A few weeks ago we talked about International Strategy for SMEs. Thanks to all the great responses, we thought it made sense to focus on global strategy basics for businesses; 5 do’s and 5 don’ts. There are many ways that a business can approach their global strategy. We found that these are some of the big ticket items that trend for our clients who are highly successful:
Do’s in Global Strategy
Have a cohesive and proactive entry strategy before entering a country or countries
- Many companies tend to react to an opportunity that may drop in their lap. Many times this leads to an ad-hoc strategy and a disjointed executive team; across our years of experience we have found the number one factor for success with global strategy is an aligned and committed executive team.
Have a purposeful exit strategy for each country
- Know what it would take to pull your business out of that country; companies that fail with their global expansion experience did not realize that on average it takes three times as much in both time and money to tear down a foreign subsidiary as it did to form it. Which is salting the wound!
Take an incremental and Agile approach with benchmarks of success that dictate the next level of investment in country
- Many companies believe they need to go all in and create a foreign subsidiary. Or, be forced to take on a risky contractor relationship. There are ways, like our FSaaS model where you can hold onto control, be compliant, but not take on the burden of operating a foreign company. Set milestones of success before taking on the creation of a foreign subsidiary or invest in hard assets; focus on people, sales, and testing your market strategy first.
Get the right people on the bus quickly in country
- Focus on finding the right people that buy in to your business model. Make sure they can identify new opportunities while learning quickly about the market.
Pick the Right Global Expansion Partner (check out our past blog post for more detail)
Don’ts in Global Strategy
DO NOT assume that your IP is protected if you decide to go with an in-country contractor relationship
- Many companies choose to just hire contractors in the country they are looking to do business in or access the talent pool. The major mistake we see is that the contractor does not have to respect the IP of the company; they could be working for your direct competitor. In many countries it may even be illegal to not allow the contractor to work for your competitor. See our blog post about International Hiring Compliance Traps for more info.
DO NOT assume the country you are trying to enter has a tax treaty with the country you are currently expanding from
- Destroying your profit margin with extreme export taxation can mean the difference of success and failure. Make sure you fully understand the tax implications before committing to entry. See our blog post about Understanding the Legal Aspects of Doing Business Overseas for more info and a free guide.
DO NOT have only one local partner
- Many companies find a local partner in country and do not have a sounding board for understanding if that partner is being ineffective due to environmental reasons or if it’s because that particular partner is just a poor performer. In every country that Velocity Global operates in we have multiple options of partners or resource providers so we know what the true cost of doing business is there.
DO NOT leave free money on the table
- As our friend Mike Shanley of Konektid outlined in his blog post New Model for Entering Emerging Markets, there is over $150 Billion in government grants and investment that goes into only developing opportunities in emerging markets. You may not have to take on all of the burden of your global initiative.
DO NOT reinvent the wheel
- Many companies think they need to start from scratch when entering a new market. That’s just not true. Companies like Velocity Global, Konektid, and Polaris Law Group are utilizing the sharing economy model to make funding, entry, exit, hiring, and success in country far simpler, faster, and less risky.
We hope this article was informative and resonated with some of the pain points you are experiencing, or now know to avoid when/while going global. Velocity Global’s FSaaS (Foreign Subsidiary as a Service) offering can help you achieve or avoid almost all of these items and get you in-country in a matter of days. Let us know if you have any questions, we are always happy to help!