If your overarching goal is to build a successful legacy business that will be around long after you are gone. And your horizon plans extend beyond the next 90 days. Then please read on …
In this article I want to share some thoughts on why you should consider globalizing your business, if you are in it for the long haul. So stay with me.
“Globalization is becoming a strategic imperative for survival and growth.”
Whether we choose to acknowledge this fact, or not, it is true for small businesses as well as large, multi-national corporations. I have been writing and speaking off and on about this topic for the past 10+ years. My first book, GLOBALIZATION: America’s Leadership Challenge Ahead, provides an in-depth look at the major challenges we must overcome in the complex, rapidly evolving global society we are all members of.
But I’m getting ahead of myself. Many of you reading this introduction are thinking this does not apply to me. “I’m just a local small business owner and have no current plans to expand globally.” I have spoken to numerous business groups, and heard this comment more times than I can count.
What I’m here to tell you is “there is no such thing as a local small business in today’s global economy”. You’ll understand why I say this as you read further.
Before we press ahead it’s important to define what globalization is, so we are all on the same page. HINT: It’s not about Al Gore and global warming. Globalization defined …
”Globalization is the process of interaction and integration among people, companies, and governments worldwide.”
No longer is it just about business expansion and the movement of products & services across geographic boundaries. During the past 30 years alone, we have moved from an interconnected society to an interdependent society. For the business world specifically, globalization is not a matter of “IF” but “WHEN”. This holds true for many other areas as well. Government, education, quality of life and so forth.
The dilemma we face is that most leaders are not equipped to manage the complexity and challenges of a rapidly evolving global society, let alone a global business. We all want our businesses to be extraordinary, not ordinary. How do we bridge this gap and prepare for a brighter long-term future?
Before I answer this, let’s take a closer look at some of the global market forces shaping our world today. Excerpts from ‘The 8 Major Forces Shaping the Future of the Global Economy’ by Jeff Desjardins.
The Tech Invasion. In our data driven society, tech companies now comprise the Top 5 companies worldwide in terms of market cap. We live in a world of bytes – and for the first time technology and commerce have collided in a way that makes data far more valuable than physical, tangible objects.
NOTE: By 2025, it’s estimated that 463 exabytes of data will be created each day on a global basis. That’s the equivalent of almost 213 million DVDs per day!
The Wealth Landscape. Wealth is not stagnant – and so if you are looking to make the most out of global opportunities, it’s important to get a sense of how the distribution of wealth and debt is changing the landscape to know where to invest your time, resources and capital. Today the Top 1% of the richest people in the world control roughly 50% of the wealth.
NOTE: The world has also amassed $247 trillion in debt, including $63 trillion borrowed by central governments. U.S. debt is now at a record high $22 trillion. Why is this fact so important? Because debt restricts growth and can lead to trade restrictions.
Shifting Human Geography. Now this is where things really get interesting! By 2050 it’s estimated that the world population will reach 10 billion people. Today, China has over 100 cities with more than 1,000,000 inhabitants. Many of which fly below the radar on the global stage, BUT have impressive economies – built on factories, natural resource production, or information tech.
By 2029 there will be more people in China’s middle class than the entire population of the U.S. (Let that sink in).
NOTE: By 2100, 13 of the top 20 cities are expected to be in Africa. Lagos, Nigeria is projected to be the top mega city with 88.3 million people.
If you’re playing the long game, where should you focus your future growth plans and investments? HINT: Marketing 101, go where your “future” customers are.
The Trade Paradox. The consensus by major economists is that free trade is ultimately beneficial, and countries around the world have been working to remove trade barriers since World War II with great success. However, we now seem to be trapped in a trade paradox in which politicians give lip service to free trade, but often take action in the opposite direction (i.e. tariffs, trade embargos and other restrictions).
NOTE: The trade paradox is expected to continue for the foreseeable future, as the trade war with China rages on.
Are you still with me? Good. I know there’s a lot of content to take in here, but I thought it was important to over-share in order to set the stage. Now let’s get to it …
I’m often asked if globalization is good or bad for business; it is both. Globalization can represent a huge market and growth opportunity, as well as a major business risk.
So, back to the original question, “Why globalize your business?” Here are some of the most important reasons to consider it:
- The world population is currently 7.7 billion people & counting
- 95% of your potential customers live outside the U.S.
- The world economy increased to $88 trillion in 2019
- There are virtually no border limitations today
- 97% of U.S. exporters are small businesses
Do the math. Globalizing your business, despite the inherent risk, represents a huge long-term market opportunity. In my opinion, by simply ignoring it you’re putting your business at even greater peril.
The tremendous growth of international trade over the past several decades has been a boom to both developed and under-developed nations around the globe. As a result, consumers now enjoy access to a much broader array of products and services than ever before.
Why not capitalize on it to fuel your future growth plans?
Here is my best advice for business owners who want to build a global legacy business as a long-term strategy, and are ready to take that exploratory first step.
Change your thinking. I believe this to be the “global imperative”, as I stated in my book. Psychologists tell us that if we reshape the lens of how we view things we can change reality. By changing reality we can change the outcome.
How do you view your business today? Local small business, or global enterprise doing business in selected markets? HINT: Global enterprise is the correct answer.
With the explosion of the Internet and Web commerce, there is no such thing as a local small business anymore as I stated previously. Adjust your vision accordingly. Take a broader view of the world around you, and the role you can play as CEO of a global enterprise.
Do your homework. Do your research and planning upfront. The days of “Ready, Fire, Aim” are long gone.
When you are an unknown to the global consumer, having a well-defined game plan to achieve your business and financial goals is fundamental to success. Know in advance of launch where to invest, how to invest, and the time and resources required to reach the predetermined target markets.
Build your community. Don’t try to go it alone! Who are the stakeholders – customers, suppliers, trading partners, etc. that can help you gain access to the global marketplace and build a stronger brand?
Start with the known – your existing supply chain. Who do you do business with today that has an established presence where you want to go? Has built great relationships? And can help reduce the barriers to entry and time-to-market required to gain access to new global customers?
Focus on value creation. The key differentiators for any business are its people and its intellectual capital. A no-brainer, right? Not so fast!
Who determines the value? The customer. Are the value drivers for your products and services different in other countries?
Recognize the constructs may be different country-by-country, so determine this upfront. Do the required market testing to ensure the offers, marketing, promotions and pricing are in alignment with customer demands to avoid any bad surprises.
In summary, globalizing your business is not just a simple one-off task. It is, however, a strategic imperative for survival and growth, if you are building a legacy business for the long-term.
If you were to have asked me my thoughts on globalizing your business 20 years ago, my short response would have been “go big or stay home”. A lot has changed since then, as reflected in this article.
My short response today is to “start small … think big … invest wisely … go slowly“. Most importantly, get expert advice where needed to help support your efforts.
Enjoy the journey!