Making the Most of Others’ Expertise: Agents, Brokers, Consultants and Reps

It’s silly to think you can or must do
all your international business
development yourself.

ENTREPRENEURS EXCEL AT plunging into action and getting things done. They are also gifted (or get good at) recognizing when they can’t do something themselves. For example, most know better than to do their own tax accounting or complex contract drafting. The same thinking can apply to setting up and running your business abroad, with added considerations.

Don’t be discouraged or dismayed by the number of areas in which you may find outside help useful in your approach to a new market abroad. Many questions will be answered informally through networking, doing online research, perhaps visits to the target market, and so forth. Our aim here is to give you a heads up on how to identify and then close gaps, with the help of experts you identify as your research progresses.

Where do you need help?

Try this exercise to reveal where you and your team can do things yourselves, and where you may want to bring in experts:

1. Focus first on your business plan for the new territory. Ask yourself if you need any outside expertise in researching your target market so you can build a really solid plan. Can you get the data you need using only your current, local resources and information from the web? If not, make a list of areas where you need external resources to help with the process.

2. Sketch out a flow chart of a typical transaction in your proposed new market’s business, noting for each stage whether you can handle it with your existing resources or where you need to use particular outside expertise (product development, sales and marketing, production, finance, legal matters, etc.).

3. Review the things you think you can handle with existing resources. Can they really stretch to work in the target market? Maybe they can, perhaps with additional personnel, training or supervision. But can they deliver results as fast or as well as people on site in the new locality? You may want to shift some internal tasks to external hands, or at least be open to that possibility. (It’s fair to say that your internal people may gain more knowledge through trial and error, and feel more ownership and engagement in your new market’s business, but that can be slow, expensive education as well.)

Now you have identified the types of expertise you should be looking for to support your expansion. It’s rare that a business can expand internationally without some external support. At a minimum, if your home business is based in a multinational trade zone (like the European Union) and your expansion is within that zone, you probably will need to get briefed on cross-border taxation. Typically, entrepreneurs find they need at least to set up a banking relationship, find a legal advisor, and connect with people who can guide them through the business practices in their target market.

Typical areas where local expertise can help

As you saw from the exercise above, there may be many functions that might benefit from outside help to speed up your learning curve and ramp up business abroad with fewer delays and surprises. As we’ve noted, if your target market is nearby and quite similar culturally, financially and otherwise to your home base, you may find you need very little help. But as distance, both physical and otherwise, increases, the complexity increases even faster. Check your list from the exercise above against this one and add any functions you may have missed:

• Innovation and product development or adaptation

• Contacts and networking

• Customers and prospects

• Sales and marketing

• Language and customs

• Offices, factories and other real estate

• Labor, training, supervision

• Production—buyers, planners, quality and compliance monitors

• Logistics

• Law

• Finance—banks, investors, currency/payments in and out, taxes, subsidies

Who can help you?

If this is your first expansion to a new country, you may feel that there are far too many barriers standing in the way of expanding your business there. But countries and other entities recognize more and more that inward investment benefits their own people and economy, so they offer practical and financial incentives to attract incoming business development.

• Trade associations in your industry can help identify players to partner with (and also, identify competition)

• Global business consultants offer special services to help you gather data and make choices that qualify you for favorable tax, location, labor access and other supports

• Networking can reveal individuals or groups of sales representatives, brokers, consultants, retirees who want to keep active, freelancers and friends of friends who could provide you with important support, direction, and door-opening tips

• Government—both your home government and the target market’s, at various levels—is not only there to regulate but to promote growth

• Special trade zones have experts on staff to help you with planning and making the most of their zone’s special advantages

• Local legal affiliates, corresponding offices or trusted colleagues of your current legal and financial advisors—these contacts can be eyes and ears in the target market and help point you to further connections

• Sales representatives who might in future become external sales re-sources—they can be knowledgeable about local players, practices and trends in your sector (don’t be naïve; test what you hear with other sources)

• Brokers who bring together suppliers and buyers—see more on this below

• Consultants—these can be former players in your sector, or firms set up specifically to guide newcomers through the mazes in the new market

• Contacts—you might come across someone from your sector who is between jobs and can help for a limited period of time, or a fellow entrepreneur who could make a good partner, or a freelancer who’s happy to focus on one limited aspect of your business

Using a broker, agent or project coordinator

Your initial inclination to do things yourself and also to control start-up costs might make you think that paying a broker’s fees to find suppliers, or screen candidates for roles in your new business, or whatever, is money you can save. But particularly when your target market is markedly different from your home base (e.g., your base is in Bolivia and the target is China), using a local broker or overall coordinator can make a lot of sense. For one thing, language and business practice issues you can’t possibly master quickly are easily handled. Your broker can often negotiate better rates or pricing for the services or talent you need, and think up creative solutions to local obstacles to your progress. When problems do arise, a good broker can rely on the trust of the two parties she’s brought together to work out win-win, face-saving solutions. Further, over time, you will learn a lot from a good broker as your business develops.

An agent is another potential external resource to consider if you deal in services or intellectual properties. Like a broker, an agent will charge a fee or a commission for the services provided. A good agent will study your offering and know who to sell it to (or create an acceptable license) for maximum benefit to you. Check who else the agent is currently representing (ask about past clients, and try to find out why they are now past, not current), ask who the agent sells to regularly, and make it clear how finances flow. You might want someone on the ground responsible for collections, from which commissions and taxes are deducted and then the net goes to you. Or you may want to show top-line income from abroad and then pay the commission and taxes directly. In some countries there’s no choice available, but make sure you know the set-up before launching.

Plan for external resource and support costs

Don’t neglect to budget for the costs of these services. They are part of your start-up and running expenses, and usually won’t go away. Used wisely, external resources can give you funding, cut your costs, repay you in trouble and time saved, and free you to focus on the strategy and growth you are hoping to achieve abroad.

K.S.