You work hard every day to sell and deliver great products and services. Your customers love you and investors wax optimistically about your future. Every quarter, you do more, better, and faster. Could you still be missing out on an important opportunity to increase profitability and enterprise value? The marketplace is globalised and increasingly competitive. If you are not growing in Europe, consider these five good reasons to start, now.
Reason 1: You already did the hard part, now you can cash in.
You have already made the investment to get your product or service right. Consider replicating your rollout in a less competitive market. Seize the easiest market share that you will ever win, the first-mover market share of a market with no competition. Much of what you have learned the hard way at home regarding customer needs and segmentation will give you a head start in new markets. Changes necessary to satisfy overseas regulation or language requirements likely require only modest additional investment. Amortize your investments and fixed costs over more units to create greater profitability.
Reason 2: You can reduce your risk.
Is your profitability sensitive to an economic downturn at home? Hedge your risks by generating revenues in countries with different economic fundamentals. Wouldn’t now be a great time to let the buoyant German economy drive sales, picking up the slack for flagging US turnover? With good reason, US firms’ foreign investment increased 27% from 2010 to 2011, with over half of that investment going to Europe, according to the Congressional Research Service.1
Do you source overseas, making currency fluctuation a concern? Consider how growing internationally could allow you to bank some Euros and stabilize your profitability.
Reason 3: You can acquire new customers more easily.
Have you got competition at home? Your product or service may be one-of-a- kind in a new market. Alternatively, the market for your product or service may be more developed, with a wide base of potential customers who already understand your value proposition. Consider that the European Union, with over 500 million inhabitants, has more potential customers for most products and services than the United States, but is potentially underdeveloped precisely in your sweet spot. Did you know that 14% of revenue of the S&P 500 companies comes from Europe?2
Reason 4: You can let your existing customers pave (and pay) the way.
One of the most promising growth opportunities is to follow your existing customers into new markets. If happy with what you are doing for them at headquarters at home, your customers will be pleased to have the opportunity to roll out your value proposition to their overseas operations. They may even distribute to other customers for you.
Reason 5: If you don’t, somebody else will.
Copycats are more than willing to duplicate and transplant your products and services that are successful in the US in new markets, harvesting the fruit of your labor. It was Apple’s Steve Jobs who said, “Good artists copy, great artists steal. And we have always been shameless about stealing great ideas.” Once established, copycats may even block your subsequent entry to new markets. Proactively seeking growth opportunity in new markets and moving swiftly to introduce your proposition, on terms, can be decisive to bolstering your firm’s long-term value.
While it may make sense to get it right in the US first, for most ventures, it’s never too early to plan for international growth. You may well be able to rewrite your equity story by increasing revenues and profitability, reducing risk, and growing and protecting market share while cashing in on the unique selling proposition that you have worked so hard to achieve. You have several options: exporting, joint venture, and direct investment. Altus Alliance is on the ground in Europe and can be your guide in understanding customer needs, establishing a “market-driven baseline”, then guiding you on your journey to create sales traction abroad.
1 http://www.fas.org/sgp/crs/misc/RS21118.pdf, retrieved 11/21/2012
2 http://www.reuters.com/article/2012/07/02/us-markets-usa-earnings- europe-idUSBRE86105D20120702, retrieved 11/21/2012
Author: Michael Ricks, Strategic Partner