How to successfully set yourself up to grow globally

The internet has made the evaluation of going global much easier, but an abundance of information shouldn’t be a stand-in for situational due diligence, says Jim Altman, Middle Market Pennsylvania Regional Executive at Huntington Bank.

“To be successful in a foreign market, a company needs to gauge the viability of its product in that market, both in terms of its value proposition and price point, as well as understand the local competitive and regulatory landscapes,” he says. “That requires assessing whether or not the competencies that made the company good domestically are transferable overseas.”

Altman says an effective approach is to build a network of competent advisers that can serve a fundamental role in assembling the company’s foreign market strategy.

Smart Business spoke with Altman about what it takes for companies to grow successfully outside of the domestic market.

How can companies determine whether they’re ready for the global stage?

Before making an entrance into a foreign marketplace, companies should have their domestic house in order. Mixing global complexity with domestic challenges can make difficulties at home much worse.

Next, develop a qualified list of target countries, in partnership with advisers, to determine where to go and why it makes sense to go there. Then define how to approach the market, knowing that the aggregate global strategy is a compilation of the specific country strategies. When selling internationally, there’s a need for precision.

What commonly gets companies in trouble when they venture beyond the U.S. borders?

The biggest challenge and often mistake that companies make is they assume business practices are the same in other countries as they are in the U.S. But in reality, buying behavior and even day-to-day business practices are all different country by country. To be successful, companies need to get to know the local landscape very well.

Companies also get burned when they miss the technical risks associated with cross-border transactions. For instance, the potential for local governments to assert currency controls that could frustrate repayment and complicate plans.

How can a banking partner facilitate a company’s growth in the global market?

A good banking partner should have access to risk management products that help protect a business, as well as a global network of partners, including foreign banks and development agencies in the countries that are being targeted. Their collective aim should be helping companies evaluate foreign markets, and if it progresses, setting up shop there. Ideally, the banking partner would be involved in the plans early to help shape what the company is doing and position it for the best effect.

What signals that a banking partner can support a company’s international efforts?

A company should look for a bank that’s large enough to have a dedicated international staff with on-the-ground experience in the targeted country, but small enough to want to work with a business of its size. Many small and midsize companies find refuge in regional banks that have made investments in core products and relationships to help clients globally, while truly wanting their business.

From a product perspective, look for a banking partner that has an actively managed correspondent banking network, foreign exchange products, trade finance and services products as well as access to trade credit insurance, preferably from a bank-owned insurance brokerage, to ensure continued alignment of interest. When small to midsize companies try to set up shop in a foreign country, they can struggle to attract the attention of local partners. They should be able to leverage their bank’s experience and relationships in those markets to get the attention they need.

Planning is crucial in order to successfully go global. And there’s great value in doing it in partnership with a trusted adviser, which may include a bank.

There are nuanced risks when dealing outside of the U.S., but the opportunity is compelling. It’s the strongest global economy in two decades. Most emerging and developed markets are trending upward, giving companies with the right plan a good chance to succeed.

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