| Column: A Global Horizon |
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International markets yield growth opportunities for multinational savvy entrepreneurs
by Rohit Arora, co-founder of Biz2Credit
With the United States economy deteriorating and globalization accelerating, international expansion is quickly becoming the number one growth tactic for small businesses. The falling U.S. dollar and economic growth in BRIC (Brazil, Russia, India and China) and surrounding regions opens new expansion opportunities for entrepreneurs. BRIC and other emerging markets have opened up to foreign investments. Now, U.S. businesses owners can borrow from the cheap domestic credit market and invest in the high growth emerging markets abroad. A recent Goldman Sachs Report estimated that BRIC economies will grow by 6 to 7 percent over the next 20 to 30 years, generating double-digit returns. Over the past year we’ve worked on a couple of highly successful global projects. Here’s what we’ve seen: Companies that service the needs of the immigrant community in the U.S. and their domestic market powerfully leverage their business. Western Union is a prime example of a company that used the immigrant market to build their global money transfer business network. They effectively channeled their following in the ethnic communities throughout the U.S. to penetrate Indian and Latin American markets. As a natural progression, they’ve leveraged their presence in these markets over the past two years to expand their local money transfer business. Entrepreneurs based in the U.S. with connections in these countries have tremendous growth potential, particularly in the media sector. By streaming content from foreign and local markets, media giants like Telemundo, Univision and Star have had a death grip on the industry for the past decade. But thanks to the development of new low cost production methods, small business owners will see these markets open up. We’ve already seen some of the small business owners we work with raise debt financing to expand their media channels to target ethnic groups. For those entrepreneurs without any ties abroad, franchise networks provide access to these markets. For example, Subway’s expansion into India and Herbal Life’s expansion into Spanish speaking markets were both successful ventures that brought diversification to franchisees portfolios. By purchasing an existing business or franchise, small business owners avoid entering the market cold and have the ability to utilize the established market presence and intelligence. This can be challenging but rewarding if done properly. To aid entrepreneurs, The U.S. Department of Commerce runs an overseas program for small and medium enterprises to access information on trade delegation and network with local companies. Attending trade shows or outsourcing services can be a great way to meet ethnic entrepreneurs. Market segmentation is a key part of any successful growth strategy. Regardless of a business owner’s nationality, expanding globally requires extensive market knowledge and immense preparation. Those entrepreneurs that can execute a seamless global launch will achieve a more stable and diversified investment position. Rohit has worked for Deloitte Consulting and Silkroute. A former advisor to UNCTAD on small and medium enterprise development in emerging markets, he has gained extensive experience in financial services. Currently, he works with lenders and small business owners, as founder and CEO of Biz2Credit. |