Growth and development are natural, although not guaranteed phenomena pertaining to all living organisms. Businesses, despite obviously not being life forms on their own, are made up of people and grow along with them. For many of them foreign expansion indeed constitutes one of these natural stages of development, however, it requires a thoughtful approach and a lot of attention. Is your company ready to venture outside of its domestic market?
Foreign expansion entails a number of challenges, but also brings about a promise of growth, sometimes significant, for your business. It can help you solidify your position in the market, build prestige, and of course boost revenue.
The following article contains comments and insights of two experienced sales specialists – Mr. Sebastian Sulma and Mr. Łukasz Barbacki. As industry practitioners, they were kind enough to share their knowledge and observations regarding export and foreign expansion.
Go ahead and read up, assess your situation based on the information provided, and take relevant steps towards growing your business.
What is foreign expansion?
The question seems easy enough, and the answer straightforward, but is it really so?
Sebastian Sulma, when asked about foreign expansion, recollects the early days of his company. “We started our operations in the second half of 2013, and already in 2015 we had our first notable client in the Netherlands. That said, I wouldn’t exactly call that a natural step in development.” – he adds.
In case of Sulma & Sulma, foreign expansion was somewhat forced. The local market proved to be not ready for the company’s innovative approach towards business and that’s why a decision about seeking clients abroad was made.
Sulma & Sulma had appetite for growth and major projects, which current conditions in Poland didn’t allow for. Needed was more trust in innovativeness and so they chose the Netherlands. It all started with a small project, but as more of them came, the service scalability was significantly improved.
“Currently, when working with startups, it happens that from the get-go we’re focused on foreign markets, sometimes very remote ones. In my assessment, we shouldn’t thus treat foreign expansion as a far-removed stage in the company’s life cycle, but rather view the market globally and think of export as of selling to another state or county.” – says Sebastian Sulma.
This approach is invaluable. Knowledge and contacts are one thing, but getting a wider perspective on your own services is a value in itself. Seeing the differences between markets, you can make your offer and methodology more universal. This helps bolster your market position against often stronger competitors, or oven outpace them.
Łukasz Barbacki reckons that foreign expansion is a natural, and even necessary step in a company’s growth. In his own words, “Oftentimes, growing sales in the highly satiated and competitive domestic market isn’t only a tougher, but also more costly task.”
In his opinion, you can’t really overestimate the image-building value of commencing operations abroad either. A local company or a brand becomes international. This changes the way it’s being viewed not only by customers, but also potential investors.
Consider foreign expansion when…
So, when’s the right moment to start seriously thinking about foreign expansion? When asked, Sebastian Sulma replies with, “In theory, if you have a scalable sales process in the domestic (or test) market, are able to distinguish the particular stages of the process and its variables, you’re ready for expansion. Then, you “only” have to adjust your proven method (strategy and sales process) to the requirements of the target market.”
In practice, however, there are more variables. A lot will depend on what stage of development your company is at and how you define successful export.
Success can only be achieved through a long-term export strategy based on knowing the cultural differences, the particular market requirements, data on all the sales chain elements, as well as precise assessment of the quantity, price, and the very method of selling your product.
Foreign expansion is for someone who can adjust their product and sales process to the target market, set milestones, and run promotional and sales activities with their business partner in the given market.
Despite what you may think, it’s a bit easier to start exporting at a smaller company or a startup. It’s more difficult at a large company because changing pre-existing habits and ways of conducting export operations will face major resistance, you’ll have to wait long for results, and the whole decision-making process is more complicated.
Łukasz Barbacki sees the issue of starting foreign expansion a bit differently. In his view, “When further development in the domestic market becomes relatively tough and expensive, you can consider sustaining growth through venturing into foreign markets.”
The reach and number of potential clients obviously matter when it comes to sales. Going beyond the borders of your domestic market opens nearly unlimited opportunities for businesses.
“Well-diversified markets boost stability and foreseeability of the result. Running export sales renders a business immune to local crises and market fluctuations. It also provides insights into behavior, preferences and consumer trends in a region bigger than just the local market, which in turn makes the product or service more universal.”, he adds.
Of course, in reality, the very fact of expanding abroad doesn’t guarantee success. You need to be well-prepared and have a relevant backing. This will mitigate the risk of losing not only the invested assets, but also the irretrievable time.
Foreign expansion isn’t for someone who…
Alright then, we now know who and when should think about foreign expansion. Who shouldn’t, though? A frequent human ailment is the inability to make a sharp self-assessment. It’s worth it then, that we approach the issue from another angle as well.
Sebastian Sulma puts particular emphasis on a comprehensive and scalable sales process. It shouldn’t come as a surprise then, that in his opinion someone who hasn’t developed such a process shouldn’t think about export.
“If you’re not sure why your product sells on the local market or why it fits well with the target market, work on your process.”, he adds.
In his experience, you also need to have hard (budget) and soft (creativity) resources for running diversified operations in the target market and reacting to any unforeseen circumstances.
Łukasz Barbacki warns of a certain detrimental way of thinking. He claims that foreign expansion shouldn’t be considered by someone who “Reckons that if he made it at home, then foreign markets will be easier to conquer and will welcome his offer with open hands. The times when a Polish product was attractive and easy to sell due to its lower price are long gone. Nowadays, developing a professional and effective export strategy is a specialist work requiring a lot of knowledge, effort, and actual experience.”
The grass isn’t always greener on the other side. That’s why using services of companies specializing in efficient foreign expansion is a great start.
Obstacles on the road to foreign expansion
A company meeting the conditions discussed earlier is only a part of the success. Expanding into a foreign market involves many challenges which you have to be aware of to maximize the chances of your projects flourishing.
When deciding to enter a new market, look before you leap. You need to determine your main goal and know what intermediate goals will lead to it.
“Careless actions lead to wasted time and money. Export department can spend weeks redesigning business cards only to learn that the stock is hard to sell because of some of its features and the way it’s marketed.”, says Sebastian Sulma.
He also points to the importance of understanding local culture. It’s best to find some common ground with it and address it. It can be a historical event, moral values, or even basic knowledge of the language – all this will surely open many doors.
Another important element of a successful foreign expansion is internal visualization, and thus understanding what has to transpire in the target market in order for your product to generate sales.
Too much reliance on local partners and thinking they’ll take care of everything is a mistake. They’d not only have to be experts in their domestic market, but also have an excellent understanding of your offer, which is something you can’t blindly expect.
Łukasz Barbacki also stresses the cultural aspect, “Cultural differences, which at first may seem to be unimportant, since you have a good product at a decent price, may ruin your foreign expansion efforts. If you won’t research the specifics of the given market, the cultural and legal differences, or even requirements related to the dominant religion, you expose yourself to some serious trouble.”
Foreign expansion isn’t just a promise of increased revenue. It’s also a time and money expenditure related to customs fees and various certificates. This, in turn, significantly increases the final price of the product in the target market.
Improper price positioning is a major, although often disregarded mistake disrupting sales. You also have to remember that the country of origin is an important factor in consumers’ purchase decision. Your country’s barcode, or the information “Made in ENTER COUNTRY NAME” aren’t always a good leverage working in your favor.
Congratulations, dear reader, you’ve just graduated from a brief course on foreign expansion! From now on, you’re way more aware of your position, understand export-related challenges, and are capable of assessing your readiness for going beyond your local market.
Sebastian Sulma agrees with the statement made early on in the article. In his words, “Export should be a natural and logical step in development, based on knowledge and analysis of the situation you’re in.”
Providing his own company as an example, he recalls that the decision to expand abroad was made after a meticulous analysis of the Polish market. The goal was to win a client in a tougher but more profitable market, not just in financial terms.
Łukasz Barbacki adds that despite being largely natural, foreign expansion sometimes seems to be hard to accomplish and available only to major players. In fact, it’s an opportunity for any, even a micro company.
“Faint heart never won fair lady. Still, mere courage isn’t enough these days. You need to factor in knowledge and substantive support. That’s when you get a recipe for effective and revenue-generating export activities.”, he says.
His company, Barbacki Consulting, deals in, among other things, broadly understood coaching of export sales teams, providing them with the necessary knowledge and tools for foreign expansion.
As a result, companies become way better positioned to start working with Sulma & Sulma with regards to commencing the expansion.
Sebastian Sulma with the team offer support especially in terms of introducing products to American, European, and East African markets and growing their sales. The portfolio of projects the company’s executed speaks for itself.
All in all, in business, as it is in sports, you can’t rely solely on raw talent and luck. In order to become a star in your discipline or niche, you need practical knowledge, grit, commitment, and support of various coaches with complementing sets of competencies.
Regardless of the stage your company’s currently at, consider including foreign expansion in your wider growth strategy.
If you’d like to maximize your chances for successful export, you may want to seek support of experienced professionals. Feel free to contact Sulma & Sulma and Barbacki Consulting any time. Together we can achieve much more!