Vicki Prout - Sherpa Group
IS IT TIME TO GO GLOBAL?
I have certainly had a whirlwind 10 years of international business accomplishments. After a five year UK adventure in setting up, piloting and successfully franchising an Aussie homebased franchise brand into over 100 UK homes and eight EU countries, I joined the ink Refilling brand, Cartridge World. At the time the franchise had 436 stores. Within the space of four years, we expanded into over 40 countries with 1600 stores.
Neither of these brands were a simple success, but they both were fun and at many times intense! Sure, mistakes were made, but we continually learnt and adapted along the way. Constant updates and introduction of systems, increasing standards, evolving supplier chains,
enhancing training courses, improving selection criteria and processes (recruitment of key assets such as people and franchises) and strengthening support to form a well-balanced head office team - all made for an interesting journey.
The most important lesson learnt was the value of continually reinvesting back into the business as the franchisor. Having an overall attitude and determination to be the best, drive success and to grow the finest ‘crop’ globally, all aided in becoming a global phenomenon.
The journey, even in the darkest hours (termination of master licenses in foreign countries, larger manufacturers continually entering the market with ridiculous loss leaders, etc), makes you resilient, more determined and more focussed.
My personal growth lesson was mastering the art of communication, to continually invest myself in the network through inspiring creativity and rewarding key milestones and keeping unity with the brand and operating systems. Basically, remaining true to yourself – Remaining true to the Australian spirit.
By constantly building rapport with all stakeholders and remaining true to our Australian culture and the culture of our brand, we greatly enhanced our sales and were able to still enjoy the journey.
Having a brand and business model that is profitable, simple to replicate and simple to train multiple groups of various cultures is key. You must then support this model with processes, unique products, strong brand and positioning. This is a true test of the business model, its personal character and its brand strength.
Expanding on an international scale, you do need to be mindful and be prepared for your brand to potentially be distorted in some way. You need to be mentally ready to witness your brand and your business that you have worked so hard to build in Australia be ‘botoxed’, or undergo some superficial transformation. Obviously you have tight systems in place, but some ‘cosmetic alterations’ will occur. So, as the Scouts say, ‘Be prepared’.
Don’t be fooled, there is an abundance of work to undertake when looking at global expansion. You may feel the need to delay the development of your global business strategy - as it seems too complicated and overwhelming.
The right advice and a planned approach to developing the strategy, structure, economics and commercial policies are needed to be successful in building a global network and adapting a global attitude. This will allow your business to join the hundreds of franchise systems now operating in foreign markets.
There are many key opportunities. Social and economic trends such as an ageing population, increase in child care demand, family structures, health and fitness, internet usage and dining out are good indicators of opportunities in business. These trends can all translate into demand for products and services which vastly suit the franchise community. But what do you do? Where do you start?
Before you start the journey, make sure your business and your plan passes the Fitness Test:
KEYS TO GOING GLOBAL
There are three broad objectives common to global expansion:
• Extract the maximum profit from the other overseas venture while keeping the risks low
• Maintain control in a foreign country and, where necessary, enforce rights
• Protect the brand and other valuable intellectual property
How do you answer these objectives? You must undertake research, visit the countries in which you hope to expand and experience the landscape. You must also conduct an international viability assessment.
1. Have a clear understanding of how the network might look, operate and function as a fully developed global network.
2. Determine what resources are required to function as a fully developed licensed international system. These could include:
b. market entry model
c. market viability
d. financial projections
e. various other operational functions
To determine what the network might look like and what is required to get the business up and running in a new country, these are the questions to consider:
• Why do you want to go offshore?
• What is your motivation?
• What is your timing?
• Where do you want to expand to and why – which countries?
• What products and services will be offered and what is the price positioning and product supply?
• What is the appropriate structure to use: direct franchising, area development, master franchise, joint venture, organic, distribution method?
• Do you need to use the same model or can you use different models for differing countries?
• Should you have a local presence?
• How much control do you want?
• How do you define the right structure?
• Are you fully committed and passionate to global expansion?
• Have you got talented management around you to support you?
• Do you have sufficient financial resources – work out what you need then double it!
• Have you the skills to find and exploit new opportunities?
• Do you need to develop new products/services?
• Are the skills within your network suitable to teach and train on a global level?
• Have you the passion and desire to drive growth and strategy?
• Have you determined what you are looking for in your ‘partners’ and do they share the same passion for your business?
• Have you undertaken market analysis?
• Have you visited and spent time in the market?
• Are the clients similar to Australia, what about the pricing and product placement?
• Who are the competitors?
• Are there any barriers to entry?
• What is the political landscape?
Over the years I have often been asked ,’How did you grow, then support over 1600 franchises in 40 countries in a fairly short timeframe and remain relatively sane?’
• What are your tax considerations?
• What are your commercial considerations?
• How will external parties seek funding?
• How will you receive your fees?
• Does your structure allow for possible investors?
• Do you need local presence to operate?
• Have I suitable financial resources to expand?
By researching and clearly answering these questions, which in some cases will seem to be an intrusion into your ‘entrepreneurial spirit’, you will build a platform for a sound development plan for your global business expansion.
Be certain your reasons for going global are sound. Expansion should not be seen as a fast track to financial freedom. It should also not be seen as too overwhelming to contemplate. With the development of strategy, structure, economics and commercial policies - supported by a planned vision to ‘export” in response to a positive market opportunity’, it is certainly an attainable, realistic and reachable goal.
Vicki Prout is Chief Sherpa at Sherpa Group. The team at Sherpa Group can assist clients in determining which international expansion model is best for their business and implement a structured process to guide their clients to a successful expansion journey.
Contact Sherpa Group on 02 9267 6277 for a free Sherpa Global Guide or email email@example.com.