Creating a Global Footprint

By Features Business on Main

In an increasingly global economy where multinational companies continue to expand their reach, small businesses must find a way to compete in the international arena.

What’s a small business to do? For starters, become a member of an international consortium. These global, industry-specific membership networks of privately owned businesses provide members with representation and market penetration both locally and abroad.

“Robust growth is coming outside the U.S., and these consortia can be a very good way to get to know the players in the new market,” says Dr. Henry Chesbrough, executive director of the Center for Open Innovation at the University of California, Berkeley’s Haas School of Business. “Small businesses do have to make investments to expand overseas, and one of the ways not to [incur the cost] themselves is through these consortiums,” he says.

In addition, they offer companies business sector expertise, local market knowledge, access to partner locations, and the ability to tap into knowledgeable professionals within a specific industry, says Virginia M. Sheridan, president of M. Silver Associates Inc., a New York-based public relations agency, and chair of the Worldcom Public Relations Group (Americas region), of which her firm is a member.

Worldcom is one such consortium — a network of independently owned PR firms with 112 offices in 93 cities in 42 countries. Worldcom firms employ more than 2,000 workers and their 2007 revenue was $227 million — up from $189 million in 2006. Their multiple partner engagements with major businesses and organizations rose to 100 in 2007, compared to 74 in 2005.

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Choosing the right consortium
For Roy W. Hoffman, a partner with J.H. Cohn LLP, an accounting, tax and consulting firm, the decision to join Nexia International — which has member firms in more than 90 countries, with more than 580 offices and 20,000 professionals — was based on several factors. “By providing this type of service capability, we keep our internationally interested clients in the fold,” he says.

Hoffman also sees it as an opportunity to attract inbound business. “In our marketplace, we become the alternative to the Big Four and attract … referrals from internationally involved bankers and lawyers,” he says. The company also joined Nexia International for credibility and referrals. “You cannot offer credible accounting or tax consulting services in this global economy unless you or your international affiliation has the skill set and service proposition to match,” says Hoffman.

To truly benefit from an international consortium, it is essential to do your homework, join the right group and be involved once you join. “Being actively involved in Worldcom has helped me have more business opportunities because I know my partners better,” says Sheridan. “It has also allowed me to engage in interesting activities and grow my circle of influence beyond the U.S.”

Shopping for the right consortium is imperative. “Many consortiums promise a lot and few really deliver,” says Hoffman. The following guidelines can help small-business owners choose correctly and know what to expect once they join a group.

Where to look. Tap into your industry association and groups to inquire about international consortiums. Ask for recommendations and referrals.

What to ask. When performing your due diligence, you’ll want to vet the organization’s management. Sheridan suggests asking the following general questions: What is the basic philosophy of the consortium? What is its size in terms of agencies, cities, countries, continents and staff? What are the practice areas and geography covered by the consortium? How much total revenue does the consortium represent?

She also suggests asking about the following specifics: What is the consortium’s retention and year-over-year growth rate? How is the consortium governed? How is it marketed? What is the size of the board and is there dedicated staff? What are the benefits beyond shared business (e.g., professional development for principals and staff; development of best business practices; access to industry trends, training and information; preferred pricing with vendors)?

What will it cost? As part of joining the membership organization, there is generally a one-time fee and then an annual membership fee of $100 to cover the cost of running the organization. The size of the fees will depend on whether or not the organization is a for-profit or not-for-profit. “There are also costs of travel and entertainment when we visit our fellow member firms,” says Hoffman.

But these dues may well be worth the cost if it means breaking out from America’s boundaries and reaching a broader market of consumers.

Toddi Gutner is an award-winning journalist, writer and editor and currently a contributing writer covering career management issues for The Wall Street Journal.

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