May 20, 2014

Going global is great for younger companies because it helps grow your sales and creates cash flow. But one risk in going global is the inability to control your brand reputation. And brand is what creates value for your line and company financials, your retailers, investors and potential acquirers. Overseas, you may not have a say in which stores your distributor will sell your line to and that is a scary thing. It’s all the risks of managing your brand stateside, but without the advantage of being in that market to immediately know when things go sour. Plus, do you have the ability to market your brand in that foreign market? Often times, large companies have global brand managers to help them navigate the nuances of the local market. Consider the management time that international distribution could require.

As for US retailers, do they care about the sales numbers you are pulling in from your international distributors? For one, it is unlikely your distributor will be able to get you point of sales data. Secondly, even if you did have access to point of sales data, U.S. retailers will not give it much weight. Why? The markets are different: Different consumer, different purchase interests and habits, different set of competitors, and momentum in other countries rarely have any “halo effect” on the US market.

So pursue global cautiously. Wait for the right partner. Ask the right questions (provided in Romy’s blog) and then use the cash from international distributors’ better payment terms to hold you over during the longer payment terms imposed by US retailers. And make sure your company is staffed up to handle a global business.