- Posted by Graham Dockrill
- On October 21, 2018
- 0 Comments
- business, entrepreneur, export, growth, sales, strategy, technology
Deciding to take your business global is courageous, challenging and at times can seem outright foolish. I was recently invited by New Zealand Trade and Enterprise (NZTE) to participate in a round table discussion. The panel was formed to challenge the status quo, identify consistent themes and challenges that New Zealand technology companies face when entering a new market.
In a recent report by the Technology Investment Network (TIN), New Zealand’s top 200 technology companies generated $10 billion of annual sales for the first time, with more than $7.3 billion coming from exports. This is an outstanding performance by the technology sector and represents continued growth built on previous years’ successes. Revenues rose 7.9 per cent while exports jumped 8.5 per cent.
“It’s not just a number but a marker that indicates that our technology exporters are well and truly entrenched as a critical part of New Zealand’s economic growth.”
– Greg Shanahan – Technology Investment Network managing director
Citrus Tree works with innovative technology companies. One such company is Whos On Location (WOL), a simple way to manage people (visitors, contractors, and employees) signing into and out of sites. WOL identified Houston, Texas as their base to grow into the USA, and for good reason. The lift in the TIN report was mainly driven by exports to the United States rising almost 19 per cent to more than $2.4 billion. ICT firms achieved the highest growth in North America, increasing revenues by 48 per cent.
Citrus Tree client Fluent IQ is a robust test of real-world English communication designed for the talent industry. FluentIQ helps individuals stand out from the crowd and avoid bias when applying for jobs. It also helps organisations increase diversity and make low-risk hiring decisions. Fluent IQ is a global player with customers and channel partners in New York and Boston.
“The United States market is incredibly important to us. The global staffing market in 2013 was worth an estimated USD$416 billion. The USA accounts for $124 billion, nearly 30% of the global market and is growing at 7% annually. If we want to scale, we need a North American Strategy, Citrus Tree is critical in this path to market.”
– Andy McLeod – Director of Sales FluentIQ
The biotech sector also experienced a strong growth rate of 29 per cent. Sales to Europe were up 3.1 per cent, weighed on by the stronger euro, while sales to Asia grew 5.3 per cent.
The technology sector is now the country’s third largest export earner, behind dairy and tourism. This is based on the performance of New Zealand’s 200 largest technology firms in information and communication technology, high-tech manufacturing, and biotechnology. Technology now generates over 10 per cent of New Zealand’s exports and has created 4352 more new jobs in the past year. New Zealand’s 200 largest technology companies now employ a total of 43,437 full-time staff, or about 1.8 per cent of the workforce, paying an average salary just below $84,000. Software as a Service (Saas) is a very scalable business model and it’s no surprise that companies with revenue of more than $20 million grew at twice the rate of companies below $20 million.
Wellington-based Datacom replaced Fisher & Paykel Appliances to take this year’s number one ranking for the first time with revenues of $1.6 billion. Fisher & Paykel Appliances generated $1.15 billion, while Fisher & Paykel Healthcare was third, with revenues of $894 million.
The Bad (Challenges)
Scaling – many of the firms at the panel discussion expressed concerns and challenges in growing their businesses globally. However, it’s encouraging that New Zealand firms are faced with this challenge as it demonstrates they have a product or service that resonates in their export market. To succeed you must seize the opportunities by growing the international teams and infrastructure.
International Presence – related to the above, participants agreed an international presence was critical to ensure customers received a good level of service. They themselves also need to grow in line with their customers.
Credibility – more time and budget needs to be spent on building company profile and credibility in global markets – building the brand is crucial to building credibility with customers.
Competition – the global market offers significant business opportunities but consequently it is also a highly competitive market. Understanding the competition is imperative to help decide your Unique Selling Point (USP) and product fit.
Channel partners vs system integrators – There are pros and cons of managing a channel partner network versus a systems integrator network which is considered by some a more effective route; integration partners are considered more effective as knowledge, IP and learnings are easily transferred across into software solutions.
Lack of focus – it’s important firms remain highly focussed on their goals to avoid unnecessary distractions (you should learn to say no!).
Bootstrapping vs Investment – The New Zealand business culture is skewed to undertake everything ourselves with an aversion to seek outside help. Engaging with well aligned agencies on building and executing branding/advertising/PR/marketing should be considered an investment, not an expense.
Raising Investment – New Zealand firms are often not prepared to think big and bring in external financiers to accelerate their growth which is perhaps due to a reluctance to give up equity. As the saying goes, it’s better to own a small piece of a large pie than a whole piece of a little pie.
The Ugly (hard work)
Growing an international business takes perseverance, persistence and patience. These three ‘P’s will form the foundation of success and must have equal importance in your alignment of strategy and sales. You need to be well capitalised and focused. See my blog ‘Show Me The Money’ to learn more about entrepreneurial funding.
Over-stretching both physically and financially are two of the biggest downfalls that I have observed working with technology companies going global. Focus on a specific city or state, rather than all of Europe or the USA. I refer to myself as a ‘sniper salesmen’ and for good reason. To penetrate a market and establish a beachhead requires an intensity of focus. This will also require longevity in the market and needs to be measured in years, not months.
Surround yourself with people that have the skills and knowledge to take you global. Sound and stable governance is imperative. Directors and C-Level executives that understand the complexities, nuances (see my business etiquette blog by clicking here) and investment required are essential. Be prepared for the long haul, it will take you five times as long and require five times the investment you budgeted on.
Finally, grow your network and connections as quickly as you can. Like your domestic market, your export market will be built on trust, relationships and working with people they like. It’s never about businesses working with businesses, it’s always about people working with people. Create more relationships and trust than your competitors, the sales and profit will follow.
Graham Dockrill is the founder and CEO of Citrus Tree Consultants. Supporting technology companies to align strategy and sales to reach their global growth ambitions. Graham is serial technology entrepreneur with first hand experience of growing international businesses. See Graham’s LinkedIn profile here.