Published 26. Apr. 2017
Expanding Business Overseas: 5 Tips for IT and Service Companies
by Olli Muurainen
First, always ask about your motivation. What drives your company for expanding operations abroad? If the answers are that it would be cool, people would like to travel, or blend international atmosphere to the company genes, please think again.
International business is a dangerous business if you have the wrong motivation. On the other hand, if done right and boosted with the right drivers, it can be great intellectual journey which multiplies the value of your company.
I would like to share with you some tips based on my 12 years of experience in internationalizing a company, which originally was a small Nordic enterprise with home base in Helsinki. I am not talking about heavy smokestack industry investments. This is for tech, IT, and service companies that need local offices and staff, and are right now planning the first steps for expanding overseas.
1. Employ the Special Forces
When I was taking the first steps, I got valuable advice from my Swedish board member Håkan Gershagen. Håkan told me that I can’t be an international manager only on Tuesday afternoons. It won’t work if it is a task among the others.
It must be your #1 priority. Lead it with your best brains to win the game.
The first priority tests the strength of your company’s management team. The next generation of leaders must be ready to step into the boots of those who fly around the new markets from the home base.
Operating in new countries with second-tier people won’t work. Even if you are a star in your home market, you’re back in square one in the new markets. Your customers don’t know you. If your product or service must be dramatically adapted to new local needs, you are even further away from success. But if your country manager is creative and with an energizing character, he or she can cause even fluffy ideas to fly.
One sanity check about basics is superiority. If your product or service makes tons of money in the home market, your customers are overwhelmingly happy, and your growth exceeds peer companies, you may have a decent chance. If that’s not the case, don’t go out.
2. Control is Good
Leading a smallish successful company with 10 to 40 people in a single office is a lovely situation for a CEO or entrepreneur. The leader knows all the employees. At best, they are stars and it feels like a big family. The accumulated respect gained for the business may easily lead to an illusion that the success could be easily replicated in another country.
Yes, it’s possible, but through a controlled process. You need much more structure in everything you do. It’s the rule of law.
Structures, templates, and reporting cause stiffness and costs. This is the reality which must be accepted but there’s really no choice to solid reporting.
Trust is good, but control is much better. When I say this, I want to underline that leadership is not at all just requiring your teams to fill out forms and write reports. It’s exactly the opposite. Your key people must help, support, clarify, and lead the teams to great results, 95 % of this work has purely positive nature.
3. Targets Must be Numbers
Easy to say, tough to do.
I once heard that the world’s second biggest lie will be said when the HQ people are coming to visit the country of operations and saying that they are there to help. The greatest lie is when the local key staff say yes, they believe it!
If you can tell this joke to your local teams and still have great working relationship, I think that both sides know what the sarcastic joke is about.
In many companies, the routine practice is that country manager sends a monthly report about how they are doing. Reporting is okay, but it has low value if it contains mostly round and soft formulations about like, “we’re progressing well,” and “we’re receiving encouraging signals.”
It’s much better if the goals are in numbers: meetings, sales pipeline, recruitment, and employee satisfactions results. Targets must always be in numbers. Your management reporting platform can capture them automatically and send the report to the country manager. There’s really no need for writing. You manage with expectations. Intelligent people start independently to think how to fix the numbers.
4. Have Money and Resilience
Expanding a business to new markets always takes a much longer time than estimated and the costs often double as much more than what the team has planned. If you have been thinking about one year, think about two. If the calculated cost is 200,000 dollars, raise it to 500,000 dollars and you are closer to reality.
There will be many other surprises. Most of them have a vicious nature, so when positive surprises appear, be ready to get as much out of them as possible.
The launch of a business in a new country requires the same kind of alertness as from soldiers who are moving in the darkness of a war zone. It’s not the right place for the 9-to-5 folks and cannot be recommended to people that are reaching for a perfect balance between work and life.
But there are very special people around who enjoy the excitement of business wars. The challenges are mighty but the prize is the greatest they can think of: the ultimate satisfaction of winning.
5. Speed Up Key Tasks
What happens often, despite the great people and great efforts, is too little too late. The longer it takes, the uglier it usually gets.
Your biggest cost will be the waste of time: delays with recruiting new people or making corrections to earlier decisions, which have been obviously wrong.
You probably need help to attract people, find leads and shorten cycles of key opening tasks. Better spend money than wait for no results. Your aim should be winning – not saving cents when you lose dollars.
First, find the local staff. I have been rarely satisfied with the headhunters. Still I must recommend them as there are not really other options available.
If you need to build a customers offer pipeline, I recommend you to acquire help on that, too. All variations of direct marketing, LinkedIn campaigns, booking meetings and face-to-face meetings with your potential customers are good to save time and speed up things.
You need to get the real business going.