Jon Schreibfeder is president of Effective Inventory Management, Inc., a firm dedicated to helping manufacturers, distributors, and large retailers get the most out of their investment in stock inventory.
For more than 20 years, Jon has served as an inventory management consultant to more than two thousand firms to improve their productivity and profitability through better inventory management. Jon has designed several inventory management computer systems and has also served as a distribution industry “troubleshooter” for two major computer companies.
We recently sat down with Jon to discuss ways small business owners can increase their chances of success when expanding globally.
Exact: What is one piece of advice you would offer small businesses before expanding globally?
Jon: The first piece of advice I have for small businesses hoping to expand globally is to be absolutely certain there is a demand for your product or service in the geographies you’re targeting. All too often business owners fall into the trap of assuming that just because an emerging market is trending toward purchasing products similar to what they offer, it automatically means that their particular business will have a customer-base. I tell my clients to do their homework and pay attention to market research before committing themselves to an expensive global expansion. Because once you’ve spent the capital to expand into a foreign market, you need to succeed to recoup your investment while remaining profitable.
Exact: Can you give an example of an unanticipated challenge small business owners face when expanding globally?
Jon: There are two main things business owners, regardless of scale, need to understand prior to committing themselves to a global expansion. The first is that they need to have a strong understanding of how foreign countries regulate commerce – what are the rules and regulations governing the particular country? What approvals will they need to conduct business within its borders? What are the local tax commitments? And second, beyond the hard regulations, what is the commercial culture like in their target countries? Most countries have different expectations regarding the standards of their purchased goods and services. In Shanghai, for instance, consumers will accept a lower quality product if it means they can pay a reduced cost. So businesses need to adapt to common practices in order to succeed. This is especially challenging to smaller businesses that may not have immediate access to sophisticated regulatory experts.
Exact: Can you identify one common characteristic that successful global small businesses share?
Jon: Small businesses that have successfully expanded globally all begin with a strong supply chain, operating with strong replenishment software. Companies need to constantly know what they have in their warehouses to ensure they can address customer demand. Businesses must consistently review inventory and orders of their stock when deciding when and if to reorder. The more automated the process can be, the more efficient a business can operate. This is especially critical when factoring in all of the additional considerations small businesses need to address in foreign markets. One less thing to worry about can make all of the difference.
Steve Leavitt, GM of U.S. Cloud Solutions for Exact