Raymond A. Hopkins's Blog
April 26, 2023
Understanding What People Buy
As an entrepreneur in your domestic marketplace, you’re selling products or services that solve a customer’s problem while simultaneously bolstering your bottom line, different goals but each meets the “business” needs of both the customer and seller.
After the purchase/sale, your product and service solution to the customer’s problem produces a better living standard or business outcome for both the customer and your business.
The problem with selling any product or service solution sold domestically, for that matter, internationally, is that your customer can’t experience your solution until he buys and uses the product or service you are selling. As a result, the customer potentially slows your sales cycle and you risk losing the sale.
So, how can we create a system that will achieve the same level of bottom-line results as those world-class international entrepreneurs you so often read about?
The answer is taking the initiative. International sales are all about taking international prospects through key decision points in a buying cycle suited to the norms and values of a different culture. Let’s refresh our understanding of the customer buying cycle.
Your Customer’s Buying Cycle (Your Sales Cycle)
The customer’s buying cycle, your sales cycle, is a process every consumer completes as he becomes aware, educates himself on solutions, and moves toward finalizing his purchase decision. After making that decision he confronts the question of repeating his purchase. Realize the online buying cycle is no different except for its occurrence over the Internet.
The cycle consists of five stages:
1) Awareness or realizing a problem requires a solution, the first decision. Absent this decision a prospective will make no purchase and your company will make no sale. With the right marketing strategies and campaigns, you and your competitor companies may reach the customers you target.
2) Consideration – the prospective customer considers his options after obtaining detailed information that products and services are available to solve his problem.
3) Intent –the stage in which the prospective customer determines the best solution for his needs. After reviewing product/service ratings and assessing affordability, the prospective customer decides to buy.
4) Purchase – the prospective customer buys the best solution that meets his needs, and
5) Repurchase of the product or service. The prospective customer, after satisfying himself with the use of the product or service, determines repurchase and continued use of the solution is worthwhile.
Most entrepreneurs clinging to their domestic markets don’t consider sales opportunities beyond their country’s borders. They and you don’t have to be world-class international entrepreneurs immediately. Your becoming world-class begins with the first step, a sound financial analysis of the start-up costs of your entry into an international market.
What to Take into Account
Most entrepreneurs open to entering international markets fail the due-diligence phase. Due diligence, specifically your financial analysis, needs to gauge returns on minimal risk where the cost of market entry fits the target budget without being so rigid that responding to market changes becomes difficult if not impossible.
This means understanding the target market’s unique requirements as well as the form of market entry, from tax laws to employment contracts to local business customs to truly understand the cost ramifications. To do otherwise makes the task of accurately estimating the cost of establishing and operating in a new market impossible. There is no substitute for a comprehensive cost-benefit analysis.
Most companies approaching expansion presume their target international market operates the same way their domestic marketplace operates. No problem. Right? They typically develop a list of common domestic expenses that might include employer social security contributions, corporate income taxes, and office operating expenses, and then make adjustments to account for target country tax laws, real estate costs, and other expenses. The reality is that each country, operates according to its own set of complex, constantly changing laws governing how a business operates. If you are unfamiliar with a target country’s business laws, customs, and practices you will expose your business to significant hidden costs and risks. To offset that risk you might consider partnering with a local institution and/or retaining outside expertise.
If you are going “international,” make sure you invest sufficient time and effort in identifying all the costs of operating overseas.
After the purchase/sale, your product and service solution to the customer’s problem produces a better living standard or business outcome for both the customer and your business.
The problem with selling any product or service solution sold domestically, for that matter, internationally, is that your customer can’t experience your solution until he buys and uses the product or service you are selling. As a result, the customer potentially slows your sales cycle and you risk losing the sale.
So, how can we create a system that will achieve the same level of bottom-line results as those world-class international entrepreneurs you so often read about?
The answer is taking the initiative. International sales are all about taking international prospects through key decision points in a buying cycle suited to the norms and values of a different culture. Let’s refresh our understanding of the customer buying cycle.
Your Customer’s Buying Cycle (Your Sales Cycle)
The customer’s buying cycle, your sales cycle, is a process every consumer completes as he becomes aware, educates himself on solutions, and moves toward finalizing his purchase decision. After making that decision he confronts the question of repeating his purchase. Realize the online buying cycle is no different except for its occurrence over the Internet.
The cycle consists of five stages:
1) Awareness or realizing a problem requires a solution, the first decision. Absent this decision a prospective will make no purchase and your company will make no sale. With the right marketing strategies and campaigns, you and your competitor companies may reach the customers you target.
2) Consideration – the prospective customer considers his options after obtaining detailed information that products and services are available to solve his problem.
3) Intent –the stage in which the prospective customer determines the best solution for his needs. After reviewing product/service ratings and assessing affordability, the prospective customer decides to buy.
4) Purchase – the prospective customer buys the best solution that meets his needs, and
5) Repurchase of the product or service. The prospective customer, after satisfying himself with the use of the product or service, determines repurchase and continued use of the solution is worthwhile.
Most entrepreneurs clinging to their domestic markets don’t consider sales opportunities beyond their country’s borders. They and you don’t have to be world-class international entrepreneurs immediately. Your becoming world-class begins with the first step, a sound financial analysis of the start-up costs of your entry into an international market.
What to Take into Account
Most entrepreneurs open to entering international markets fail the due-diligence phase. Due diligence, specifically your financial analysis, needs to gauge returns on minimal risk where the cost of market entry fits the target budget without being so rigid that responding to market changes becomes difficult if not impossible.
This means understanding the target market’s unique requirements as well as the form of market entry, from tax laws to employment contracts to local business customs to truly understand the cost ramifications. To do otherwise makes the task of accurately estimating the cost of establishing and operating in a new market impossible. There is no substitute for a comprehensive cost-benefit analysis.
Most companies approaching expansion presume their target international market operates the same way their domestic marketplace operates. No problem. Right? They typically develop a list of common domestic expenses that might include employer social security contributions, corporate income taxes, and office operating expenses, and then make adjustments to account for target country tax laws, real estate costs, and other expenses. The reality is that each country, operates according to its own set of complex, constantly changing laws governing how a business operates. If you are unfamiliar with a target country’s business laws, customs, and practices you will expose your business to significant hidden costs and risks. To offset that risk you might consider partnering with a local institution and/or retaining outside expertise.
If you are going “international,” make sure you invest sufficient time and effort in identifying all the costs of operating overseas.
October 16, 2017
Why Aren't American Firms Growing Global Markets?
Does growing global markets sound intimidating and possibly overwhelming? It does not have to be. Global market expansion offers many opportunities for companies large and small to boost their revenues and profits by introducing new, innovative products and services to the global marketplace. To get started, let’s back up a bit and take a look at how well U.S. small- and medium-sized enterprises (SMEs: those organizations employing fewer than 500 employees) have done growing their global markets. According to the U.S. Small Business administration, small- to medium-sized businesses produce nearly 50% of the non-farm GDP and account for 60% of the net new jobs. As of May 2017, SMEs are still optimistic about their economic prospects, but they have yet to see the impressive levels of hiring and spending anticipated in welcoming a Republican administration to the nation’s capital.[1] Hmm… Is that how you are finding the U.S. business environment in 2017?
How about comparing the characteristics and performance of U.S. SMEs with the export activities, barriers, and opportunities of their European Union (EU) counterparts?[2] As of January 2010 when the U.S. government last addressed this topic, U.S. SMEs accounted for the most of firms that produced about half the gross domestic product generated by non-agricultural sectors within the U.S. economy accounting for about 30 percent of merchandise exports between 1997 and 2007. Unlike larger firms, U.S. SMEs tended to aim their merchandise exports – labor intensive items such as wood products, apparel and accessories—at affluent markets such as Hong Kong, Israel, and Switzerland. Available services export data suggest the United Kingdom and Canada are two important destinations for affiliates in two services industries –– finance and insurance and professional, scientific, and technical services. If we compare the U.S. and European markets, we see the U.S. market is more integrated than Europe’s, and U.S. firms that export tend to be larger than their counterparts in the EU. This explains why estimated exports by manufacturing SME firms in the EU in 2005 amounted to about $231–$275 billion (about 31% of total EU exports), compared to the $65 billion in exports (about 13% of total U.S. exports) made by similarly defined U.S. SMEs.
By mid-2010 the U.S. government determined that it provided a wider range of support for pre-export financing and short-term credit than is generally available in EU countries. However, SMEs in the EU appeared to have access to more sources and a higher level of help in foreign markets as well as more financial support for participating in international trade fairs than U.S. SMEs did. By November 2010 the government reported U.S. exporting SMEs outperformed their non-exporting SME counterparts by several measures. Whether they dealt in services or manufacturing, exporting, U.S. SMEs showed higher total revenues, faster total revenue growth, and higher labor productivity than their non-exporting U.S. SME counterparts. These firms served foreign clients primarily through direct exports. SMEs that exported services, a very small share of all U.S. services SMEs, were more export-intensive than large services exporters. U.S. multinational companies that export, which is even less common, were nearly three times more export-intensive than large U.S. multinationals. SMEs also participated in the export economy by exporting indirectly through wholesalers and other intermediaries or selling intermediate goods or services domestically to large and small firms that used these intermediate inputs to produce exported goods or services. Paging forward to April 2017, the U.S. Government Census Bureau[3] reported a total of 294.8 thousand firms (106,977 - manufacturers, 125,245 - wholesalers, and 155,175 - other companies) linked to U.S. export transactions in 2015. The exporting efforts of these firms accounted for $1,335 billion, a staggering small export volume that should be millions greater. 228,621 companies of the total are identified as small and medium-sized exporters.
In contrast, long-term exporters (those exporting more than five years) are self-assured, adaptable and resilient. Having developed a global awareness of their brands and sound exporting plans, they now sell to a more diverse group of customers using social media as the source of most of their sales leads. You and your firm could be among them! In addition, by establishing channels of distribution in foreign markets suited to their products before their competitors do, they will have increased their global competitive advantage, an advantage you and your team should seek. So why don’t more American firms go global by growing their global markets?
[1] Dunkelberg, W.C. and H. Wade (February 2017) NFIB Small Business Economic Trends Report No. ISBS #0940791‐24-2. National Federation of Independent Business Retrieved from: http://www.nfib.com/assets/SBET-Feb-2...
[2] U.S. International Trade Commission (January 2010) Small and Medium- Sized Enterprises: Overview of Participation in U.S. Exports. Investigation No. 332-508 USITC Publication 4125.
U.S. International Trade Commission (July 2010) Small and Medium- Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms. Investigation No. 332-509 USITC Publication 4169.
U.S. International Trade Commission (November 2010) Small and Medium- Sized Enterprises: Characteristics and Performance. Investigation No. 332-510 USITC Publication 4189.
[3] U.S. Census Bureau News. (4/4/17) CB17-53. A Profile of U.S. Exporting Companies, 2014 -2015. Retrieved from: https://www.census.gov/foreign-trade/...
How about comparing the characteristics and performance of U.S. SMEs with the export activities, barriers, and opportunities of their European Union (EU) counterparts?[2] As of January 2010 when the U.S. government last addressed this topic, U.S. SMEs accounted for the most of firms that produced about half the gross domestic product generated by non-agricultural sectors within the U.S. economy accounting for about 30 percent of merchandise exports between 1997 and 2007. Unlike larger firms, U.S. SMEs tended to aim their merchandise exports – labor intensive items such as wood products, apparel and accessories—at affluent markets such as Hong Kong, Israel, and Switzerland. Available services export data suggest the United Kingdom and Canada are two important destinations for affiliates in two services industries –– finance and insurance and professional, scientific, and technical services. If we compare the U.S. and European markets, we see the U.S. market is more integrated than Europe’s, and U.S. firms that export tend to be larger than their counterparts in the EU. This explains why estimated exports by manufacturing SME firms in the EU in 2005 amounted to about $231–$275 billion (about 31% of total EU exports), compared to the $65 billion in exports (about 13% of total U.S. exports) made by similarly defined U.S. SMEs.
By mid-2010 the U.S. government determined that it provided a wider range of support for pre-export financing and short-term credit than is generally available in EU countries. However, SMEs in the EU appeared to have access to more sources and a higher level of help in foreign markets as well as more financial support for participating in international trade fairs than U.S. SMEs did. By November 2010 the government reported U.S. exporting SMEs outperformed their non-exporting SME counterparts by several measures. Whether they dealt in services or manufacturing, exporting, U.S. SMEs showed higher total revenues, faster total revenue growth, and higher labor productivity than their non-exporting U.S. SME counterparts. These firms served foreign clients primarily through direct exports. SMEs that exported services, a very small share of all U.S. services SMEs, were more export-intensive than large services exporters. U.S. multinational companies that export, which is even less common, were nearly three times more export-intensive than large U.S. multinationals. SMEs also participated in the export economy by exporting indirectly through wholesalers and other intermediaries or selling intermediate goods or services domestically to large and small firms that used these intermediate inputs to produce exported goods or services. Paging forward to April 2017, the U.S. Government Census Bureau[3] reported a total of 294.8 thousand firms (106,977 - manufacturers, 125,245 - wholesalers, and 155,175 - other companies) linked to U.S. export transactions in 2015. The exporting efforts of these firms accounted for $1,335 billion, a staggering small export volume that should be millions greater. 228,621 companies of the total are identified as small and medium-sized exporters.
In contrast, long-term exporters (those exporting more than five years) are self-assured, adaptable and resilient. Having developed a global awareness of their brands and sound exporting plans, they now sell to a more diverse group of customers using social media as the source of most of their sales leads. You and your firm could be among them! In addition, by establishing channels of distribution in foreign markets suited to their products before their competitors do, they will have increased their global competitive advantage, an advantage you and your team should seek. So why don’t more American firms go global by growing their global markets?
[1] Dunkelberg, W.C. and H. Wade (February 2017) NFIB Small Business Economic Trends Report No. ISBS #0940791‐24-2. National Federation of Independent Business Retrieved from: http://www.nfib.com/assets/SBET-Feb-2...
[2] U.S. International Trade Commission (January 2010) Small and Medium- Sized Enterprises: Overview of Participation in U.S. Exports. Investigation No. 332-508 USITC Publication 4125.
U.S. International Trade Commission (July 2010) Small and Medium- Sized Enterprises: U.S. and EU Export Activities, and Barriers and Opportunities Experienced by U.S. Firms. Investigation No. 332-509 USITC Publication 4169.
U.S. International Trade Commission (November 2010) Small and Medium- Sized Enterprises: Characteristics and Performance. Investigation No. 332-510 USITC Publication 4189.
[3] U.S. Census Bureau News. (4/4/17) CB17-53. A Profile of U.S. Exporting Companies, 2014 -2015. Retrieved from: https://www.census.gov/foreign-trade/...
