Being a global operation isn’t just for Fortune 500 corporations anymore; it’s an increasingly necessary step for even small- and mid-sized businesses to take.

There’s no getting around it anymore – it really is a small world, after all. Being a global operation isn’t just for Fortune 500 corporations anymore; it’s becoming an increasingly necessary step for even small- and mid-sized businesses to take. Whether that means taking manufacturing overseas, opening sales offices in foreign countries or taking on work from international clients, going global is the way to go.

If you’re the owner of a small- to mid-sized business, you may be considering taking this monumental step yourself. However, it may also be one of the most intimidating decisions you make in your career. Luckily, companies that have already taken the plunge say that the benefits can outweigh substantially the risks, and also say that once you understand a few basic principles, becoming an international player can be a smooth and rewarding experience.

Risk & Reward
Perry Newman is the founder and principal of the Atlantica Group, a consulting firm based on the East Coast that helps smaller businesses take their firms global. He says going global can provide a company with an assortment of rewards.

“There are a number of benefits for the small- to mid-sized business,” he says. “First, of course, is that having a global customer base provides some protection against the domestic business cycle.”

Having customers in more than one country also has the added benefit of making your company more disciplined, Newman says. “Companies that tend to export tend to be more profitable, better organized and more competitive than are companies that are exclusively domestically focused,” he says. “They have to do their homework, they have to gear up to be more responsive and they have to be ready for prime time.”

Of course, no benefits can come without there being an element of risk, and Newman says selling overseas comes with a few. “The principle risk is that you’re dealing with a customer who isn’t right in front of you,” he says. “You can’t know the buyer as well, and out of sight can sometimes be out of mind. It’s not literally working without a net, but you have farther to fall in the export game than if you’re working with a neighbor.”

Do Your Homework
Before taking the plunge into international waters, Newman advises companies to take their time and do their homework. First on the agenda, he says, is to “know thyself.” Companies should take a good, hard look at what they have to offer an international market or client. Studying the markets beforehand is also essential, and Newman says the U.S. State Department provides a great deal of free international market research, including market studies and briefings.

Kobi Karp, president and CEO of Kobi Karp Architecture in Florida, says his company looked within for the cultural and market knowledge it needed to begin doing international work in the 1980s. It began with a number of Caribbean resorts, and now the firm designs projects in the Middle East.

“Most of our success in the international market comes from having people in our offices who are from completely different, radically different backgrounds,” Karp says. “We have had people working in our offices since the late 1980s who are from the Middle East, from Eastern Europe, Russia, South and Central America and the Caribbean.” Although most of his staff was educated in the United States, nearly 80 percent of them were born elsewhere.

“That helped us a lot to understand international thinking again in a local sense, while having the education or experience that we receive here in the United States,” Karp says. “We have folks who are American-educated but were born in the Middle East, so it made our legalities and our language barriers much easier to overcome by having those folks be part of the team.”

Culture Shock
Operating globally means seeing the big picture, but Karp says being able to think locally also makes a big difference, and that means having a great deal of cultural sensitivity. “We have to understand that being local in Mexico is different than being local in Grenada and the British West Indies, and it’s different than being local in Abu Dhabi and Dubai,” he says.

"In order to develop those key relationships that are likely to result in export sales, it’s important to have an understanding of the business and cultural environment of where you intend to sell,” Newman says. Many times, Western management techniques won’t translate with international staff or customers.

Larry Angione is president of Coastline Manufacturing, which manufactures for a variety of industries from three facilities in Tijuana, Mexico. He says he had to adapt to the Mexican way of life and tailor his management style around a culture that is very eager to please. When asked a question, he says, most Mexican workers will tell the boss what they think the boss wants to hear, which can lead to miscommunication and lost production.

“So, I reinforced in them any time they would tell me something a little negative, I would not jump down their throat,” Angione says.

The best way to understand a foreign market is to experience it yourself, Angione says. “Immerse yourself enough in the country to understand the culture and its differences to your home country’s culture,” he says.

Keep an Eye Out
Cultural differences and poor communications are the biggest stumbling blocks to a company successfully establishing international operations, Newman says. “All of [the problems] can be traced to poor communication and the lack of understanding of both parts,” he says.

In many cases, issues such as quality control, absenteeism and the failure to ship products can be traced directly back to an inability of the home office to communicate effectively with the overseas facilities, as well as a general ignorance of what truly goes on there. “The key relationships are between the people responsible for the overseas production and the manager of the foreign facility,” Newman says.

“Really good companies that operate on a global basis will hire what are being called social auditors,” he adds. These auditors are responsible for monitoring working conditions, giving the home office a better idea of what goes on in those facilities and a chance to fix any problems before they lead to dissatisfaction and poor work. However, he says, “There’s no substitute for … the development of a relationship, and that can only be established through meeting face-to-face and regular communications thereafter.”

Tread Lightly
Newman says that compared to the rest of the world, the United States has a very entrepreneurial business community, and is much more willing to take a risk on something like going global than others. Although he admits that there is a place for “serendipity and impulsiveness,” becoming an international company isn’t something one should go into lightly. It may be expensive to perform the due diligence, but the dividends can be more than worth it.

“People don’t like to spend money up front on research and market exploration, and frankly if they did, they would achieve their success sooner and with less cost,” Newman says. “These markets are wide open, and the opportunities are enormous for small- to mid-sized businesses.”