The world has grown much smaller in the last two decades thanks to technology advancements. The Disney song “It’s a small world after all” has certainly taken on new meaning in the “Information Age.” People and places that were once so far away and foreign are the tap of a button away today. For small businesses, markets that would have been out of the question in days long past, are suddenly a click away on the World Wide Web. That’s the good news.
However, even though small businesses can now compete in a global marketplace, it brings new risks to their table, including logistical, supplier, volatility, travel, and regulatory risks. As a business owner, you should be aware of these risks so that you can actively seek to minimize them.
Logistical/Supplier Risks
Logistics is so much more than a big-time buzzword used in freight commercials. It’s something businesses deal with, on a small scale, in local markets. But, when you make the move to a more expanded regional market or even the international marketplace, logistics take on a much broader, and more importance for the sake of your business. While logistics seems simply about getting products or goods from point A to point B, it’s a complex web of connectivity that impacts buyers, sellers, supplies, and distribution centers.
What’s a solution to mitigate some of this logistical risk? One of the best ways is to diversify your purchase orders over several different suppliers. To take this risk mitigation even further, choose suppliers in vastly different locations to reduce the risk of weather-related events. Having a backup supplier for “every” supplier is a wise strategy.
Regulatory Risks
Regulation from one nation to the next varies greatly. Different nations have different policies regarding environmental impact, safety requirements, safety, and transactional regulations. If you don’t know the local “foreign” landscape for navigating these regulations, you could find yourself and your business sinking fast in a sea of red tape and bureaucracy. Respecting local customs, attitudes, and procedures to the letter will help international operations go more smoothly and minimize foreign land business practices risks.
Travel Risks
Chances are if you are operating a business internationally, at some point you may need to travel to a foreign land to present a business offering or make a deal. However, terrorism, civil unrest, medical emergencies, kidnapping, and natural disasters are all real risks you can be exposed to when you do. Of course, it’s vital to take precautions, like immunizations, when traveling abroad, but it’s more than a good idea to get travel accident insurance when taking an international trip to mitigate your risks even more.
Volatility Risks
The solution in this case, is one that’s well worth considering – particularly in volatile markets or war torn regions. Consider licensing the right to sell your products to a foreign company rather than selling them yourself. You license your products, trademarks, and brand recognition to companies in other countries who will not need to do the market research, brand building, and development of the products. They get the profits from their sales and you get the profit from the licensing fees. Everyone wins.
Nine times out of ten, in the world of business, roadblocks are merely opportunities in disguise. It’s whether you decide to try to plow through them or make the decision to find creative alternatives that makes all the difference in the world for the future of your business. Don’t forget, however, to take time to talk to your business insurance agent about ways to further by mitigating the risks associated with international operations for your business.
