We delve into the essential strategies and considerations that can help NZ SMEs successfully launch and expand their operations abroad, ensuring they are well-prepared to meet the demands and seize the opportunities of new markets. To do this, we spoke with Peter Robinson, a Beachhead Advisor for NZTE, to share his expert insights on how to navigate this process. From strategic planning and team preparation to financial investment, local partnerships, and compliance, Robinson’s advice offers a comprehensive guide for businesses aiming to grow internationally.
According to Peter Robinson, effective planning revolves around four key areas: people, money, partners, and tools. First, assess whether your team, especially senior management, has the capacity to dedicate significant time and effort to the new market. Next, evaluate the financial investment required, as profitability may not be immediate. Partnerships can be a game-changer, providing local insights and reducing costs through distribution agreements or reseller partnerships. Lastly, ensure you have the right tools in place, such as localized marketing resources and communication technology, to support your international operations. By addressing these areas thoroughly, businesses can identify and mitigate potential issues, setting a strong foundation for successful expansion.
"The overarching theme is that this takes longer and requires greater effort than even the most wise and pragmatic planner could have anticipated. The people who I've seen have greatest success have gone to some serious strategic planning effort and looked at the opportunity offshore through the lens of four big areas: people, money, partners, and tools."
Your team is vital for successful international expansion. Peter emphasises the need to evaluate your current team’s capacity, particularly that of senior management, to ensure they can dedicate the necessary time and resources to the new market. This involves determining whether your domestic business can afford to reallocate key personnel or if there’s a need to hire new staff. It’s crucial that your team is not stretched too thin, as this could jeopardise both local and international operations. Additionally, investing in training and development to equip your team with the skills needed for the international market is essential. Having a strong, dedicated team will help navigate the complexities of the new market, ensuring that your business can maintain its performance at home while successfully expanding abroad.
"Does the domestic business have the capacity in terms of bandwidth, particularly of the senior management, to devote a lot of time and care to an offshore market? Is the local business humming successfully and can you slice away some key important intellectual property and key people from the domestic business?"
It’s essential to have a clear understanding of the financial commitment required to establish a presence in the new market. NZ businesses need to anticipate significant upfront costs and a potential lack of profitability in the first 12 to 24 months. Forming local partnerships can be a strategic way to manage these costs. Distribution agreements or reseller partnerships can help reduce expenses and provide valuable market insights, making the entry process more efficient and cost-effective. Additionally, businesses should prepare for ongoing expenses related to marketing, compliance, and adapting products or services to meet local regulations and preferences. By carefully planning and managing financial resources, companies can avoid unexpected financial strain and being unable to sustain their market presence.
In his interview, Peter highlights the importance of forming strategic partnerships, such as distribution agreements or reseller partnerships, to gain quick access to local market knowledge and reduce entry costs. These partnerships provide valuable insights into local consumer behaviour, competition, and regulatory requirements, helping businesses adapt their strategies effectively. Understanding the local market also means evaluating how your value proposition stacks up against existing competitors. This involves researching local consumer preferences, identifying gaps in the market, and tailoring your offerings to meet local demands. Leveraging the expertise of local partners can fast-track your market entry and ensure you are well-equipped to navigate the complexities of a new market.
The importance of understanding and adhering to local regulations and compliance requirements can't be stressed enough, as these can significantly impact product offerings and operations. Each market has its own set of rules, ranging from product standards and labeling requirements to import/export regulations and tax laws. Ignoring these can lead to costly delays or fines. Additionally, businesses must be ready to adapt their products or services to meet local preferences and legal standards, which may involve changes in packaging, formulation, or marketing strategies. Being proactive about compliance helps avoid unexpected obstacles and ensures a smoother entry into the new market. Furthermore, staying informed about market-specific challenges, such as cultural differences and economic conditions, allows businesses to tailor their approach effectively.
Peter Robinson’s advice provides a clear guide to help navigate the complexities of expanding internationally. Good preparation and understanding the new market are key, as well as utilising the experts and organisations that are already experienced in doing it.
