(Although a gal can always dream, the above is clearly NOT a photo of me)
I have a friend who rock climbs. She joined a climbing gym, she’s impressively dedicated to going two to three times a week, and she’s got the muscle-tone and dexterity to prove it!
I recently accompanied her to her gym to try out this burgeoning sport. Reflecting back on my experience, I find a lot of similarities between rock climbing and the process of growing your business into new markets.
Barriers to Entry
“Whenever companies try to enter a market, they will encounter some obstacles or conditions that make entry more challenging, more expensive or even impossible.”
Granted the barriers involved in learning to rock climb don’t initially seem quite so daunting as trying to grow a business into a foreign market; but they still exist.
There’s convincing yourself to move outside of your comfort zone to try something new, getting over the fact that you’re going to have to rent and wear shoes that hundreds of other people have sweated in (potential bare foot), and getting over that slight fear of heights that you openly deny but can’t deny to yourself when you’re suspended 20ft off the ground. But if it’s an activity worth doing then the barriers are all surmountable.
Some of the barriers to international trade are easier to get over than others.
Language, culture and brand awareness can be worked on and overcome. And market intelligence is something you can gradually gather and develop toward a better product for your target audience and a better marketing plan.
Other barriers aren’t quite so easy to overcome, and some are even out of your hands. There may be economic barriers, such as unfavourable exchange rates, high taxes, and different or difficult payment mechanisms.
Political and legal barriers must also be considered. Are there trade or economic sanctions in place? What are the regulatory standards in your target market, and how does your current product stack up? And what’s the political environment like? Is it stable? Is there inefficiency or corruption?
While you can’t always eliminate these types of barriers, if a market is right for your business then you can sometimes plan to work around them by mitigating the potential risks they present.
Market Entry Strategy
“When a company has chosen a foreign market to target, it needs to decide how to enter that market.”
Rock climbing walls are decorated with climbing holds—the differently shaped and coloured bits and pieces that you must grasp and toe to make your way to the top. But you don’t just use any random selection of climbing holds to complete your upward journey. Gyms label the different holds to demarcate paths up the wall, and each path is marked based on its level of difficulty.
Unfortunately there are no general guides to tell you how difficult a foreign market will be for your company to attempt.
However, in business as with rock climbing, you can assess your strengths and capabilities and determine which path is the best for you.
Should you export your product into your target market using a wholesaler, agent or distributor? Or perhaps you’re better off licensing or even franchising, depending on your product and business model.
Another thing to consider is creating strategic alliances to help you move forward (or upward if you’re climbing a rock wall). Sometimes having a good partner makes all the difference.
Strategic Alliances: Finding the right partner
“Because international trade is far more complicated than domestic trade, many organizations have great difficulty entering a new market without assistance.”
Whether it’s her experience or just her kind, encouraging demeanor I’m not sure, but my friend is a wonderful climbing companion. She recommends paths she thinks you’ll enjoy, she point out a climbing hold you didn’t even notice right when you think you won’t be able to finish a path, and she gives you enough encouragement on your progress to make you want to return to the gym and try another day!
Strategic allies should do the same. They can help you do your business better, whether that’s helping you enter a new market more smoothly, giving you insider knowledge so you can get to know your target audience and sales environment, or assisting you in branching your network, enhancing your competitiveness and keeping your sales growing upward.
But how do you create the best alliances for your business?
Determine what your strengths and resources are, pinpoint your gaps, and try to work with partners and allies that will make up for those gaps.
Exit Strategy
“All partnerships are started in the hopes of business success.”
The first time I climbed all the way to the top of the wall, I quickly realized while I was clutching on for dear life a mere 10 to 15 feet off the ground that I would also have to climb back down again. For some reason climbing down is a lot scarier than climbing up, but that doesn’t mean you should just barrel downward and hope for the best. You need to safely plan your decent.
Sometimes it takes a while to figure out that a certain market isn’t everything you thought it would be. Economies, political situations and even cultural demands can shift. When the effort you’re putting into growing your sales in that market are no longer worth the return you’re getting, it’s time to retreat.
No one wants to be negative at the beginning of a new venture, but planning your exit strategy as much as you can before you’ve even entered into a new foreign market is advisable.
Determine benchmarks for performance for your company and all your potential partners so you’ll know if things are running smoothly or need to be reviewed and revised.
Be specific with your contracts and expectations, which will assist later with any disputes. And at the end of the day, always, Always, ALWAYS build an exit clause into your contracts and agreements.
You don’t want to find yourself stuck in a project or partnership that just isn’t working (or clutching for dear life onto a rock wall you can’t get down from).
What are the best lessons you’ve learned while entering new markets?
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