The Human Element of Entrepreneurship
Welcome to the fourth installment of our special globalEDGE Series on Global Entrepreneurship. Today we'll focus on probably the most important aspect of international entrepreneurship, or even business in general: people. The human element of entrepreneurship, as we have discussed previously, is what drives innovation and creation. In this post, we'll specifically discuss how the people you meet and work with are key to expanding your business internationally, how to find those people, and how to keep them interested in working with you.
Step 1: Making Friends - How and When to Network
Starting a small business means making it a huge personal priority - for a while, you may even be the only employee. So how do you find people to work with once you've got an awesome idea? According to MSNBC's Jessica Chen, the answer is simple: network, network, network. "It's been said that there's a time and place for networking -- any time and any place," she writes, "...so no matter what the occasion -- whether you're at the yoga studio, your child's soccer game or at a religious event -- networking is possible."
Taking advantage of any situation to meet new people and making a business relationship isn't easy. For those of us who are too meek to talk to random strangers in an airplane, in a cab, or your kid's little league game, there's always the internet: networking sites such as LinkedIn.com or Konnects.com provide instant connectivity to millions of users all over the world (LinkedIn boasts membership of over 30 million).
Step 2: Following Trade Leads
What do you do once you've made these connections with your future business partners? There are plenty of options to choose from, each depending on what your specific needs are. The first option is to simply incorporate your new associate in your logistics network as a supplier or a customer, a trade lead. This would involve you in two kinds of relationships: business-to-business (aka "B2B"), or a business-to-consumer relationship ("B2C"). For example, if you are in agriculture and grow produce of some kind, you can simply sell your vegetables to your new associate, who may own a restaurant or cafe (B2B). Or, if you ran an independent accounting firm, you would directly provide your end-service to a firm that required advice (B2C). Obviously, these things vary depending on the scope of your business and the type of product/service, and it is possible to have both a B2B and B2C partnerships in the same transaction.
In addition to networking, you can also find trade leads online for products and services. For example, Alibababa is a B2B supplier of consumer goods that sell goods in bulk to other businesses. iTradeFinance, on the other hand, focuses on connecting business with financial support from banks, financers, hedge funds, insurance companies, etc.
Step 3: Effective Partnerships and Joint Ventures
Another option is to find people who will help run your business. There are two more options to consider here: partnerships or joint ventures. The distinction is pretty simple. Partnerships are pretty much what they sound like - recruiting another person with a skill set or assets that complement yours to work with you permanently. Together, you and your business partner will reap the rewards and pay the debts of your business. Joint ventures, on the other hand, isolate your partnership (usually with another company) to a specific project. Toshiba, for example, has formed many joint ventures (also known as "strategic alliances") with many large international companies including General Electric, Apple, Ericson, Sun Microsystems, on various projects. All companies invest capital and, in turn, share profit.
It is important to note that the scope of your business affects the types of partnerships and joint ventures you would want (Toshiba is obviously not a "small business"). But, as we discussed in our previous post on business strategy, the success on your business is the most important thing, even if that means avoiding certain partnership commitments until you are better established.
Step 4: The Art of Negotiation
After you have networked your way into a great business relationship, it's time to make a solid deal. This may seem really simple, but depending on who you are negotiating with, it may not be so cut and dry. Cultural differences are important to understand when knowing how to approach a deal. In Arabian cultures, for example, haggling for prices is considered an important part of getting to know your trade partner. But in many Scandinavian cultures, it is perceived as rude and improper. The point is that you need to understand whether or not the negotiating style you would normally employ at home is appropriate when working with people abroad. globalEDGE is an excellent resource to learn about the "Do's and Don'ts" of international negotiation and business culture generally. Our module on International Negotiations is an excellent start to understanding the dynamics of cultural interaction. Beyond that, when you have chosen your specific target market, the Country Insights section provides very detailed and thorough information on cultural norms and business conduct.
ge Module: International Negotiations – A tutorial outlining the importance of business negotiation, cultural sensitivity in trade negotiations, negotiation styles, and the "do's and don'ts"
ge Module: Using Technology Licensing and Joint Ventures - What are the pros and cons of licensing and joint ventures? This gE original presentation focuses on using these means to develop foreign trade income and expanding internationally.
Business Coach: Joint Ventures - A section of the Business Coach guide focused specifically on joint ventures, inclduing what they are, why they're important to expanding your business internationally, the role of a business architect, how to pick venture partners, human resource issues, and case studies
gE Resource Desk: Trade Leads - Our very own database of different internet based trade leads sites, including Alibaba, iTradeFinance, and dozens of others
Motley Fool: Partnerships in Small Business - An article describing the relationship between business parners or partner companies, and how they can work together to achieve the greatest success
MSNBC: Alternative Places to Network - An article that features tips and examples on how to make networking second nature in any situation
Networking Opportunities/ Events
globalEDGE Network - Connect with over 36,000 registered users on our very own networking tool. Find business partners and industry professionals from all over the world for free!
Industry Profiles: Events - In each industry profile, you will find an events database specific to the industry you are researching.