Going Global: The Top 10 Mistakes Many Small Businesses Make (and How to Avoid Them)
You’ve made the decision to take your small business global, congratulations! You’ve been successfully running your domestic affairs for quite some time and are ready for the exciting prospect of international customers. But wait! Operating in a global setting is not the same as it is at home. Here are 10 common mistakes that occur when going global and how you can avoid them.
1. You paid 100% upfront on a transaction. The supplier says, “We require 100% upfront on the transaction wire transferred to our bank account.” Your response should be: “No can do.” Ask for the smallest percentage as a down payment and the balance to follow after you receive your shipment. That way, you have recourse should something go wrong.
2. You export your products to a bunch of foreign markets at once. Pick a product and pick a market. Then stick to it. It takes a lot of discipline to resist the scattershot approach to doing business.
3. You don’t inspect all goods from top to bottom. There are two lessons here. Hire an independent inspector in the country where you are importing goods to ensure quality is intact before the shipment leaves. The second is you should open each case and examine every product to make sure everything is to your satisfaction. If you just check a few items you might find out later that the items on the bottom are cracked.
4. You don’t target your request for proposals. Don’t send a blanket request for a proposal through a database where thousands can respond. You will be lucky if 1% of the proposals are close to what you are looking for. Think about how much time and money it will cost you to go through them all! Instead, focus on what you need and target three to five companies that can produce what you need.
5. You don’t get proof that a supplier can do what you need done. A supplier says, “We can do that, no problem.” You send the specs, request 25 prototypes, and confirm pricing and delivery times. The supplier asks you to pay in advance via wire transfer for the prototypes and shipping costs. You agree. A couple of weeks go by and you receive your prototypes. They look nothing like what you asked for. You go back to the supplier and ask for a refund. The supplier says that is as good as they can do. Since you paid upfront, there’s no recourse. Next time, get samples of products on their dime that show they can do what you need done and hold off on payment until you get what you are looking for.
6. You let your customers lead you. An American businessman interested in exporting food items to Asia told me that he had the resources to furnish literally any American food product that a customer wanted. He said, “My company works with hundreds of suppliers. If your customer wants sea salted caramels, we can get it for you.” I responded, “The customers aren’t supposed to lead us. We’re supposed to lead the customers! Tell your customer what unique products you have, why they are special and how they will become game changers for your customer’s business.” This clearly came as a big surprise to him, but this is the kind of thinking that succeeds. Focus and lead your customer. Take them to where they didn’t know they could go in terms of satisfaction, increased sales and profitability.
7. You don’t adapt your products to meet the needs of the global marketplace. You must tailor your product to meet the needs of the customer. Forcing a customer to buy what you have available with little to no willingness to make improvements is not just insensitive, but downright hostile.
8. You don’t provide immediate and consistent service. I hate when someone disappears after a sale. Would you want to be treated that way? Service brings satisfaction, and satisfaction brings trial orders followed by repeat orders. Anything less than immediate and consistent service only wastes your time–and that of your prospective customer!
9. You don’t meet with prospective customers. Once you line up a potential customer (and this holds true for sales agents and distributors), ask if you may visit them and if they would assist on your first visit. You will be surprised at how gracious people are and how eagerly they welcome the opportunity to show you around their country! Customers matter. The personal meeting is the best way to demonstrate your professional commitment and to see what’s going on in their community.
10. You don’t get sales from your agents and distributors. When exporting a product, it’s a smart practice to ask a distributor what he anticipates selling in the first year. Then, request that his first order be 20% of that anticipated volume, prepaid, which allows him the opportunity to have exclusivity. You should expect the balance of projected sales to be ordered during the rest of the year, with each subsequent order, at minimum, the size of the first. This allows you to monitor and exercise good control over the distributor’s sales.
Laurel Delaney runs Chicago-based GlobeTrade.com, a leading management consulting and marketing solutions company dedicated to helping entrepreneurs and small businesses go global. She is the creator of The Global Small Business Blog, ranked No. 1 in the world for entrepreneurs and small businesses interested in going global. She is currently at work on a new book on exporting to be published February 2014. You can reach Laurel via email.