12 difficult questions to ask before going international through direct or channel sales

There comes a time for the leadership at most growing technology companies when they decide to look beyond their home market.

As in Homer’s “Odyssey” the Siren’s call of overseas markets can often be too much to resist. However, as Odysseus found out, monstrous unknown challenges await the innocent entrepreneur. The leadership of these companies must understand how to sail through their Scylla and Charybdis if they are to avoid running aground like so many tech companies who have gone before them.

There is more to launching overseas than just sales and marketing. Company strategy, stakeholders and governance also have a significant role to play. This article, written by an entrepreneur and Chartered Director who has previously travelled this route in overseas markets provides 12 key questions for the company’s leadership team to help them on their way.

1. What is your Company Vision and Mission? How does this fit with your plans to develop overseas?
   • In the words of Michael Porter, “To the company without a strategy, everything is an opportunity”. The company’s vision and mission are its navigation systems. Without a clear and agreed vision and mission it is easy to get distracted by seemingly good ideas that lead the company in the wrong long-term direction.
2. Are all of your stakeholders on board?
   • Decisions around internationalisation cannot be taken purely by the management team. They need to be discussed at board level, and consultations should be taken with the company’s bankers, financial partners and other relevant stakeholders. If the strategy hits a “speedbump”, it will be important to have all stakeholders on board.
3. Have you conducted a thorough analysis of the external environment, your company’s internal strengths and your strategic “fit” or “gap”?
   • Use PESTEL analysis to analyse the external environment, VRIN analysis to analyse your internal situation, and SWOT analysis to link both. This will help you to understand your strategic fit for certain markets, and also any gap that you will need to fill. Be sure to check historic currency fluctuations as part of this and decide if you need a hedging strategy.
4. What is your distinct competitive advantage in this overseas market? What are your key differentiators and unique selling proposition?
   • Developing buyer personas can be helpful in identifying where your competitive strengths lie. Competitive research is obviously key.
5. Is it necessary to launch an office in this jurisdiction? Could you first test the water via a channel partner or alliance, and do you know how to recruit new channel resellers?
6. What other partnerships can you develop? If you are a channel partner with a major technology vendor can they help you identify other local partners where you both have synergies?
7. What is the legal, regulatory, compliance, hiring and tax situation in the chosen market? Does the market use a similar financial reporting methodology to your own, or will you need to learn and integrate completely new financial reporting methods?
8. How difficult is it to “unwind” your commitment if it does not work out? Will it be a costly exit?
   • The reality is that many entries into overseas markets fail. Sometimes the most effective solution is a tactical withdrawal, followed by an assessment before perhaps trying again. However, if the company decides to take a strategy of “burning it’s boats” and going all-in, committing to long-term leases on properties and so on, then the ability to unwind at low cost is dramatically reduced. A flexible strategy may be more prudent.
9. What financial or other supports are available from government bodies in the market that you are entering, such as salary and training supports? What are the penalties if you choose to exit?
10. “Crossing the Chasm” – what market segments will you focus on initially and how will you build your credibility in that local segment?
    • Those familiar with the teachings of Chasm Group will understand the necessity of “establishing a beachhead” in the market by winning a strategically important client early in the process.
11. What localisation is required? Entering a non-native English country can bring a myriad of complexities in product development, marketing collateral and support. If your home market is native English speaking, then it probably makes sense to initially target an English-speaking country. However, don’t be fooled into thinking that language is all that is required. Cultural factors are incredibly important and need to be understood before taking a decision on the chosen market. If you decide to use channel partners, do you understand the keys to successful channel sales or does your team need further channel training?
12. Couple or Uncouple? Depending on the size of the market you may want to combine multiple geographies (e.g. not just Netherlands, but BeNeLux). Conversely, if it is a large market (e.g. the US) you may want to initially engage a regional strategy (e.g. New England).

Overseas markets present great opportunities for growing technology companies. But remember, it took Odysseus many years to make it home!

About the Channel Institute.

The aim of the Channel Institute is to bring a more formal, standardized structure to training for channel business professionals. In particular, the Institute aims to focus on the vastly under-served segment of training and certification for those that are relatively new to the channel management profession.

The Institute provides two certified channel sales training courses for channel sales professionals: The Certificate in Channel Management and the Certificate in Channel Sales. Both courses are 100% online with an exam and lead to Certified Channel Professional status.

The Certificates in Channel Marketing and Digital Co-Marketing are also ideal for those charged with channel partner marketing and channel partner training at technology reseller companies, to help them understand vendor-independent global best practices in co-marketing.