One of the issues facing U.K. growth businesses as opposed to similar businesses in the U.S.A., is the earlier stage at which they are confronted with the challenges of internationalisation. Scaling a business is always difficult, but because of its domestic market size, companies in the U.S. do not typically have to tackle internationalising their business until later in their existence. Consequently, they have already developed some economies of scale, have typically retained more profits and have a more mature infrastructure before taking their first international steps.
It is much harder to achieve those economies of scale in Europe, when you are faced with much smaller domestic markets. Selling to Europe you and are then faced with a huge diversity of languages, cultures and numerous regulatory, tax and currency issues in order to address a similar population size, despite the E.U.’s single market policy. This works against some of the benefits of scaling the business as onetraditionally replicates overhead to cope.
If you have a product that is capable of digital delivery however then you can expand more quickly internationally than when faced with the logistical challenges of physical product distribution. At Interactive Ideas, a software distributor, we are using London’s strength as an international hub for budget airlines, its multilingual talent pool and technologies like VoIP telephony, to emulate the U.S. growth experience of S.M.E.s
In the digital world, there is no need for ‘bricks and mortar’ around Europe and the additional costs that creates. Out of our London offices, we can have native-speaking talent working any market as seemlessly as if they were locally based. I experienced this in the financial services industry in London 25 years ago, when I provided account coverage to Scandinavian institutions from London, just with the aid of a phone, a fax and some ‘carry on’ baggage! It is amazing how long this has taken to catch on in other industries.
Local market knowledge remains important. However geographic location is becoming increasingly irrelevant. Businesses need to be constantly revising their options on how to think local and act global. I am not sure that ‘The world is flat.’ but Europe is certainly heading that way.