You've built a strong U.S. business and are considering overseas expansion. How should you approach that decision? Here's how one company did it.
The economic outlook in the U.S. remains challenging, which has created a headwind for businesses looking to grow. As a result, many business leaders are looking at global expansion as an alternative growth vehicle. If you are considering overseas expansion, how should you approach that decision?
We worked recently with a security services company that was considering global expansion. We helped it answer several questions to guide its thinking:
1. How competitive and profitable are your target overseas markets?
Overseas markets can be just as competitive and profit challenged as the U.S. market, if not more so. In each target market, we needed to talk with local experts to understand the unique growth opportunities and competitive environment. For example, Italy and France share a border, but as target markets they have night-and-day differences in regulatory and competitive dynamics.
2. Is there a customer need that is not being filled? Are you uniquely qualified to profitably fill that gap?
As with any growth strategy, before expanding globally, you must believe you can profitably meet a currently unmet customer need in that foreign market. In other words, you must believe you will bring a unique value proposition to the market.
3. Which customers should you target? What is your go-to-market strategy?
With our client, we chose a specific set of customers to target based on our view of unmet needs. We also developed and debated alternatives for how to reach and win customers.
As a result of this analysis, we were able to filter out a set of end markets (e.g., Italy, Japan, France) that had terrible competitive and regulatory dynamics and were unattractive from the get-go. We determined that cross-border financial services companies were a key target for us because they faced real challenges managing security across borders and we could uniquely and profitably build on our strengths to solve that problem for them.
We also recognized that decision making can be concentrated or diffuse at cross-border companies. With some potential customers, we needed to make the sale in their home country headquarters. With others, we needed to make the sale in their local market. In many cases, we needed to do both.
As a result, we developed specific sales campaign strategies tailored to each customer. We set up cross-border teams to pursue our target cross-border customers, providing a coordinated sales approach to each client that reflected its unique buying-decision process.
The global expansion is still in the early days, but this approach appears to be paying off for our client: It has won business from several target customers and is gaining share in its target markets.
If you are considering global expansion, investing the time to thoroughly answer the questions above will help to maximize your odds of success.
KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree. @karlstark