Testing the market in your target country is an integral step in modern global expansion strategy. In the past, many companies would have to get together an exorbitant amount of resources together to make a subsidiary company in a target country and did not have the ability to test their strategies with small, incremental steps. Sending a representative overseas to explore the demographics, culture, and environment is a process that verifies if your strategy will work in that market. If performed with the Lean method, you will save your company time, money and waste.
What is International Business Development “Done Lean?”
Operating your business with Lean techniques essentially means that you create the most value possible with minimal resources, and approach growth strategy incrementally versus taking a “waterfall” approach.
Many startups turned to this methodology, leading to the coined term lean startup, after experiencing high failure rates. Startups typically have little resources and rely heavily on expensive equity. As a result, the Lean method is attractive to these business owners because they can test the market without using up all their financing. Learn more about international business expansion- how to be lean.
They use a customer development approach to test their business plan. This is a great way for you to test international markets. After allowing consumers to try your product or service, you’ll receive feedback about quality, features, and pricing. This feedback shows you the changes you need to make to your product or service for it to succeed in a wide launch.
How To Implement the Lean Method into Your International Business Development
Learning from experiences, taking smaller steps into a new target market is the best approach to international expansion. Using a global Employer of Record (also known as International PEO) can make your process even easier.
Establishing an entity is expensive. The setup and maintenance costs of a subsidiary in a foreign country run in the thousands of dollars. You also need to include time, which is equally valuable; this process can take months.
If you establish a subsidiary in a new market without using the Lean methods mentioned above, you may experience real failure. If your business model doesn’t match the culture or the consumer base isn’t interested in your product, you just wasted capital resources. The results could be detrimental for your business. Plus, countries have varying time frames for terminating a subsidiary; you may be stuck there for a while.
Who manages your development process?
You might be thinking that the best way to avoid establishing an entity is by hiring an independent contractor to test the waters in the new market. We disagree for a few reasons.
- You cannot hire an independent contractor through a domestic employment contract.
- Contractors are not always the best brand advocates.
- Hiring an employee, versus a contractor, gives you a loyal, dedicated team member.
The best person to manage your overseas development is a sales representative or a business development director. You can grant them quick and affordable access to work overseas with FSaaS. This service keeps you and your employees compliant without establishing an entity in the foreign market.
A sales representative is a great resource to use in your target market because they have a direct relationship with your customers. This is a powerful practice for lean thinkers. Train them to understand your goals and processes so they can effectively observe the market to determine if it’s the best place for you to expand.
Goals for your International Sales/BizDev Representative
Now that you understand the process, consider the following goals for seeking a representative to help with your international business development.
- You should have a strong relationship with the employee. They can be a local national from your target country or a domestically-based employee. The most important factor is that you trust them to help establish and manage your brand overseas.
- The employee should be committed to your international strategy with a self-starter attitude.
- They should send you reports on their customer development observations and other potential opportunities.
- These reports should give you a sense of the market’s size and potential for your company.
If your employee is successful, you should be able to make a clear decision regarding your next steps. The data in their reports can tell you whether to keep a small staff overseas, hire a larger team or leave the country completely.
Using the lean method with an Employer of Record is the most efficient way to begin your international business development. In the time it takes to set up a foreign subsidiary, you could have tested the market using this solution. If you’d like to learn more about Velocity Global’s tools, contact us!