Cynthia Dearin is one of Australia’s foremost experts on international markets and the author of Business Beyond Borders: Take Your Company Global. Passionate about helping Aussie business owners carve out a place on the international stage, she joined editor Cec Busby on the Flying Solo podcast to share some of her top tips for businesses keen to expand overseas.
As a former Department of Foreign Affairs & Trade diplomat between Australia and the Middle East and with over 20 years of experience helping business leaders take their enterprises global, there’s not much Cynthia Dearin doesn’t know about building a successful international operation.
And with the massive influx of small businesses taking their operations online in recent years, Cynthia says the opportunity for Australian businesses to go global has never been better.
Cynthia Dearin, international business strategist
Is going global a good option for your business?
According to Cynthia, considering a move into global markets might be right for your business “if you have aspirations to make a lot of money, make a big impact on the world, and create a business for yourself that lets you have the freedom and the life you want.”
“If you are based in a small or medium-sized market like Australia, you’re limited by geography,” Cynthia says. “You cap out at an absolute maximum total of 25 million people that you can sell to – and that’s if you sell something like toothpaste, which absolutely everybody needs. For most companies, especially those selling a niche product, there are far fewer consumers than 25 million. I think for anybody who wants to do something big and impactful, you have to be looking further than your backyard.”
“First, let’s imagine that you’ve got a consumer product,” says Cynthia. “Something that goes from your business straight to somebody’s home. You can start operating an eCommerce business overseas the moment you get started – the barriers to entry are very low. You can get on a platform like Shopify, Amazon or Etsy, and you can start reaching people worldwide.
“However, a service or consulting business (such as architecture or law) will have a very different cost structure and method of providing services than if you sell a simple product. If you sell something bigger than a simple post pack, or provide a service, you’re going to have to make more of an investment. It’s a much bigger play to get yourself into an international market.
“If you’re selling something that goes B2B, I usually recommend that businesses wait until they hit the $1 million mark to do it because you don’t want to set yourself up to fail. When you go international, it’s going to be a big play, and it’s more than simply changing the address you’re selling to. There’s an outlay of time, money and energy, so you want to ensure you’ve got the resources to do a great job.
Listen to Cynthia Dearin on the Flying Solo podcast:
Three mistakes businesses make when expanding overseas
Many business owners are so keen to bring their brilliant product or service to a global audience that they fail to fully prepare themselves for the transition.
Cynthia reveals that there are three big mistakes businesses make the most.
- Choosing the right markets
“People often have this thought about wanting to go overseas, then they see potential in many markets and don’t know which one they should go to. So they act reactively and chase whatever opportunities come to them from the outside world, rather than looking at the various markets and saying, where is the largest opportunity? Where is the lowest risk, and where can we make the most profit?
“If you think of a Venn diagram with three circles, it’s the overlap between them – opportunity, risk and profitability – which is your sweet spot. That’s a mistake that I see a lot because selecting the right market is a crucial first step.
“Once you pick a market, it’s important to have a laser-beam strategy for that market. It frees up a lot of brain space and resources to just do one thing at a time. I think people fall victim to the excitement of an international project, and as a result, they try and do too many things simultaneously, and it doesn’t work as well as it could.”
- Understanding your ideal international client
“A huge roadblock is that people are unclear about their ideal international client,” Cynthia says. “That’s a huge problem because if you don’t know whom you are selling to, it’s virtually impossible to create marketing that reaches those people, and that cuts through.
“With the level of marketing and advertising we’re subjected to these days, that is super important. If you don’t have a message that speaks directly to people’s goals, challenges and desires – as they relate to what you’re trying to sell – you’ve got a snowball’s chance in hell of actually selling stuff.”
- Building the best team
“Lots of mistakes are made around the building of teams,” says Cynthia. “By that, I mean putting together a team that belongs to your company overseas, that can service your needs on the ground in another territory.
“That includes working with people like distributors. Although they’re not technically part of your team, they are effectively part of your team because they’re your arms and legs on the ground in a country that you’re unfamiliar with. I see a lot of different issues popping up around that.”
Pricing in different countries
When moving into international markets, a big difference for your business may be price points. How can you ensure that you are competitive with your price when you’re selling overseas? Cynthia has some great tips to help gauge the right price to pitch your product.
“At a very general level, there are three ways that you can price a product,” says Cynthia. “You can price it based on ‘cost plus’ – that is your cost to make and sell the product, plus a margin on top. You can price by looking at competitor pricing and placing yourself somewhere in the middle of that pack. And you can price on value, which has nothing to do with how much it costs you to make and sell the product; instead, it’s all about how much value the customer or the client sees in that product and the value that they will get from using it.
“These are three quite different strategies, but in my opinion, you get the best result when you combine all three,” advises Cynthia. “Firstly, you look at how much it costs to make and sell internationally. That gives you a floor – a price below which you can’t drop without losing money. That’s really important.
“Then you look at what competitors are selling for because that also gives you a range. You can decide if you want to put yourself at the bottom of the range, in the middle, or beyond the top end if you have a luxury product. Then you understand where you sit in the pack and how your product can be differentiated from other products.
“The third thing is to look at what value your product represents to the consumer in that market. Once you’ve found out those three pieces of information, that will give you three data points to help inform what your price should be.”
When moving into new territory with your business, building the brand trust you’ve been used to in your own country can be a tough battle. Cynthia says that building wise partnerships with other businesses in the territory can bring huge benefits when you’re just starting.
“Partnerships are critical across a whole range of levels. It might be about brand credibility, but it is also just about connections on the ground and getting things done.
“If you’ve started a company in your home market, then your customers have grown up with you as you’ve grown up with them; you understand them well. You know how they tick, you know what they want, and it creates this virtual circle.
“But when you go to a new market, you don’t really know your customers that well – and your international customers don’t yet know and trust you. So if you can partner with a firm that already has a good reputation in the local market, you get some of their credibility.
“They also know how things work. They know how the regulatory system works, they’ve got connections in their country, state or city, and they can help you get things done better and faster. For example, if you partner with a distributor with 50 sales representatives, you’ve suddenly got 50 people who can go out and sell the product on your behalf. Rather than one or two people from your office travelling to the market a few times a year, you can have 200 or a thousand meetings conducted on your behalf in that market.
“There is a range of partnership options, but done well, I think they can be game-changing,” says Cynthia.
Learning to work through cultural differences
Cynthia believes that being respectful and knowledgeable of different cultural norms is essential to a successful international expansion.
“There’s nothing more important,” says Cynthia. “So many business deals fall apart because the people on either side of the table just don’t understand each other. When there are gaps in their information and understanding, they make assumptions to fill in the gaps – sometimes with negative interpretations. Once you get into a cycle where both sides interpret what the other side does negatively, it tends to spiral.
“I think it’s vitally important before you go to do business anywhere else in the world that you approach it with the understanding that you’ll be talking to people who are different and then be pleasantly surprised by the things that you have in common, rather than assuming anything at the outset.
“A great example of this is Australia and the United States. A lot of mistakes are made because Australians go off to the US and they say, “We’ve watched all the sitcoms, we know how it works in the States”. But they get there, and they find that the communication style is highly different and it can be really off-putting.”
Cynthia strongly recommends doing your research ahead of time and being open-minded when negotiations seem confusing or even insulting.
“Do a lot of research; expose yourself to that culture as much as you can. Watch documentaries and TV shows, read books, listen to podcasts, meet people from that culture, and join an industry association that deals with the country that you’re going to. Do everything that you can to soak yourself in the culture.
“Then always try to stand in the other person’s shoes. When you’re dealing with a person who’s so different from you and something comes back that you feel offended or mystified by, take a minute to stand back and think, what is this person experiencing? How are they seeing this? Is it possible that how I’m interpreting what they’ve just said is not what they meant?
“I think if people did that more frequently, you would probably see a lot less business deals fail, and you’d probably actually see a lot less political conflict.”
Click here to order your copy of Cynthia Dearin’s
Business Beyond Borders: Take Your Company Global.
This post originally appeared on Flying Solo, read the original here.
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