Why expanding overseas is your ticket to new markets, new ideas, and a world of adventure.
Foreign markets are like children's shoes: They offer plenty of room to grow. According to the Office of the United States Trade Representative, 95 percent of the world's consumers reside outside the United States. Some of those people have holes in their lives the exact size and shape of your product.
Entrepreneurs are getting the message. In a survey of 449 CEOs conducted by Inc. and Amar Bhidé, a professor at Columbia University's Graduate School of Business, 58 percent of those doing business overseas reported that foreign demand for their product was growing. Furthermore, just 12 percent of the stay-at-homes blamed their hesitation on a lack of demand. Anecdotally, a surprisingly large number of CEOs interviewed for this package--selling everything from trash-compacting equipment to toothbrushes to public relations--have been making money overseas for a decade or more. Perhaps the question facing businesses pondering globalization should not be "Why?" but rather "Why not?"
Certainly our respondents offered plenty of reasonable why-nots: language and cultural barriers, the complexity of running a global organization, difficulty finding the right partners, and--most commonly--an overfull plate at home. But most of those are reasons why not now. By contrast, the reasons to at least start sussing out a global strategy reflect long-term realities:
Because it's where your customers are, or will be. The aforementioned 95 percent (six-plus billion) of consumers living outside the United States are a toothsome prospect. That's virtually all new business--and what's more, business whose brand loyalties are likely still in play. Business-to-business firms may feel the more immediate imperative. Small and midsize companies are launching operations overseas and large corporations are already there. If the client you serve in Venice Beach gives you his or her business in Venice as well, you can use that account to pilot-fish your way into a new market.
Because the other guy is doing it. If you're not up to serving your globalizing clients, someone else will be. Burgeoning entrepreneurial cultures in many countries are spawning businesses that can offer your customers invaluable local insight and contacts. Such competitors often charge less. Then, foot in the door, they may persuade your customers--many of which are winnowing supply chains--that they can also do the job in the United States. Fight them there, so you don't have to fight them here.
Because you're wired. The Internet famously gave Yao Ming-size footprints to Willie Shoemaker-size companies. In the '90s, many small businesses went global unintentionally as nascent search engines directed foreign customers to their websites. Now businesses use low-cost tools such as Skype (NASDAQ:EBAY) and WebEx (NASDAQ:WEBX) to assemble coherent virtual enterprises using the best talent around the world. Global commerce predates e-commerce, yet arguably the former has become a subset of the latter.
Because it's what entrepreneurs do. To wax deductive: Globalizing is risky. Entrepreneurs embrace risk. Therefore entrepreneurs embrace globalization. Of course there's risk and then there's risk, with the latter including such potential spoilers as an unfamiliar language, an alien business landscape, untested partners, and political volatility. Still, the chance to try new things in new places is like a jumper cable to the entrepreneurial engine. Several company owners we spoke with described running their international efforts as the most exciting aspect of doing business, not just for themselves but for employees as well.
On the pages that follow, you'll read about the spectrum of opportunities and obstacles facing global-minded entrepreneurs. Like the Internet fledglings of a decade ago, these company owners are working out the rules as they go, drawing lessons from failures and successes alike. They see the scale of battle growing, and they are girding for it. A single country cannot contain their ambitions.
The world really is your oyster. Whether it produces pearls or just grit is up to you.
LEIGH BUCHANAN is an editor at large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan