Friday, April 30, 2010

Exporting Need Not Be Scary

Our friend and bright colleague, Joshua Kurlantzick did a solid piece for on Obama's export goals which target small businesses. Here's my favorite snippet from his article:
Unfortunately, the gap between political rhetoric and real-world reality is wide. A mere 4 percent of U.S. small businesses export, according to the Small Business Administration. Indeed, Fortune 500 firms dominate exports, even though they comprise a small percentage of U.S. businesses.
We thank Joshua for reaching out to us and including our remarks in his article. Read it here and get on the export express train!

Thursday, April 29, 2010

Turning a Goal Into a Reality: Increase SMB Exports

John Tozzi, small business reporter for BusinessWeek and U.S. Commerce Secretary Gary Locke brainstorm about how the U.S. government plans to boost small business exports. They address three key issues:

1. What stops most small businesses from exporting?

2. How will the Obama Administration double exports in five years?

3. Some people argue that growing exports depends more on the value of the dollar, and there's not much from a policy point of view that the U.S. can do to boost exports.

Read the entire Q&A here.

Wednesday, April 28, 2010

Worldy Warrillow Wisdom

I was sent a complimentary copy of "Built to Sell: Turn Your Business Into One You Can Sell," and read it one recent rainy Sunday afternoon. I am sure the author, John Warrillow (not pictured), was hoping I'd write a favorable review about it on this blog. His hope has turned into a reality. It's a great little book and I highly recommend it to anyone who runs a business with the desire, at some point, to sell it.

I liked the simplicity of the book so much that when John followed up with me, we decided to conduct a Q&A so readers -- that's you! -- could get a true understanding of what the book's about and why he wrote it in the first place. Here's the result.

LD: Why did you write "Built to Sell?" What's in it for you? What's in it for your reader?

JW: I used to own a market research company with a special niche of studying business owners. One statistic that jumped out at me was that more than half of all business owners want to exit their companies in the next 10 years yet just one percent successfully sell their company each year.

"Built to Sell" is about how to build a valuable company you could sell – whether you want to sell next year, 10 years down the road or would just like to sleep well at night knowing you could sell your business if and when you’re ready.

LD: Does your ideal reader have a particular age or revenue base?

JW: The ideal reader is a business owner whose growth has stalled and they feel trapped by their business. Customers ask to speak to the owner, the owner gets involved in serving customers and then customers have the expectation the owner will serve them the next time. With customers loyal to the owner, they reach a ceiling they can’t bust through.

LD: In addition to a business owner building a business where "they" are the business, what is the second biggest mistake owners make when they are ready to sell their business and why?

JW: Assuming the offer they receive is a binding deal. When an acquirer makes an offer for your business, it is typically a non-binding letter of intent. Many business owners see the offer and spend the money in their mind without realizing that the acquirer can walk away at any time during due diligence with no penalty. Their offer is often discounted during diligence (I spoke with a deal lawyer for an article I was writing and he claimed 100% of the deals he has worked involved a discount in price between the offer letter and the binding agreement) so there is still a lot of work and negotiation to be done between agreeing to a non-binding letter of intent and a binding agreement.

LD: How important is a company's international base of customers when they go to sell their business? For example, say my company sells to more than 27 countries and generates 33% of its overall sales overseas. How attractive is that to a potential buyer? If it depends, how so and why? What is the likelihood then that my company might be acquired by a company located in another country? What's it based on?

JW: I think having international customers will increase your value and you’ll get a better multiple for your business when you sell. The price you get for your business is governed by supply and demand – the more people who want to buy your company, the higher the price you’ll get. With international customers you will be seen as an international company and buyers may come from countries where you have customers.

The weakness of the U.S. dollar in relation to some other world currencies also means you should definitely include countries outside of the U.S. as possible acquirers. For example, two years ago, the Canadian dollar was worth 78 cents to the U.S. dollar. Today the currencies are at par, meaning Canadians are buying more U.S. businesses with their newly strengthened currency.

LD: One of the tips you offer in your book is positioning your service business as a product business by way of a process. Without giving away too much, can you explain how that came about and touch on its advantages?

JW: Acquirers try to quickly put your business into one of two buckets when they are evaluating a possible purchase: They have a “service business bucket” and a “product business bucket.” If you get stuck in the service business bucket, they will reason that the assets are the people, and they will value your business much lower (lower multiple etc.). Whatever money you do get for your business will be tied to a risky 3-5 year “earn out” which involves trading your ownership stake in your company for a glorified job in the acquiring company. An earn out is the enemy for any entrepreneur so you want to do whatever you can to get put in the “product business bucket” and get as much of your cash up front.

LD: What tactical steps should small business owners be taking now to maximize value for when they sell their business? If they have a product or service offering that is not scaleable, would you suggest they scrap it and start over or ...?

JW: Yes. In a recession, it's tempting to offer more stuff to grasp whatever revenue you can, but that revenue comes at an unacceptable cost in the time and money it takes away from what you’re best at. Jim Hindman identified oil changes as the one service of the typical auto service center that could scale beyond him. He started Jiffy Lube and ultimately sold it for $42 million. Arguably now more than ever it is important to be the world’s best at one thing rather than being good at a lot of things.

LD: If there was one strategic thing that a business owner should focus on while building a great, enduring enterprise that can be sold later on for a gazillion dollars, what would it be?

JW: Create a positive cash flow cycle by charging for all or some of your product/service up front. A positive cash flow cycle will allow you to use your customers' money to grow your business without going outside for capital, and when you’re ready to sell you’ll get a higher multiple because the acquirer does not need to commit extra cash to fund the day-to-day operations of your business.

There are lots of examples of companies that have turned their cash flow model from negative to positive. Probably one of the most famous is Dell. At Dell they used to pay for the inventory to build the computers and then advertise to get a customer to call. They had to outlay all of the cash from the inventory and advertising and almost choked on their own growth. Now they take the customers' money and wait to order the parts based on orders they received. They process the customers' credit card when they make the purchase and don’t pay their vendors for 60 or 90 days, allowing them to use their customers' cash to fund the business.

LD: If you had it to do all over again, what would you have done differently in terms of how you built and sold your first company?

JW: I’ve started and exited four companies. My first was a graphic design company where we would do anything for a buck. I had read too many books about how the “customer is king” and heard too many stories like the guy who returns snow tires to Nordstrom’s despite not buying them there (Nordstrom’s doesn’t sell snow tires). I mistakenly believed the key to an enduring business is treating the customer well. Now I think that’s crap. A business owner needs to lead their customers by offering something of value on terms that allow the business owner to scale their company. I wasted a lot of time bending over backwards trying to “serve” customers when I should have picked one service, taught others to execute and built a business. Instead we were just a collection of people, hawking hours.

LD: With the Internet and globalization, how do you see the future when it comes to buying and selling businesses? Will it be easier, more competitive, more complex or all of the above?

JW: It's becoming a lot more fluid and global. In the past, if you wanted to sell your business, you had to rely on a business broker who knew your local geographic market. Now the same broker will list your company for sale on and get access to potential buyers from around the world.

More information can be found here:

Go here for an overview of the book.
Visit Warrillow's blog here.
His column in The Globe & Mail (Canada's national newspaper) here.
And his website:

Posted by: The Global Small Business Blog

Tuesday, April 27, 2010

Be Fearless: Get Out There and Export!

Another great (expanded for print version) article on exporting by John Tozzi for BusinessWeek:

Entrepreneurs' Fears May Jinx Obama's Export Push

Here's an interesting issue posed by a small business owner:
Payment isn't the only challenge. Betsy Shields, founder of Breakaway Technologies based in Park City, Ill., sells used computer equipment abroad. Exports made up about 30% of her total sales of $2.4 million last year. Brisk business in Hong Kong and Singapore, though, dried up in 2007, when computer hardware manufacturers "dumped a lot of brand new product over there at pretty low prices," she says. A recent prospect in Tanzania looked promising, but tariffs made Shields' goods too costly.
We are honored to be included in this story. A hat tip and thank you to John for always reaching out to us whenever a feature has to do with global small business.

Saturday, April 24, 2010

Which Country is Still the Single Largest Source of Global Demand?

United States!
U.S. consumers remain the single largest source of global demand, even if their clout isn't what it once was. J.P. Morgan estimates U.S. consumer spending will account for one-fourth of the global total in 2010, down from about 35% in 2003. Still, the global recession spread to Latin America and Asia when U.S. buyers put away their credit cards.
According to Bob Davis's April 19, 2010 WSJ article, "IMF to Ponder China, Jobs and the U.S.'s Wallet," a number of forecasters are looking for 4% global growth in 2010 and 2011 -- with more than 3% growth in the U.S., somewhat slower in Japan and a double-digit advance in China.

Read more here.

Friday, April 23, 2010

Thomas Friedman: Just do it


In case you missed Friedman's column in the April 17th edition of The New York Times, here's a snippet before I give you the link to the real deal:
EndoStim was inspired by Cuban and Indian immigrants to America and funded by St. Louis venture capitalists. Its prototype is being manufactured in Uruguay, with the help of Israeli engineers and constant feedback from doctors in India and Chile. Oh, and the C.E.O. is a South African, who was educated at the Sorbonne, but lives in Missouri and California, and his head office is basically a BlackBerry. While rescuing General Motors will save some old jobs, only by spawning thousands of EndoStims — thousands — will we generate the kind of good new jobs to keep raising our standard of living.
Read the entire contribution here:

Wednesday, April 21, 2010

Apple Delays Overseas Launch of Its iPad

Think they have all their iDucks in a row? Is the domestic demand so great that it's forcing Apple to slow down their international expansion efforts? Or did Israel's ban wallop them?

Don't know.

Read more here and let us know what you think or what you would do if you were in Apple's shoes.

We welcome your viewpoints.

Tuesday, April 20, 2010

Mister Softee Goes to China

Digital Vision/Thinkstock
This quintessential East coast (established in Philadelphia) institution has forged a remarkable road to China.
It happened almost by accident. An American working as an English teacher was walking around the streets of the city where he taught and noticed a deluge of American fast food franchises, but found nothing resembling the kind of soft-serve ice cream that his college roommate’s family had turned into a multimillion-dollar enterprise.
And that is how Mr. Softee (known in China as Mr. Soft Heart) went to China.
Read all about it here:

Mr. Softee Sets Sights On Asia

Additional related links:

• Mister Softee China website

• Mister Softee China YouTube

Monday, April 19, 2010

Expand Globally and Become a True Multinational

In light of our current economic crisis and recent corporate scandals with a couple of Indian companies, do you think, in general, Indian companies will adapt and emerge globally?

The global economic crisis has slowed India’s growth, but it has not curbed the potential of its strongest homegrown companies. So says Nirmalya Kumar, coauthor of India’s Global Powerhouses: How They Are Taking On the World (with Pradipta K. Mohapatra and Suj Chandrasekhar; Harvard Business School Press, 2009). Kumar believes that many of India’s largest companies are poised to expand into international markets and become true multinationals.
Read all about it here:

strategy + business
For Indian Companies, It's Globalization as Usual

Posted by: The Global Small Business Blog

Saturday, April 17, 2010

Who's Doing More Exporting: SMBs or Large Companies?

Riding off yesterday's post, "The Importance of Small Businesses Exporting," and questioning U.S. Secretary of Commerce Gary Locke's example of Caterpillar Inc. as a successful small business exporter, you must read this article by Emilia Istrate for The New Republic:

We welcome your views.

Posted by: The Global Small Business Blog

Friday, April 16, 2010

The Importance of Small Businesses Exporting

Recap of the latest on why small businesses should export. Looks like we're building momentum and getting a little traction:

Small businesses: Exporting to extend reach (Chicago Tribune)

Key quote: "If small businesses can sell more, they'll produce more, and more people can find work."

Size no barrier to export success (The Australian -- great little article)

Key quote: "Resourcefulness and self-belief are the keys to victory for small businesses in the global market."

Commerce secretary uses Cat subsidiary as export example (Peoria, IL, ... somebody help me out here ... how does Caterpillar (mining truck shown above) represent a good example of a small business?

Key quote: "When traditional drivers of U.S. economic growth like consumer and business spending are facing headwinds, increasing exports must be a central part of America's economic recovery and job creation efforts."

Posted by: The Global Small Business Blog

Thursday, April 15, 2010

The Global Entrepreneurial Edge: Have You Got It?

Wavebreak Media/Thinkstock
Can the new wave of entrepreneurship worldwide be sustained? Read more (however, to read most of the material in its entirety, you have to become a subscriber except for what we preview below -- shame on The Wilson Quarterly for cutting off a great deal of our thirst for knowledge) at the Spring Edition 2010 of The Wilson Quarterly.

Can America Keep It?

For 30 years, the United States has ridden a spectacular wave of technology-based entrepreneurship. Now, with economic lethargy at home and rising challenges abroad, can the wave be sustained?

The Enterprise of Nations

by David S. Landes
Critics have tried to explain away the West’s centuries-long economic domination of the globe; they would do better to study its lessons.
Posted by: The Global Small Business Blog

Wednesday, April 14, 2010

What's a $300 Billion Opportunity?

Fast-food in China and it's expected to increase by 10% this year as the middle class in that country grows.

Read how McDonald's plans to nearly double the number of Golden Arches locations in that highly coveted market.

McDonald's Seeks a Chinese Fortune

Related article here: McDonald's to Double Restaurants in China

Interesting sidenote!

Posted by: The Global Small Business Blog

Tuesday, April 13, 2010

Go Global Or Your Business Will Die

Why do I feel like the whole world is catching up to us on the importance of entrepreneurs and small businesses taking their business global?

Take this special report on America's economy entitled, "Export or Die," published by The Economist (3/31/10). It drives home the point that with demand dwindling or in some instances totally disappearing on a local level, American firms are looking abroad to grow their business.

A quick snippet from the report:
More American companies will have to look abroad. They are the least likely to export out of 15 big economies, according to the National Association of Manufacturers, a trade group. Matthew Slaughter of Dartmouth College notes that only 4% of all American firms and 15% of American manufacturers do any exporting at all. And 80% of America’s total trade is conducted by just 1% of firms that export or import. This does not mean there is something wrong with American firms.
Let me take you back in time (2004), when I wrote a manifesto for -- that has been read more than 16,000 times by folks interested in international trade -- called "Global Guru: Shaking Things Up. Making Things Happen." One of my key quotes within it was:

"In the future, there will be two kinds of enterprises: those that go global and those that die." ~ Laurel Delaney

And then we went on to be interviewed May, 2006 for a feature in Business Strategies Magazine called, "Go Global or Die: Propelling Your Business into the Global Marketplace." This was an exciting moment because that particular edition had a smiling Thomas Friedman on the front cover (the most happening guy on the planet at the time due to his book "The World is Flat"). We were honored to be in such good company!

Once again I pose this question to everyone: Think we're on to something when it comes to taking a business global?

Anyway, let's get back to what we started with, The Economist's fresh, new piece: "Export or Die." Have a look.

It seems that going global is no longer an option but a necessity in our new world of business. Think we're wrong?

We feel so impassioned about this that we are launching a new online gift accessory store which will educate and empower small businesses to expand internationally. Watch for more news shortly but if you want to take a peek (work in progress): The Global Small Business Depot.

Chart credits: ISI Group and Economist Intelligence Unit

Posted by: The Global Small Business Blog

Monday, April 12, 2010

What Is the Life Purpose of a True Social Entrepreneur?

Wavebreak Media/Thinkstock
What interests the social entrepreneur? Take a peek:
... what defines the true social entrepreneur is that he or she simply cannot come to rest in life until his or her vision has become the new pattern society wide. Scholars and artists are satisfied when they express an idea. Professionals are when they serve a client well, and managers are when their organization succeeds. None of this much interests the entrepreneur. The life purpose of the true social entrepreneur is to change the world.
Find out more in a blog post Bill Drayton (full disclosure: Drayton is Chairman and CEO of Ashoka) writes for McKinsey & Company's "What Matters" blog.

Posted by: The Global Small Business Blog

Saturday, April 10, 2010

Borderless Legal World

There's Doctors Without Borders, Teachers Without Borders and Scientists Without Borders, to name just a few of the many borderless initiatives that exist. Why there's even Mothers Without Borders! And of course, there's us: SMBs that operate without borders.

But did you know? There are lawyers that see a borderless world when it comes to offering free, or pro bono, work on global legal troubles. Guess what they are called? Lawyers Without Borders.

Read about this new twist here.

Posted by: The Global Small Business Blog

Friday, April 09, 2010

Wal-Mart Prepares To Take On The World To Rev Up Global Revenue

With international Web sales lagging behind major competitors such as Amazon, Wal-Mart is stepping up its overseas e-commerce expansion, looking for staff, talking to vendors and mapping its approach to what could become the world's biggest Internet initiative.

Rest assure we will be reaching out to them to assist because we know exactly how this should be done.

Snapshot from article:
Wal-Mart already pulls in the most sales of any retailer—$405 billion last year, including about $100 billion from international operations in 14 countries. While the company doesn't disclose Internet sales, indications are the retailer has a lot of growing room. Trade publication Internet Retailer estimated that Wal-Mart's e-commerce sales in 2008, the latest projection available, were $1.74 billion. That compared with No. 1 ranked Inc. at $19.2 billion and No. 2 Staples Inc., at $7.7 billion. Other brick-and-mortar retailers like Office Depot Inc., OfficeMax Inc., Sears Holding Corp. and Best Buy Co. outranked Wal-Mart in Web sales, with Wal-Mart entering the list at No. 13. This was before Wal-Mart said it was making a great push to improve online sales.
Read the entire article here.

Related post: Playing the "Wal-Mart-China" Global Game

Posted by: The Global Small Business Blog

Thursday, April 08, 2010

Explore Australia, Dine with Crocodiles and Learn Aboriginal Culture From the Natives Themselves

Imagine all that and more with Adventures By Disney. ABD takes families (listen up global small business owners ... a vacation may be just what you and your loved ones need!) on guided tours, discovering the world like never before.

Learn more:

Go Global with AAA and Disney

Posted by: The Global Small Business Blog

Wednesday, April 07, 2010

Does Dubai Matter?

John Byrne's last podcast (we're a little late with this news -- sorry) as editor-in-chief at BusinessWeek (Why Dubai Matters). He's off doing his own thing now at C-Change Media.

Congrats to John for finally becoming a true free agent.

Tuesday, April 06, 2010

Volvo Global: Becoming a Competitive Brand in the World

One (wo)man's distractions (Ford's) can be another (wo)man's global treasure (Volvo).

Read about how Ford's sale of Volvo to Zhejiang Geely Holding Group Co. could help the Chinese car maker further its global ambitions while allowing Ford to exit a money-losing business that was a distraction from its core operations.

Go here for the article.

Posted by: The Global Small Business Blog

Monday, April 05, 2010

How to Make Yourself and Your Business a Success Overseas

Listen to the podcast: Mansour Javidan, dean of research at the Thunderbird School of Global Management and co-author of the HBR article "Managing Yourself: Making It Overseas." Copyright 2010 Harvard Business School Publishing.

We've written extensively about what Dr. Javidan refers to as developing a "global mindset" (a major prerequisite to moving ahead in our world) and characteristics needed to achieve success as a leader in the global marketplace. So we are glad to see he's "on it."

Find out if you have a global mindset here (immediate download):

Are You Ready? Take The Global IQ Test To Find Out

And remember, even McDonald's was a small shop at one time. Why just click on the 1940 button and you'll see what I mean!

Posted by: The Global Small Business Blog

Saturday, April 03, 2010

Opening a New Global Frontier: The iPad

Here it comes. Brace yourself for a magical and revolutionary product that will change the way we do things on a global basis in the digital media sphere. It's called the iPad.

And we wrote about it first here (2/1/10). And then Mossberg over at the WSJ referred to it the same way here (4/1/10). Remember this piece too? "Who Has the Global Edge On Wireless Reading Devices?"

Looks like we are on to something. Are you ready?

Posted by: The Global Small Business Blog

Friday, April 02, 2010

A Crackdown by China's Web Censors; But Wait, There's More!

Google's search sites in China abruptly stopped working earlier this week, but the explanation for the outage got a little loosey goosey as the day wore on. The Internet technology powerhouse first blamed itself, noting a technical change, but later reversed course and pointed to the heavy hand of China’s “Great Firewall" -- even as service appeared to be back to normal.

Read Google Runs Into China's "Great Firewall" over at the AllThingsD.

What do you think is really going on?

Then, I read the following and find it terribly unsettling yet fascinating at the same time:

Why Foreigners Can't Win in China

And to top that off, which I didn't think was possible, I catch this disturbing piece related not to Google-China relations but to China, the country itself, that makes me want to never ever write about China again:

China Body-Dumping Case Highlights Clash of Values (I'll say)

All of this gives us an idea of the country and the people we are negotiating with.

Posted by: The Global Small Business Blog

Thursday, April 01, 2010

How to Grow Your Business Globally and Capitalize on the Rebounding Economy

Eyecandy Images/Thinkstock
On February 9th, I served as a panelist for the San Francisco-based SMB Summit, "How Businesses Can Capitalize on the Rebounding Economy," that was hosted by Verio and Inc. Magazine and for private-company CEOs, business owners, and Inc. 500|5000 alumni. It was a great experience to share insights with other leading experts in the SMB sphere, including:
  • Donna Fenn, Moderator, International Author, Contributing Editor/Blogger at Inc. Magazine
  • Mitchell Merrifield, Senior Director of Managed Computing Solutions, Verio, Inc.
  • Brian Burch, Director of SMB Marketing, Americas Region, Personal Systems Group, Hewlett-Packard Company
  • Laurel Delaney, President,
  • Kristin Micalizio, V.P. Strategic Initiatives, Office Depot North America
  • Alex Freemon, Volunteer, Silicon Valley Chapter, SCORE
My focus was on how small to medium-size businesses (SMBs) can grow and capitalize on the rebounding economy by taking their businesses global. Here are some of the questions I addressed, my responses, stories I shared and some other issues that came up as a result of our lively conversation (attendees were magnificent!).


Q: Let’s start by addressing the 800-pound gorilla in the room: Is the economy rebounding? Tell us if you’ve seen some glimmers of recovery; how are you reading the tea leaves?

My response: Not really, although I find it hard to imagine it getting any worse. We are at rock bottom so the only way is up. Nothing, other than the “tech” industry, tells me there’s a rebound. What I mean by that is Cisco (Cisco Chairman and CEO John Chambers indicated, “This is one of the most robust positive turnarounds I’ve seen in my career”), Microsoft, IBM, Apple, NetSuite and Google all reported stunning profit results for the last quarter of 2009, which means SMB owners might be getting more tech savvy in preparation for a slow recovery. But let’s face it, money is not just tight. There is no money for growth unless you are running an established business with a wildly successful track record. That’s scary for people who have insanely great ideas and can’t get them funded. The good news for SMB owners who are tinkering with the notion of taking their business global is that our commerce secretary, Gary Locke, pledged $6 billion a year in export financing for USA small businesses through the Export-Import Bank of the United States.

Aside from all this, the only real sign I am seeing with SMB owners related to recovery is ...
Read the entire piece here.

Posted by: The Global Small Business Blog