Making an international success of your business by Liz Love, MD Z-Card Ltd on 05-Mar-2012

It is important to establish a good business and people 'fit' as well as being aware of the business and cultural differences in your different international markets. Liz Love, CEO of ZCard, talks to Roger about how she took her highly-successful business into over 60 countries. She emphasises the critical points to consider when going international and offers some useful tips.

q: What made you want to take your business abroad?

a: The scale of opportunity. The business world, irrespective of cultural differences, is relatively similar and surprisingly accessible. Our products and services are equally viable in any market across the world, so it was an obvious challenge to try to realise the pure scale of opportunity presented by breaking into new markets.

q: Were you nervous about starting to expand the business?

a: never be scared to make mistakes If I were doing it now I think that I would be more nervous – lack of knowledge can be a liberating force! Inevitably, you’re going to have some slip-ups along the way but, as long as you understand your core proposition and are able to articulate it in a way that makes sense to the people you are trying to interest, you will ultimately find the right path. But never be scared to make mistakes.

q: How do you build rapport and trust with people with whom you are hoping to work?

Kitty Kidd with the ZCard CIM Award

a: It is crucial to get out there and meet with potential business partners face to face – particularly when the culture is one which you may be less familiar. We would never have been so successful if we hadn’t got on a plane and gone to visit people, as it allows you to start to understand them and also the market dynamics.

I am a big believer in what I would call 'enlightened self-interest'. The most important thing if you are going into business with someone is that it makes commercial sense to them. It is however also important to find someone who is a good fit with your business in terms of personality and aspiration. However, this personal element is still second to the business fit.

q: We are lucky that international business is frequently transacted in English, but have you experienced times when someone’s command of English has been deceptive?

a: Yes, that’s an important point. It isn’t that the word-for-word translation isn’t good, it is the meaning behind the words which sometimes doesn’t come across. A contact may speak incredibly impressive English, but the way that they do business and what they actually mean by something can sometimes be quite different to the way we would interpret it! It’s crucial to take the time to ensure everyone understands one another.

q: Do you find significant differences in the way business is transacted even within Europe?

a: Most definitely. I love the diversity and, for me, one of the pleasures of running an international network is the fun of dealing with different cultures. But you do always have to understand that you can’t automatically assume people do business in the same way you do!

q: What about the 'nuts and bolts' such as payment terms and HR matters?

a: I think it's very important that you understand exactly what you are getting into and what are the business norms within the country you are about to start working in. Ultimately, you have to go with their business norms and cannot, or should not try to, impose your own.

In terms of HR, northern Europe is much more straightforward as you would expect, whereas the south can be far more challenging. Such things as employee rights and behavioural issues can come as a surprise there. This is where establishing a very strong relationship with your key individuals is important so that they can contribute their local knowledge and manage situations on your behalf.

We also make sure we get good legal advice from the outset. We work with an international legal firm that either has an office or can recommend a local firm is to work with. Although there is a cost involved, it is worth the investment in the long run to do your research and make sure you are well covered legally.

we always make sure that our business partners share our values and ethos

It is also important for cash flow to understand the norm for payment terms, as in some countries, particularly in the South of Europe, these can stretch to 90 or even 120 days. This needs some management if, like us, your key supply source is in northern Europe with payment expectations of 30 days!

q: Are there any other important differences that you experience often?

a: I would just like to mention the issue of Intellectual Property (IP). We decided in the early days that we were going to go international and decided that we would give business partners an exclusivity within their market. This gives your partners the security and confidence to work with you to develop your products.

We therefore patented and trademarked our product range. Of course, it is only good for countries that respect international IP law! In other countries, it is almost like a game with them trying to get around your IP and you have to make a decision on how to address the issue.

There are very different and well-documented views on IP around the world. We always make sure that our business partners share our values and ethos and that helps us maintain our brand reputation and protect it.

q: What business model did you use for local partners?

a: 85% of the time we choose the right partner We have three business models that we use. We provide sales and marketing support from our head office here in London for all our people, regardless of which 'relationship' we have so there are those overheads to keep in mind. We also establish initial relationships for a minimum of two years, enabling people to have the confidence to invest and grow the market. I suppose that 85% of the time we choose the right partner which isn’t bad, particularly as we are in 63 countries at the moment.

With our first model, we own the businesses and employ the individuals. This gives you the greatest opportunity to grow a market as you have a fully-committed team working full time on the business. However, it is a sizeable investment and so the greatest risk in financial terms. You shouldn’t rush into this arrangement in my view and may be well advised to test the market first with a lower risk partnership or sales agency model.

In the second model, we have a sales distributor relationship. In smaller markets where there is insufficient market volume to afford a stand-alone business, we have one company with which we work and make sure that our business is a substantial and very important part of their business. This works well, but you must constantly monitor and add value to the relationship or there is a risk that they will go off and find something else to do!

you should be very mindful of who you are in business with

The third is a licensee model. We use this in, for example, Russia and set them up as a separate business entity. It means that they are 100% responsible for the local operation, but working within our brand. We provide a high level of marketing and sales support for this model.

q: Are there any particular challenges with being international?

a: All international brands are increasingly judged in the media, social media and worldwide, so it is important to have your own standards and procedures in place and stick to them. We always audit our partner businesses against our standards. You should be very mindful of who you are in business with.

q: You mentioned Russia and having a licensee arrangement – was establishing there particularly challenging?

a: In the early stages, we tried to set up our own office, but we soon recognised that it was too challenging with the different ways business works, so we switched to a distributor arrangement.

be flexible and adapt quickly

When we realised some of the challenges, we looked for a partner who would be a good fit so we could offer them a total opportunity. We have done extremely well - we have now been partners for seven years and they have a great understanding of the local market. Undoubtedly, there are certain ways to do business in Russia and we felt it best to have a local person who understands them fully.

The ZCard management team

q: So, it’s about risk management in the end?

a: Yes. You should identify the markets that you can enter, prioritise them and assess the risks, then make a decision on how to allocate your resources – time and money. It is very important that you understand exactly what you are getting into.

Whilst it’s important to have a business plan, don’t let that constrain you in any way. You must always be open to spontaneity and changing as the market demands or when opportunities appear.

it is very important that you understand exactly what you are getting into

q: You mention the business plan – it must be difficult to produce a meaningful plan in many cases?

a: Absolutely! However, when I think of a business plan I think of general strategy and some key milestones over no more than a 3 year period as I think predicting exact financial performance for 5 years plus is pretty nigh meaningless! The starting point is being able to recognise a good business opportunity and to have an understanding of critical break-even points and drive forwards!

While planning is important, you need to maintain flexibility so you can adapt quickly to local market conditions and opportunities.

q: Is the licensee model similar to the one that you use in Asia?

a: Yes, our operation in India, for example, is very similar. We have a licensee arrangement as we do in Russia.

We are based in Mumbai at the moment, but India is so large and diverse, we are looking at expansion to other centres within the country. This is more true in India than in Russia - Moscow is still very much 'the' centre there whereas India has several 'hubs'.

I think that we have only just touched the surface of India at the moment. Business is set up on the basis of English law, so it is a country in which you can do business easily. Really, for us, it has been a matter of prioritisation as we have been focusing on Europe, but now is the right time for us to start to develop our business there.

q: How about China?

a: Finding someone was the biggest challenge. Even getting introductions can be quite difficult initially. There are organisations that can help and it's advisable to seek that help – for any country. Chambers of Commerce and the China Gateway helped us to find people and establish contact.

Risk analysis is critical when looking at China. It is not easy to get money out of the country and good ideas are often 'taken over'. You are very much outside your comfort zone and, of course, language is an issue. Knowing the right people and working with the right organisations are critical.

If you really, really want to develop successful business, you have to do more than just visit and actually commit to spending considerable amounts of time and resources. We are lucky enough to have a good presence there, but there are many well-documented disaster stories of those who have not been so lucky.

Social Media are changing the way companies are presenting themselves these days

q: How does the online world affect the business?

a: We are developing online products too, so it is an increasingly-important medium for us.

For customers, the first port of call is often the web site. We work in a print environment essentially, but, like me, everyone checks you out online first these days.

The online world is so huge and 'democratic', it is important to be aware of its potential. We are on LinkedIn and Facebook and our blog is very important as it gives us a chance to interact with customers easily, build a relationship and answer any queries. Of course, we don't only promote our product, we also talk about the marketing world as a whole. We also send out a monthly newsletter which includes current topical information and we see the hits on our web site peak every time we send an issue out.

Social Media are changing the way companies are presenting themselves these days and are critical in any organisation's communications.

For more information on the Z-Card: www.zcard.co.uk

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