MINIMIZING RISKS IN EUROPEAN BUSINESS DEVELOPMENT
In developing new markets there are several commercial, financial, regulatory and legal risks you should consider. In Europe, The Netherlands is definitely different than France or Spain, and all countries have different laws, cultures, and practices.
Here are 5 tips to minimize risks, while not losing strategic opportunities for the future.
Don’t start a cooperation with a supplier, consultant or distribution partner, with exclusivity or a very long explicit duration, limiting your future possibilities too much. First, give a cooperation a try for a few months, or have a clause in a contract that can let you stop the cooperation if certain results have not been met, like a minimum number of leads, clients or turnover.
Do your homework
That is: research possibilities, culture, competition, and many other aspects before you start to do business. With good prior knowledge, you can circumvent obstacles and minimize risks. In other words, be prepared and understand the market to a sensible level before you act on an impulse.
Get local help of someone you trust
Get coaching help from someone you can trust. In general, that is the business desk of your own embassy, a connection of a connection, a specialized independent consultant or your trade organization. They can help you scan the risks and help you with their experience in the specific market.
Make an assessment of the potential market size
The Dutch market may be small, but affluent. Online per capita sales may be much lower in Spain than in the Nordics. Italians don’t eat as much meat as the Germans. Do your market research before you enter a new market first. Assess the possibilities and get a rough idea about the market potential. The higher the potential, the more willing you probably are to take calculated risks to become successful. the better you will also be at deciding how much to invest and take the risk that the investment will not result in success.
Start with a market you feel most comfortable with
New markets mean many “unknown unknowns” along the way. If you are not yet very experienced in Europe, start with markets you will feel most comfortable with. This often means markets that are physically close to your home market, where you speak the language, that can be easily reachable and/ or may have a culture similar to your own or may even be countries you like to visit and learn about.