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Author's profile photo Christopher Koch

Four Ways to Prevent Global Catastrophe (for Your Small Business)

/wp-content/uploads/2012/11/globe_160425.pngHow global do you want your small business empire to be? Unless your product is insanely complex or its name is an unmentionable slur in the local language, the limits are pretty much all in your head.

This is not your father’s—or even your older brother’s—globalization. Logistical networks have improved in lockstep with the penetration of the internet and mobile phones throughout the world.

However, while the processes for managing the supply chain have improved dramatically, the most important factors in global expansion—local experience and knowledge—remain frustratingly analog. Management teams must not only know the markets they wish to enter, they also need to understand the specific strengths and weaknesses they bring to each of those markets.

“You need to look at what you bring to the table, what key capabilities you have—such as customer relationships or specific technical or industry expertise—and how you leverage that into a much bigger part of the world,” says Karl Stark, managing director of Avondale Strategic Partners, a firm that advises high-growth business clients.

And despite all the improvements, logistics processes have never been easy to manage. That old bromide, out of sight out of mind, applies. “As you start adding other locations, it gets increasingly difficult. Suddenly you can’t see it in front of you anymore,” says Mark Lehew, SAP’s national VP of strategic growth enterprises. “So it’s harder to keep control over everything. It becomes a real challenge to rapidly sense and respond to changes across the various remote locations. The challenge grows with each different time zone or language you need to support.”

Here are four ways that small and medium businesses can manage globalization without losing their minds:

  • Build a process for airlifting in best practices.Drive Medical Design and Manufacturing has grown overseas both organically and through acquisition. The acquisitions forced it to come up with a way to harmonize its supply chain processes as much as possible across the globe. “The goal is to bring our systems over there and just hand them a book so they can implement quickly,” said William Cerniglia, Drive’s chief information officer. “There will be some changes in terms of local pricing or freight requirements, but we want to keep the heart and soul of distribution and warehousing as vanilla as possible.”
  • Plan for disruptions—don’t wait for them. Bad stuff happens in the world. Corruption, weather, uprisings—especially in developing countries. “We’re looking at more agile supply chains so we can handle unexpected events like an interruption in China,” Cerniglia says. “We want to create a lean distribution method, like Amazon, to get products to our customers faster.”
  • Make up for a small workforce through knowledge sharing. An increase in specialized knowledge capital that is easily sharable across borders will drive more “micro-verticalization” across industries, predicts Steve Niesman, CEO of itelligence North America, which provides technology consulting and support services. By sharing best practices and real-time market knowledge, “you can be a 10-person engineering design firm in Kankakee, Ill., and you can reach people in Taiwan because you have a specific skill set,” Niesman says.
  • Seed market demand before going in.Orabrush, maker of a tongue-cleaning product, has grown rapidly through an aggressive and innovative social media strategy featuring YouTube videos about bad breath. “Even though we never localized that content, it quickly went global,” said CEO Jeff Davis. “We were getting calls from countries wanting to distribute our product or put it in their retail stores.” With this “reverse-marketing” model, Orabrush focused first on creating high levels of awareness online, and then secured the distribution channels as demand grew. Orabrush now has a retail presence in 13 countries.

What do you think? What would you add to this list?

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