Many SMEs have lots of paperwork or admin or customer service activities that have come to account for a high proportion of their staff costs. There’s an obvious advantage to doing that abroad, is that it can be much cheaper than with labour in your own country.
I’ve set up JVs in several countries, including India, China and Brazil. By moving work offshore, the cost savings saved my business, and exploiting the international presence not only gained new business but, in the end, a much higher company valuation.
Of course, one could just start up a new company of one’s own — and bigger companies often do, terming them “Shared Service Centres”. For an SME, though, that’s going to be a lot of investment in time and money. Especially where the reasoning is to reduce operational costs — implying that company finances aren’t as strong as they need to be — that probably makes that a non-starter. …
Over recent months, I’ve been quite active on Social Media. No, not tweeting rage or sharing my latest fashion buys. Rather, I’ve been out to try to prove that it can be a viable way of marketing B2B professional services — in my case, consultancy on international business expansion.
I was told it couldn’t be done. There is a lot of reticence to engage with social media from what I’ll call the “Decision Maker Class” in the UK. That’s been exacerbated by recent revelations of misuse of data and hacking. …
It’s true, there’s no escaping it.
However, no one should be discouraged. International expansion brings a company so many benefits that it’s worth the effort. One just needs to be prepared.
Every time I set up a new company abroad, I realise how little paperwork is involved in setting up and running a business in a country like the UK.
Here’s an idyllic business location that’s very much First World. It’s attractive as a hub for the Gulf, North Africa and the Indian sub-continent.
But the bureaucracy seems unnecessary and sometimes crazy.
Most companies set up in Free Trade Zones (FTZs). There are a lot of them, all promoting themselves, some for more or less any kind of business, some dedicated to specific sectors. They all make starting a business there sound simple, quick and straightforward. All the forms you need to fill in are online, and there are plenty of agencies offering to do that for you. …
Most countries, and many big cities and regions, have Investment Promotion Agencies (IPA for short). They exist to promote what’s call Foreign Direct Investment (FDI).
That doesn’t mean getting investors to buy shares and bonds, but rather to set up companies (or buy existing ones through acquisition) or, on a bigger scale, invest in infrastructure such as airports, roads, hospitals and so on.
There’s no doubt that such promotion is necessary.
Certainly when it comes to international business expansion, most executives tend to only consider the “usual suspects” or places they have been to themselves or have some connection with. …
So many companies believe that the only way their new overseas operation can be successful is if they send over one of their experienced managers as an Expat.
At the very least, this is a significant cost — and often can be sufficient to eliminate the savings otherwise achieved by setting up in a lower cost economy.
Sometimes, the fact that no-one wants to be relocated can call a halt to a company’s expansion plan.
Other businesses may go ahead, but insist on having one of their own nationals, which means hiring a new person.
As you’ve probably already gathered, I’m sceptical about the need for expat managers. Certainly, they bring experience and knowledge. But that doesn’t necessarily mean that they will be good at training new staff or make good managers when they’re left on their own in a new foreign office. …
I’ve found that many companies only really start to fully understand local employment laws and customs long after they’ve set up an operation, and even then only when they hit problems.
But this is an essential part of forward business planning, because your people are your company — and usually, their salaries and taxes are your single highest cost. So this is something that can’t simply be delegated to the HR department — I believe it’s essential that all executives with responsibility for commissioning, setting up or running an overseas operation should gain an early and deep understanding.
The apparent complexities and apparent risks make it a temptation to outsource employment. …
This second chapter of Planning an Exploratory Business Trip is mainly about who you need to meet, and what you should be looking out for
So you’ve decided where to go, when and how to get there.
This second chapter of Planning an Exploratory Business Trip is mainly about who you need to meet, and what you should be looking out for.
Of course, exactly who’s best to meet depends on your business. This is where your consultant in your home country (maybe I or one of my colleagues) will really be able to help — they should know the place themselves, and have contacts there who’ll help you with understanding the culture, assessing the trustworthy and the downright dodgy, and generally sorting the wheat from the chaff. …
Tales from my travels #3
Togliatti sounds Italian, doesn’t it? Actually, it’s in Russia. And it’s the setting for one of the strangest business trips I’ve ever been on. Hilarious in retrospect, but unsettling at the time. And it definitely taught me never to rely on travel arrangements made by others….
For me, the trip started unremarkably in London, on a flight to Frankfurt where I was connecting and meeting up with my two German customers. The onward flight to Samara was leaving at midnight; by 23:30, the plane had already boarded, but there was no sign of them. I phoned one. It sounded like I had reached a drunk at a noisy party. Apparently that was the Executive Lounge where, it transpired, they’d been hunkered down since about 6. He and his colleague were obviously in no hurry to leave. In the end, I got the gate staff to call the lounge and get one of their colleagues to find them and escort them to the gate — where we finally boarded at 23:59, the door literally closing behind us. …
Thinking of growing your business in a new country? Nothing beats going out there and exploring. And it’s absolutely essential before committing to anything.
People often ask me to suggest how they should prepare. Preparation is important, you shouldn’t go with vague ideas or too many assumptions. However many times you’ve been to the country or city before, whether on holiday or business trips, you need to start from an entirely different approach if you’re thinking of setting up a base there.
I’ve been to over a hundred countries and set up businesses in about 20 of them — and in the early days, I got a lot wrong. I’m hoping that this advice (and don’t worry, I’m not going to tell you what to pack) will help you and others avoid some of the pitfalls I experienced. …
Most of my articles cover aspects of international expansion from a general perspective, without any specific regional or country focus. However, I’ve been lucky enough to visit many countries, and have learnt that some of the best opportunities lie in the least considered places. I therefore thought that readers may be interested in knowing a little more about some places usually way off the business radar. So, this is the first of an occasional series.
Even those who’ve thought about expanding in Africa have never seen Ethiopia as an easy place to grow. …