / business partner – Distributors are great as a distribution channel because they offer foreign customers top-notch service and are easier for you do deal with because they typically buy enough of your product to build up an inventory.
- Final budget prep – Develop a three to five year budget and forecast and a 12-month business plan with detailed KPIs, and update / review these quarterly.
- Take is slow and be flexible – Be realistic with your growth. Learn from local feedback, and be nimble and agile with your positioning and approach as you find your niche in this new space.