Geographic expansion - how to make it work and not lose your shirt (1/5)

33% of geographic expansions are not in existence two years later and only 31% are profitable. Successful attempts require commitment: profitable expansions take up large amounts of senior management time, on average 28% of it. This sounds like a major investment to make something work, until you realise that unsuccessful expansions took up even more time, on average 39%; i.e. the senior management of these businesses spent 2 days of every weak creating either a loss-making international presence or one that would close within 48 months. (Source: Latitude study of 74 international expansions).

In this five-part series we will look at common characteristics of geographic expansions that have been profitable and sustained. Today's post gives an overview, which we'll cover in more detail in subsequent posts.

Successful expansions followed four stages, which are essentially a series of steps to stack the odds in the company's favour, and are summarised below. There were exceptions, but this is the rule:

1. Prepare the company for geographic expansion

Create a clear replicable business model that can adopted easily by the new country team and can serve cross-geography teams.

Ensure that there is a clear agreed accountability and decision making process between head office and any potential new country or region teams, i.e. who is responsible for what.

Develop a consistent global review and evaluation process with no differences between offices.

2. Select the right country or region to enter

"Follow the money" - set up to serve existing clients with significant budget over a long time frame AND where the market offers long term possibilities, i.e. follow your best long term clients but don't follow them into a backwater.

Choose a location where you have knowledge, experience and contacts.

3. Prepare the market for entry

Warm up the market with existing relationships where head office can give introductions to buyers - never go into any market cold.

Recruit, or ideally transfer, local sales people and nationals who have local budget-holder relationships and know the local language and culture. The ideal person is a country national who has worked for you for years, the next best is recruiting that same national several months in advance of opening in the new country.

4. Commit to the chosen geography

Take one country at a time and make each successful before moving onto the next.

Have conviction - commit to the geography only if you know you want to be there long term. Don't dabble in markets.

Bed in the business by taking time to integrate new recruits properly into the company.


We'll expand on each one of these stages in subsequent posts, and give good and bad examples of each.

To give some perspective on the benefits of investing in such a deliberate approach and following these stages, clients of ours that have taken this approach have on average grown local sales by 25% annually, all have been profitable within 12 months, and new offices have supported international growth by an average 10% annually.


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Please email steve@latitude.co.uk for the full pdf.