Entering a new country

One of the biggest decisions I am faced with currently is the best way to enter a new country with our products and business model. As a small company, I cannot afford to open a subsidiary in a new country, invest money and look for pay back over next 6–12 months. That sort of thing is for “strategic projects” launched by big players. One simple rule we have is that every new project requiring resources (time, people or money) should generate enough cash to finance its growth within 4 weeks of launch. I know, some of you may feel that by imposing such strong discipline, I might be leaving a lot of growth on the table. You know what? You are absolutely right! But I am quite happy to leave a lot of slack in the system because as a small company we don’t want to grow too fast or stretch ourselves too much chasing that incremental 10% growth rate. Getting back to the subject, because of this self-imposed boundary, we have to be extra careful when starting a new company in a new country.

The simplest solution to this is of course to find a good distributor in the new country and work through that company. Unfortunately, this option does not quite work for our business system. During the past 36 months, we learnt a lot of things about our business system. Suffice it to say that it is very difficult to find a distributor who can bring the same rigor and intensity to sales training and back office administration as we do. We have tried with this model in Italy, Serbia and Germany and unhappily for us, we found that most of distributors expected results to flow once they hung the sign outside their offices.

On the other hand, I do not want to invest in a new company without having the right leader for sales and in my business the only way to find this out is to take the leader out for a test drive. Yes, we do all the normal interviews, testing, reference checks, staggered meetings over a period of 4–6 weeks in different locations and contexts; but when I am going to designate one person to be responsible for our entire Croatia strategy, I am not sure if this is enough. And this is where the root of the problem lies. How can we test drive the leader without having a way to ship our products into Croatia, get some activities going in the market, invoice customers, collect payments? How can we do all these activities without having a company in the country? But then, how can we have a company in the country without having the right sales leader in place?

This is where I am right now. Has anyone of you faced a similar situation in your work? How did you handle it? I will certainly appreciate any comments or observations you might have.

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