Episode #21 - International Business Expansion Checklist with Cynthia Dearin

(upbeat music) Welcome to this episode of the Business Beyond Boarders podcast. My name is Eric Stone. I'm taking over the podcast from the US. I'm going entrepreneur. I work in the beer industry and a part of the IP-18 here in the States. This is the last of four episodes we've been talking with Cynthia about the questions people commonly ask about internationalization. In the first episode, we talked about the why. In the second, we talked about column mistakes people make. In the third, we talked about market research and might it's so critical. In this one, we're talking about the checklist, which is the checklist of things you need to do before you get started. So, Cynthia, thank you so much for having me on. - Hey, welcome to my show. (laughs) It's great to be here. (laughs) - So, Cynthia, in a few sentences, can you describe what the IBA is for people? - Yeah, sure. So, the International Business Accelerator is a structured program for business owners who want to take their company international and there are three bits to it. There is a capability piece where we teach you how to build a very strong, foolproof international strategy. There is a momentum piece where we help you make sure that you've got it up and off steam to actually go out there and implement that strategy and make sure that you see it through. And we help you to create the confidence that you can actually do this project or international expansion so that you know, get stuck at some point because you feel like, oh, it's too hard. Really quickly, the way we do that is that each month we run a class for our clients where we work on a piece of strategy. There's a coaching piece where we meet one-to-one with each company and we help them to really craft their strategy and customize what they've learned in that workshop setting into something that will work for them specifically. And the third piece is that we pair up each participant in the international business accelerated with an accountability buddy and that accountability buddy is there to review their work encourage excellence and really, you know, keep them honest and give them a kick up the bottom if they don't do what it is that they have committed to do. - So I've got your checklist right here. And it's thorough, we can't get through all of it but let's talk about some of the things that are on it. - Yes. - So when thinking about things that you need to do as you start your globalization journey, one of them is have we confirmed that all the decision-makers are on board with the concept of expanding internationally? Why is this so important? And do you have any, like horror stories, I should say, of people who started and there was maybe one person who was reluctant? - Yeah, look, I mean, it's interesting that you should mention it because it seems so self-evident. But and look, if you're in a company where you're the only decision maker, it's not quite as important. Although, you know, if you're married or you've got a life partner, I would highly suggest that you can sort with that person and make sure that they are actually on board with the project of internationalization because it's a pretty big project. If you're fortunate enough to have a board of directors or other shareholders, then you absolutely have to make sure that they agree that taking the company into national is the right thing to do because if you don't, you learn yourself in a world of hurt. We actually had a client who had started down the path of internationalization before he remembered that he hadn't actually told his shareholders that he was going to do it. And when he went and announced to them that he was planning to take the company off shore into Asia, they had a complete fit. And they didn't want him to do it. And it just created a great deal of division and stress and tension and it just got the whole project off for bad start because there wasn't unity within the leadership team about projects. So, you know, it is, everybody's got to be in agreement that it's a good thing to do before you start. - I could see the room for conflict to arise easily. So the next one is we'll product appeal in the country we're targeting. - Yeah, now this is really important because people often, you know, the idea of internationalizing is very exciting. And it's easy to build this picture in your mind about how well it's going to do. And if you've got something, say that sells on the west coast of the states and people like it and it's got some appeal. And you suddenly think about what that would look like if you sold it into China or into India. You know, you can build these massive castles in the air where suddenly everybody in India is buying your product. But until you actually know whether people even want what you're buying, that is not a reality. Now, I can give you an example of a company that did this really, really well at when out and researched the market that they wanted to go to. And the product that they were selling, and this company was Gillette. And back in the early 2000s Gillette was mainly just selling in the states, I believe. And they saw a massive opportunity in the Indian market, which had something like three quarters of a billion men who shaved in it, who needed razors. And Gillette was like, yay, we're going to go and sell the Gillette premium razor into India. And it's going to be awesome. And everybody's going to want our razor. And they went, OK, well, before we did that, we're going to go and do some research and see if our hypothesis is actually correct. So they went off and they did a bunch of market research. And what they found out was that, yeah, everybody, all the guys of shaving age in India wanted to shave. But they were currently paying something like 15 cents a razor. And there was no way they were going to pay between $2 and $3 per razor for a Gillette premium product. So they were like, oh, well, that's not going to work. That pricing strategy is not going to work. And we can't produce a Gillette premium razor that is going to sell for 15 cents a razor, what all we do. So they actually stepped back, thought about it, went back in, did some more research. And they actually came up with a razor that was right for the Indian market based on the feedback that they had got from Indian guys who shaved. So they built a slim down razor with a light handle. That didn't have the same quality and weight as an American premium razor. But people didn't care about that. They took off some of the bells and whistles. They produced it for a lot less. And I think they ended up selling it for something like 75 cents a year. But it was still better than the local product. Now, in the space of five or six years, Gillette actually cornered three quarters of the shaving market in India. Because they didn't get carried away with how great Gillette razors were. They went and actually found out what people needed, how much they were willing to pay. And then they built something that would actually meet that need. My razor has batteries in the handle. It's so heavy. Yeah. It's not an India. So that's a great example of that. So looking down your list here, I think the next one is getting back to the concept of self-awareness. Yeah. Are we sure our team has the right skills and experience to help the company internationalize and what does that mean? Well, I mean, I think again, you know, a lot of people assume that selling stuff internationally is going to be a SNAP. They're like, well, anybody can set up a Shopify account. And we're going to sell our stuff into, I don't know, Hong Kong or Malaysia or Indonesia or China or India. And how hard can it be? We know how to set up a Shopify account. Now, to a certain extent, that is true. But depending on the mode of market entry that you choose, depending on how you decide to go to market, your team is going to need a whole lot of horizontal skills that they might not have-- they probably won't have developed if they're operating only in the home market. So if you just operate in the state, so you just operate in Australia, what do you know about the regulatory framework in the market you're going to go to? What do you know about import regulations? What do you know about customs? What do you know about duties? What do you-- I mean, if the language is not English, how are you going to deal with that? If you're looking at web pages on a government website and they're all in another language, how will you deal with that? How do you know how people do business in another country? So just a few examples of things that come up, but there are this whole other set of skills that you either need to have or to acquire before you operate internationally. And if you don't have them, you need to work out how you're going to fill that gap. Hey, good. I can see that. Thinking about, are we clear on our mode of market entry? What's that one about? What is that? That is about how do you get to market. So this is about, well, if we sell baby clothes, for example, are we going to sell our baby clothes into Germany using a Shopify account? Or are we going to sell direct to retailers? Will we go and build relationships with big department stores and sell through those? Or do we want an agent or a distributor to sell our stuff? Or are we going to use a third-party site like Amazon.com? How are we going to do this? Now, this is really important because your mode of market entry, your go-to-market strategy, is going to affect how many people you reach, how you reach them, and the cost involved in doing so. So your mode of market entry can have a massive impact on your bottom line because the range of costs that you incur is very variable depending on what you choose. So you need to work that out. You know, I think one of the things that people underestimate is the cultural challenges. So even between the US and Australia, they're both Western. Yeah. A lot of similarities. You know, there's no technology gap. But there are significant cultural differences between Australia and the US that I think people-- underestimate. And can you just talk a little bit about, you know, how you would deal with them, if you were going, you know, to a similar culture versus a one that's drastically different? Look, I think the first thing to remember where you're going somewhere similar is that rather than assuming it's all going to be big, it's all going to be the same and then being shocked when it's not frustrated and angry that you can't work out what's wrong, it's better to go in with the mindset that it will be different and to go in with a mindset which is curious and asking the question, okay, how is this different and trying to work on that? Because we see that some of the big cultural problems come up for people in countries where the cultures are similar, like Australia and the States, where there's only about 20 to 30% of stuff that is different, those are the things that often cause the problems because people don't expect that. You also get cultural problems and cultural challenges in international marketing. That's an era where they come up all the time and there's a really famous example that some of you might have heard about where the Swedish company, Electrolux, had a new vacuum cleaner and they had already built a marketing campaign for Sweden and all we're going to do is just translate it into English and launched in the States. Unfortunately, they picked the tagline, nothing sucks like an Electrolux, which was fine and Swedish but had a completely different kind of connotation in the States and that marketing campaign did not do so well and that was really problematic because they used so a bunch of money and resources on it. So you have to really be across the culture of the target market or if you're not, you have to know how we're going to get across it. We're going to do loads of research, we're going to go and spend time and we're going to hire people onto our team who've got that background. There's a whole field of stuff that you have to cover off in that space. Did Electrolux just go back home? No, no, I don't think they did. I think they actually went and they changed up their marketing campaign and they run it again, which is what you do if you're a smart company. If it doesn't work out the first time, you don't say, "Oh, well, that didn't work. I'm taking my toys and going home." You say, "Okay, well, that didn't work. I wonder what went wrong and you've gone, you find out and you recalibrate it and you run it again." Excellent. So thinking about cost. I think part of the checklist, you've got to forget how much it's going to cost. So Electrolux, I'm sure spent a ton of money doing that and they're going to spend this bit more money to fix it, but tell me what that means in terms of the checklist. Well, it means that you should have a draft budget before you get started and it just blows my mind how many people do not have a draft budget. So when you say, "So do you know how much this exercise is going to cost you?" Nope. So I mean, you will have to start with numbers that are a little bit fuzzy because nobody will know exactly how much it's going to cost, but you need to put together a budget which is essentially a future spending plan so that you know how much you can actually spend. So you set yourself some limits. So you're not just going out there blowing dough all over the place and hoping for a result. You know, that discipline around the numbers and the money is it's not the most exciting thing in the world. I have to confess, you know, it's not nearly as fun as some of the other stuff, but it's really, really important and it's a great way to make sure that you stay out of trouble in both a short, medium and long term. I hope that international expansion is not the same thing as renovating a house where it costs three times as much and takes twice as long. There are some very similar parallels, which is why you need to actually do all that mapping work beforehand because just as with house renovations, people just get carried away. You know, they're overoptimistic, they have big dreams, they can see the finished thing and their minds are and that is really great and it's super exciting, but sometimes the stress that goes along with that because people haven't planned it out well is, yeah, that's pretty mind blowing too. So just we're nearing the end of the last episode here. So maybe just one last sort of words of wisdom or some sort of piece of advice for people who are thinking about doing it, unrelated to our topic of this episode, just something you want to apart to those listeners. I would say that one of the most important things is do the work up front, you know, don't let yourself get carried away, oblige yourself to go through and be thorough, be prepared to make an investment of your time and your energy and some money in figuring out your strategy and maybe even figuring out whether international expansion is the right thing for you because you would be better off to spend $25,000 and come to the conclusion that it wasn't right for your company or it was going to be too difficult rather than spending $250,000 getting a campaign up and running and getting a market launch ready and then finding out through the very painful process of trial and error that it's not going to work. You know, you've essentially devoted your life to the international business community and the process. Why do you feel so strongly about it? I see amazing opportunities for small companies to really amplify their impact in the world and to do something amazing for their clients and the people they serve and also to do something amazing for their communities because, you know, I don't believe in many places that government is really equipped to make change in the lives of people, you know, at the speed that it needs to make it but I think that entrepreneurs and people who are just pursuing their own course can do that and I just see on one hand, massive opportunity for positive change in the world for communities for individuals, for companies, for families and at the same time, I see a massive lack of capacity. So I see that people have dreams to make this amazing change and this amazing impact but they don't know where to get started and so that holds many, many people back and my vision is really to be able to change that and to make international business, education and strategy available to everyone. What's the most inspiring internationalization story you've heard? It could be some underdog from the Middle East, it could be somebody out of a developing nation? I think you see them all the time but I think some of the, I mean, even some of the very famous examples that we've seen crop up in the last few years that have just changed the, you know, the way that we do things entirely, I mean, examples like Airbnb, I know they're no longer an underdog but they didn't start as a massive company and they have basically entirely changed how people travel and see the world and share space with other people or you know, I'm signing some very big examples here but there are small ones as well, there's a company that I absolutely love in Australia called Aspen Medical and they have, they're only, you know, a relatively small business, they're not, you know, a global giant but they have done things like they set up the ambulance service in the United Arab Emirates because one of the founders went there and was on his way from the airport and got stuck in this 200 car pile up on the freeway and got into a conversation with the other people who are taking him on the visit in the car and he realized there was no ambulance service so they have drastically reduced the mortality rate from road accidents in the UAE by creating an ambulance service. They've also gone off and done amazing things like treated Ebola in Africa and so that's kind of, you know, that's a different end of the spectrum but equally for me, equally inspiring just the impact that it's had on people's lives. Cynthia, I really enjoyed the chat and thank you so much for having me on. So folks, if you've enjoyed today's episode don't forget to subscribe on your favorite platform. You can currently find us on SoundCloud and on iTunes and we are introducing more platforms soon so don't keep an eye out for those. If you'd like more information you can go to the URL internationalbusinessaccelerator.com