Find them, and watch the efficiency of your operations escalate.
Entrepreneurs often venture far away from their homeland. Starting a business already has inherent risks, but starting in an unknown environment adds uncertainty and makes tasks harder.
There is, however, a person that can help you in such situations, creating synergies and speeding your learning curve: Local allies.
Where — and how — to get such crucial partners?
I found Hubert in a social media group. I was still in the planning phase to open the touristic hostel that later became one of the largest in Warsaw. I had my budget and timelines already planned, but I wanted someone to validate it. I knew a few other entrepreneurs in the same area, but none of them had a deep knowledge of the Polish circumstances.
Hubert had. He was probably the most successful hostel-founder in the Polish capital, having different establishments with continental reputation, one of them even listed among the best in the world by Hostelworld. Fortunately, he was also accessible, and after contacting him via social media, we met in a pub in Warsaw and kept in contact.
We were not direct competitors since our businesses had different targets and a dozen kilometers of distance in between. So without any conflict of interest, he explained to me why my plan had some flaws, like unrealistic deadlines.
Which social networks are the most useful to find allies?
While much of social media serves only as a distraction (to the point of becoming a dangerous addiction), a clear cut approach can find on it plenty of opportunities.
You can use Facebook Groups and Linkedin to find pairs in your industry and exchange ideas, establishing mutually-beneficial connections, as I did. There you can discover workshops, market possibilities, qualified staff, and even ask for answers in groups of experienced players in your field. Just remember to also contribute to the group. Nobody likes leeches.
Due to social media popularity, there is a new type of ally: the local digital influencer, as an article from the Harvard Business Review explained:
These people are local thought leaders on social media with loyal followings of online fans. They spend their days developing new content — videos, photos, blog posts, and podcasts — and engaging their followers. […] Their audience turns to them for industry insights, new product information, and recommendations.
They already have the trust of thousands, if not millions, of your target customers. So why not weave your brand into their story, rather than telling yours from scratch?
Digital Influencers can be a quick (and affordable) way to introduce your brand to certain market segments, like newer generations or tech-savvy adults.
Virtual allies, however, are not a substitute for local partners, serving different purposes. Remember the research from Dr. Mehrabian, mentioned in the first chapter: 93% of our communication is by facial and body gestures or tone of voice. You will not have this two-way interaction via social media posts, something only possible via face-to-face meetings.
Finding allies in your own supply chain
Another way to find local partners is in your supply chain. Your providers can give you valuable advice, and since you are their customer, it is unlikely they will refuse to help.
Using my hostel business as an example — adapt it to your activity — I write below how suppliers can help to better understand the environment and competition.
- The marketing agency responsible for the SEO or our website: they can help us understand where our demand comes from using their expertise in online marketing.
- The laundry provider — With their experience in serving other hotels, they know about seasonality and touristic flows across the year: when they have more laundry to do, it means that the region has more tourists, and vice-versa.
- The shuttle-service we hired to pick customers to and from the airport — They provide us with valuable knowledge about the time when most guests check-in and check-out. Later on, this information is useful to dimension the staff needed for peak hours.
- Our system provider — The training sessions about their analytics & reporting module taught us which indicators we should pay attention to track demand and adjust our pricing.
As you can see, it is straightforward to find allies in your supply chain since you are (or will be) their customer. However, what to offer in exchange when your potential ally is, for example, someone with no ties to you? Hint: The answer is in the last part of this article.
Be careful with anti-trust laws and deceivers
While looking for allies, there are two mistakes you should avoid.
First: do not break any law or part of the legal framework. Since 1890 — through the Sherman Antitrust Act — the United States prohibits anticompetitive agreements or unilateral conducts that attempts to monopolize the market. With such a broad definition, I strongly recommend that any agreement with allies — especially with possible competitors — pass through the appraisal of a lawyer.
In other parts of the World, like Europe, you have similar broadly-defined legislation. According to article 101 of the Treaty of Rome, valid in the European Union, even informal, gentlemen’s agreements or mutual conclusions about pricing can be considered a cartel and result in penalties.
The reason so many conference presentations finish with phrases like Please do not discuss pricing or enquire about pricing is to avoid any accusation of collusion.
To explain the second mistake, you should avoid, let’s go back two thousand years in time.
As much as the Romans mastered the use of local chieftains as allies for expansion, they once committed a mistake, resulting in one of their worst defeats. Sixty years after conquering Gaul, the empire made a bold movement to invade Magna Germania, the region at the east of the river Rhine. Leading the Roman legions was the general Publius Quinctilius Varus.
The Romans had at their disposal 3 legions, 6 auxiliary cohorts, and 3 cavalry squadrons, but the secret weapon was the help of local Germanic deserters, which joined the legions of Varus years before. The most famous deserter was Arminius.
The father of Arminius was a Germanic tribe leader, and he sent his young son to Rome to confirm his loyalty. In Rome, the boy received a military education, joined the army, became a trusted advisor of general Varus, and accompanied him in the invasion of Magna Germania.
Secretly, however, he escaped the roman encampment to meet with German tribes, united them under his command, and later led the Romans to an ambush. All three legions were annihilated, and Varus was killed on the battlefield. The emperor Octavius Augustus, after hearing the news, in despair, hit his head on the palace walls while shouting: Varus, give me back my legions!
In hindsight, it may look obvious that it was dangerous to trust a German deserter to lead roman troops in German territory against his own people. The story of this catastrophic defeat serves as an example that every entrepreneur should have in mind: be aware of the conflict of interests when selecting your allies, watching if anyone would win something with your downfall.
Synergies, Possibilities, and Beer
I hope I made the point about how useful it is to have a local ally — remember that even the greatest roman general in history saw their importance— and how this benefits your entrepreneurial venture. Yet, there may be a question still puzzling you.
What can I, or my business, offer in exchange?
I digress here: Not always you need to offer something in exchange, as the research of Raihani and Bshary concluded. On the other hand, mutual benefits are a strong incentive for long-lasting partnerships.
The most attractive of all mutual benefits are synergies. This happens when the combined value or performance of the two companies is greater than the sum of separate individual parts.
One example: many tourists we host in Warsaw are also looking for city tours or tailor-made excursions for nearby attractions. By partnering with a city tour operator, we both win. I send my guests to their city tours, while they recommend my hostel for customers inquiring about a room. With reciprocal recommendations, we take out the middleman: internet portals charging up to 15% commission from tour operators and hotels alike.
If more customers and 15% fewer costs are not tempting enough, let’s think about the other possibilities, like joint-procurement. If your business and your ally need the same type of supply, why not buy together in a bigger batch, and therefore, with more bargain power?
Example: You need an SEO (Search Engine Optimization) provider for your website. SEO agencies often give good discounts for new clients hiring their services for more than one website. The agency I use has a promotion of 3 websites for the price of 2. In the same situation, you and your allies can hire an agency together and pay 33% less in total.
Besides all advantages, remember that one great catalyst of coalitions is around for five thousand years and still works: invite them for a beer.
Levi Borba is the CEO of expatriateconsultancy.com and a best-selling author. You can check his books here. This article was inspired by the content of his new book, Starting Your Own Business Far From Home: What (Not) to Do When Opening a Company in Another State, Country, or Galaxy.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.