Transcript
Speaker: Made on Zencastr. Because Zencastr is the all-in-one podcasting platform that really does make every stage of the podcast production and distribution processes so easy.
Speaker: All the details are in the description. Hello and welcome to the Independent Minds, a series of conversations between Abbasida and people who think outside the box about how work works, with the aim of creating better workplace experiences for everyone.
Speaker: I'm your host Michael Millward, Managing Director of Abbasida. In this episode of the Independent Minds, I am discussing international growth with Nadia Pace, who like me supports businesses to expand outside their national borders.
Speaker: Nadia is based on the beautiful island of Malta. I say beautiful, I only know about it from brochures and television programs. I am yet to visit, but it is a place that I definitely do want to visit. When I do visit Malta, I will take advantage of the trade prices on travel that I can access because I am a member of the Ultimate Travel Club.
Speaker: I have added a link with a built-in discount code to the description so that you can also become a member of the Ultimate Travel Club and travel at trade prices just like I do. Now that I have paid some bills, it is time to make an episode of the Independent Minds that will be well worth listening to, liking, downloading and subscribing to.
Speaker: and probably good enough to share with your friends, family and work colleagues as well. As with every episode of the Independent Minds, we will not be telling you what to think, but we are hoping to make you think.
Speaker: Hello, Nadia. Hello, Michael. Thank you for the invitation. I'm very pleased that you said yes, because there aren't many of people like us who help businesses expand beyond their national borders and grow international businesses. but What got you involved in that particular type of work?
Speaker: Thank you, Michael. So basically, I've been doing this work for about eight years since I set up my own business. And previously, prior to that, even during when I was occupying different executive positions, that was my role in different commercial setups, B2B environments. supporting companies to expand mostly outside of Malta. Because Malta is relatively small, just to put some context, at the moment population-wise, it's half a million.
Speaker: Most companies, even though they merge or acquire one another, then they reach a ceiling. Where do we grow? How do we grow? How do we expand to take benefit of even the economies of scale?
Speaker: So this is very common where certain companies do consider and analyze and study how do we extend and expand our jurisdiction? I've done the same work in in Greece and in Cyprus for a short period of time, again, supporting companies to expand outside of the jurisdiction and at the moment also supporting a few companies in the UK doing the same, expanding outside of the UK. So it will be definitely, it will be interesting to compare a few notes, Michael.
Speaker: Yes, definitely, definitely. One of things that makes the UK and Malta similar is that we're both islands. Correct. When you are on on an island, expanding internationally requires deliberate actions. You can't just, like in Canada and the United States, for example, if you're close to the border, you can cross the border in your car, you can walk across all sorts of different things.
Speaker: it's It's not quite the same as thinking, Yeah, there is water surrounding us and anything that we do beyond our own borders requires some deliberate thoughts and processes and structure to be in place because you've got to cross that water, you've got to either fly or you've got to get onto a boat of some sort to expand internationally.
Speaker: Exactly, exactly. What do you think is the most important place to start in terms of business, thinking about we have reached a point on our island where growth is going to become more difficult, what should they first be thinking about in terms of exp expanding internationally?
Speaker: One of the reasons why ask that is that sometimes I have to deal with organizations that want to expand internationally and they've decided on expanding into a particular market because that's where they look they like to go on holiday.
Speaker: Yes, for a founder, for any business, enjoying going to the to the country where they wish that they do business with and then um ah it's it's important. However, it shouldn't be the deciding factor, definitely. it's it's Usually it stems from there.
Speaker: and Do we we like to visit Malta? Why don't we set up an organization in Malta? Yes, fine. But there are so many other levels and so much more detail to be discovered. as i mentioned In my introduction, I mostly worked with businesses expanding services, so service-based companies, even though at the moment I'm also supporting a company that does lab furnishings as well. So so it's it's more of a product, so to speak. So first and foremost, the the the first question is about where is the market? Where can we offer something
Speaker: obviously, where we can potentially grow. so what's the data? What is the growth of that market? um and how potentially in the future, how can we continue selling our services because everything obviously evolves with the value that we are providing to our customers, to our clients and potential customers in that particular jurisdiction. We need to have a little bit of scientifical scientific data into the future.
Speaker: so that we can understand and make some numbers, right? so Sustainability the the to ensure that whenever we go and wherever we go, it is sustainable for the future. For SMEs, it's even more delicate, I find, Michael, because usually they are in a sweet spot in the sense that they would have the organization, they would have already the management and the management team, But again, regarding investing from a ka capex perspective, they need to understand and be very careful about the investment required. Internationalization can be very costly, especially for small, medium-sized enterprises. So I think we will have time to go through even the strategies that one should consider. But but in a nutshell, so definitely understanding
Speaker: which jurisdiction we're going to go to. Okay. And why is that? What is the data telling us? What are the prospects for the future? What's the current and the future like? and Not only from a market perspective, but also the external environment, the political, the economic stability of that jurisdiction of this country. So so we have to put everything into context. Yes, to understand the wider picture, it may be that people want to buy the product or the service that you're offering, but how does that fit in with the culture, the political side of things, the economic side of things? And so I suppose, as we can say at the moment, we can see what used to be
Speaker: are considered great markets to move into can become very difficult markets when they're subject when when countries are not getting along neighboring countries are not getting along so you end up with a problem uh stability in peace guys country and that's a conversation that we can have on another day what today what i'm sort like most interested in is your experience of actually working with founders who decide that they want us set up a business internationally. So it's like going back to sec to day one of setting up their original business, you were setting up a business internationally.
Speaker: And some of the issues that could happen within end the organization itself as it goes through that that change process. We're no longer a neighborhood business. An organization, founder-led business, I think, goes from being business that first of all sells to friends, family, people that we know, people in our neighborhood, and then it's the next bigger neighborhood, so the next town, the next city, the country, and then we start again in another country. And the
Speaker: The nature of the organization changes at each one of those stages, and it can change an awful lot when you decide to operate especially as well and cause friction within management teams and leadership teams, I think.
Speaker: it's
Speaker: ah For sure, Michael. I think from a founder's perspective, usually founders are the entrepreneurs, right? The ones that they hold, the vision, they do have the vision of growth. They had an idea, which they've started, they've invested a lot of time, a lot of energy. and their life it's actually part of the the meaning and the definition of their their own life so it's extremely it becomes extremely personal and very very emotional so having independent uh consultants advisors sounding boards surrounding to to to put a little bit of a of a health check and with founders to to ask those uncomfortable questions again, but they can only be asked when there's enough trust between the individuals. So so that's that's the first important that's the first important aspect to be considered. One of the things that comes out of that, what you just said, is that previously you were talking about data and strategy and facts.
Speaker: And now we're talking about emotions and the lack of facts. it's It's very much, for a founder, a business can be more than just a business. It is part of their personality and a huge emotional attachment to it.
Speaker: So if they decide they want to do something, you've got to be in the right sort of situation. I'm understanding you correctly, if you are working in founder-managed business,
Speaker: and the founder wants to do something and expand internationally. You've got to think about the emotional as well as the logical. The best solution I found, Michael, is you need to take time. i had to take a lot of time to nurture the relationship, to invest a lot in the relationship and build that trust.
Speaker: ah If that is not the case, it's very difficult to ask the questions. You will just find closed doors with founders. Naturally, because obviously they would, one would really have to be very sensitive in framing, reframing certain questions to make sure that it's, founders won't take it personally because of the emotion that he is involved. I also found that most of the these conversations, again, it's, there is never one best solution because obviously each and every founder is different and each and every context and business is is also different. But having those private conversations, offline conversations, these are not conversations that happen in a boardroom. These are not conversations that happen in formal meetings. These are conversations that happen over a coffee, you know, whilst flying on a plane, having that that chat over lunch in in a very informal and setting almost where where the founder can actually have that outside in perspective and be more open to receive those challenging questions and also perhaps consider a different perspective.
Speaker: Yes. And that is where then we start aligning strategy with emotion, personality, the story with really sustainable growth and sustainable business. So that is that is quite key and crucial, critical for success. And because as you mentioned previously, Michael, done the yeah the founder needs to make sure that whatever has been created and the business that there is currently in place still keeps on going.
Speaker: So even though we're thinking of internationalization, we don't want to jeopardize what is already working in the country that we have been operating. Yes. The manager cannot be in two places at once. And even with all of the greatest technology,
Speaker: There is only so much time in a day. So if you want to be expanding internationally, you've got to think about not just how the international business will operate, but how the original business in your home country will also operate when you are distracted by the international.
Speaker: and It sounds like there's going to be a bit of a restructure going on as well. More jobs, more people, more employees. Yes, completely. um Michael, there again, a few lessons learned with with a few of my clients. The fact that you need people that are focused on the internationalization project.
Speaker: It is very difficult for people to do both, to run the current business and the current operation. or else looking in to expand into a new country. And you were absolutely very much on point when you mentioned, Michael, that it's when you are, as a business, internationalizing your service, your product, you're starting from zero.
Speaker: So it's like already, even though you're established in your own country, in the new country, in the new jurisdiction, you're almost a startup, unless... Unless you join forces with a local partner. That is where the key success factor and the key success area lies. Because each and every jurisdiction, you need the local knowledge.
Speaker: The area from employment laws, how to onboard team members, what is the structure, what are what is the legal jurisdiction of running a business, insurances, what what are the do's and don'ts. So having a trusted local partner can facilitate quite a great deal for each and every organization. Sometimes even the language. And this becomes very complex, especially for companies that are looking in expanding into Europe.
Speaker: Europe can be very lucrative for some businesses, but can be very challenging. And one of the main reasons is also the language. yes Yes. And the is the the language barrier, because, you know, if you're in Portugal, most of the people...
Speaker: speak Portuguese. Yes, they're very fluent in English, but still yeah there are nuances, cultural nuances that you will normally be able to manage those by having local people on the ground. yes So that is is, I emphasize a great deal. Before we find, before organizations allocate, find, identify the right organizations, now whether it is, then there are different forms.
Speaker: in different shapes of partnerships. It can be a loose partnership and to start with, to gain trust, to gain between both parties, or else one can even go into you know a formal JV. Yes, JV being a joint venture.
Speaker: Yes, yes, joint venture or else um going into a merger or acquiring an organization already on the ground. that That expedites the process a great deal because once you go there and the organization is going there on its own, starting everything from scratch, that's very organic and that can take a lot of time. And that's when potentially it can become very costly.
Speaker: So what would you look for in a partner organization for someone who is expanding into us into a country? of What would be the the red flags and the green flags about a potential partner?
Speaker: Mostly, Michael, it's about the reputation of that organization. so nowadays, with all the data which we have available through AI, fortunately for businesses and unfortunately for some, you know, all those that are legit and doing business as they should, it's it's a very big plus because you can find the information easier, you know, and and more easily in and ah with a click of a button almost. So going um so doing that that initial research first.
Speaker: But then the second recommendation is understanding, first of all, where the synergies lie. How are we going to complement each other? Is it a replica of what we're doing? Or do they have strengths that they complement, actually, the strengths of our business?
Speaker: So that is a little bit of an internal check. the people, the team, the structure that they're working for. Then the most important, again, equally important aspect is um chat with their own clients, the clients that there that they are already serving. Because through those conversations, one can gain a lot of information which then is not wouldn't be available online. So the type of service, whether we're aligned in terms of values and business ethics, whether there are any red flags through those conversations, because then the most obvious red flags through an online search can be identified. But then... the non-obvious ones and the less obvious ones can be identified through these conversations. So definitely suppliers, chats, conversations with with suppliers, with stakeholders, different stakeholders that the partner is already dealing with. So that's the due diligence that the business who is expanding or deciding to set up business with, establish business with, and would be recommended to look into. Right.
Speaker: It sounds like it could actually take quite a lot of time to organize. Yes, yes. It's not an overnight type of activity considering setting up a partnership with an organization.
Speaker: Definitely not, definitely not. So internationalization, again, is not, there there are no quick fixes. Unless, as I mentioned, there is an acquisition and there's enough,
Speaker: capital investment that the company can go into because then expedite that the time is reduced significantly. Usually um it's that is not the case.
Speaker: it' it It just takes time to analyze, to assess um before going into because it can be risky. Yes, there's a big risk I should think. what What sort of things have you found about partners who organizations that wanted to form partnerships but you decided no they weren't right what sort of things resulted in you making that decision Mostly, um Michael, it's a very, very good question. Mostly it was about misalignment of cultures, strangely enough. So because the other, again, the the obvious things about, you know, P&L, due diligence on on the financial aspects, team structures and so on and so forth. That is the easy bit. But then when we start the conversation and the negotiation bit, you know, how easy it is, how smooth it is between the two parties, the a ah lot is uncovered during those conversations. And sometimes, yes, during the negotiation phase, both parties realize that this is not not healthy, you know, this is not going to take us anywhere. And this is then when the ball is dropped and and both parties go separate way. It happens.
Speaker: It happens. But ideally, one would avoid that by doing the homework rather the before formalizing and going through all the formalities of signing off agreements by doing the right checks and having those right conversations.
Speaker: One can avoid and and take his advantage of time. Yes. Yes. I see what you mean. And I'm also thinking that whilst... but making the decisions about, yeah, this partnership has the potential to work, this one doesn't have that potential.
Speaker: It must also be a learning experience for both organizations about themselves and perhaps things that they might need to adapt, change in order to make themselves more effective in a partnership relationship or even just basically more attractive to a potential business partner organization.
Speaker: Yes, it's definitely. It could be ah learning in the sense that where the organization goes back to the drawing board and say and considers different different ways and different elements of approaching. ah partnerships in the future. But again, this is is very different, Michael, from between different jurisdictions. So I have companies that are expanding in Africa, and I have companies that are expanding in Asia. It's a completely different scenario. is again because of the culture, because of the timing, because over there then there is currency issues.
Speaker: you know so So again, what worked in in one country doesn't necessarily mean that it's going to work in another country. Definitely. I totally agree with you. Having done the similar sorts of regions of organizations expanding into Asia, organizations expanding into Africa, and you mentioned money and getting your money when you've expanded internationally,
Speaker: you're selling products or services into another market, getting your money can be more difficult than you would think it would be because we're used to dealing with countries where we go on holiday and you go to the bank, the post office, wherever, and you get your foreign currency.
Speaker: When you go beyond the tourist type countries into areas of Africa, and definitely some areas of Asia, you can have a situation where it isn't possible to take your money out of a country as easily as you might think if you were simply going from the UK to America, for example, and you would buy some dollars before you arrive and you'll sell them before you leave.
Speaker: Currencies can be very, very complicated. You also mentioned the time difference and If you're based in the UK, fortunately, we're in the center of the GMT, the time zone from our perspective.
Speaker: Correct. the The working with Asia, there could be seven, eight hours ahead of you. Your working day in the UK can become very long if you're having to compensate for the time differences as well. Little practical things that people just don't seem to think about before they're thinking about lots of making lots of investment The other thing that I've noticed as my focus is on the ah HR and the compliance from an employment perspective, but people will make decisions that they're going to send an employee to a different country and
Speaker: They haven't realized that actually that employee lives with their partner rather than being married to their partner. And they won't be able to go as a couple, as a family to that other country because they're not actually married. And as an HR person, they're kind yeah, you're really excited about taking up this new role. But I've got to tell you, before you can do that, you've got to have a a marriage certificate before your family will be allowed to go with you.
Speaker: And that's a major shift for many people because they're happy as they are. But in order to progress the career, they've got to make a very dramatic and in its own way, very expensive decision about how they're going to live.
Speaker: But people don't think about it. Completely. Totally. Totally, Michael. Simple things, little things, but they make a huge difference. Yes. A huge difference. Yeah. And that's why i think organizations can save an awful lot of money by working with people who have already done that process for other organisations and can foresee the challenges that are going to come up without having to wait for them to appear because something hasn't been killed. You can see what the issues might be even from the first meeting, I think, very often. Correct. Identification of those blind spots, Michael, that might not be very obvious and to to some, but but um again, for a few independent people that are not involved in the day-to-day running of the business, so there is less emotion and more distance. it's easier sometimes to identify those blind spots, those those caveats, those questions that might owe certain risks to organizations. And that's role that's the role of people like ourselves, basically. Very much so.
Speaker: but But today, know, Nadia, I've really enjoyed our conversation. Likewise. Thank you very much. Thank you, Michael. Thank you for the invitation. Thank you. Thank you.
Speaker: I am Michael Millward, the Managing Director of Abusida. and I have been having a conversation with the independent mind, Nadia Pace, specialist in helping businesses expand internationally.
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Speaker: I'm sure you will have enjoyed listening to this episode of the Independent Minds as much as Nadia and I have enjoyed making it. So please give it a like and download it so you can listen anytime, anywhere.
Speaker: To make sure you don't miss out on future episodes, please subscribe. You'll probably also want to tell your friends, family and work colleagues about the episode as well. Remember, the aim of all the podcasts produced by Abbasida is not to tell you what to think, but we do hope to have made you think.
Speaker: Until the next episode of The Independent Minds, thank you for listening and goodbye.
