What I learnt from my biggest international business mistake
Wednesday, August 30, 2017/
More than a decade ago, I made an international business mistake, which cost me dearly. I want to tell you about it.
I was initially so embarrassed that I couldn’t talk about how I’d stuffed up. But with hindsight, I realise how much that mistake taught me, and I’d like to share the story with you. I hope that it will help you to avoid your own international business stuff-ups.
After a stint in North Africa in my 20s, I decided to start an import business. I have a soft spot for the beautiful artisanal products made in Morocco; shoes, bags, lamps, inlaid woodwork, pottery and the like — none of which you could buy in Australia back then. My plan was to bring Moroccan products to Australia and sell them there. Simple, right? I speak both French and Arabic and have friends and contacts in Morocco, so it seemed like a logical plan … what could go wrong?
I did a little research, but I had virtually zero business experience and I wasn’t too sure what I needed to cover. So, I decided that the best thing would be to go to Morocco, choose some products, ship them to Australia and then work out how to distribute them. As it turns out, this was my first big mistake.
I got on a plane and off I went. Things went well at first — I amassed a collection of truly beautiful objects from several cities in Morocco, which I was sure people in Australia would love. I opened a bank account in Rabat. I also found a shipping company that was willing to ship my cargo home. So far so good.
But then …
When I got back to Australia things started to go wrong.
I waited and waited and waited, but my shipment did not arrive. I emailed the shipping company. And emailed again. Six weeks later, I finally called them and they told me, over a very crackly phone line that my goods were still sitting in a warehouse, somewhere in Marrakech. I was furious at the misunderstanding, but somehow got it sorted out and the shipment eventually arrived.
And then things got bad…
I had no idea that getting a foreign shipment through Customs in Australia could be such a nightmare. My shipment contained items made from wood, leather and raffia. They’d been packed in newspaper and wooden crates, and it turned out that this broke pretty much every rule imaginable. My shipment had to be x-rayed and fumigated, as well as inspected, all of which cost me a packet.
By the time I’d added up the costs of getting the products to Australia, I realised that I’d probably wiped out any profit that I might make selling them.
The final straw came when I tried to work out how on earth I was going to sell my wares. There was no way I could have afforded a bricks-and-mortar shop and online selling was in its infancy in Australia back then. You couldn’t set up a Shopify site and start selling in 30 minutes the way you can these days and it seemed like an overwhelming task. I didn’t have the wherewithal to find a distributor or an agent to sell the stuff and although I approached a few stores about taking the products off my hands, I had no clue what I was doing and it didn’t end well. I took a stab at selling my beautiful Moroccan items at markets around Sydney, but it was such a grind and sales were so slow that I gave up after a few weeks at it.
My business came to an end before it had event gotten off the ground. I was mortified and out of pocket to the tune of, I don’t know … $30,000? I still blush thinking about it. And not in a good way.
So, what went wrong? Basically, I made the same mistake that lots of people make when they start a business: I started without a strategy, not really realising that unplanned international experiments are often more complex and much riskier than domestic ones. And far more expensive when they go wrong.
Specifically, I made some key strategic and tactical mistakes:
1. I did not have a plan;
2. I did not research the market for the product; I had no idea whether anyone in Australia apart from me wanted what I was importing, or what they would be prepared to pay for the products;
3. I did not work out whether I was able to make a profit selling the items I had imported;
4. I had no idea how much it would cost me to source my products and get them to market;
5. I had no clue about supply chains or any idea of how to find an agent;
6. I did not have a distribution network for selling my product at home.
Fast forward to 2017 and I’ve realised that although my stuff-up was embarrassing, costly and fatal to the business that I wanted to create, it was hardly unique. My business probably would have succeeded if I’d had a strategy and a clear idea of what I needed as I moved forward.
And the story is the same for many people. There are lots of small businesses that either want to grow internationally and never do, or try expanding internationally and fail. That’s because, although it’s tough to admit, when you start an international business for the first time, you have no experience and often no idea what you are doing. Unless your team understands how international business works or you find someone to teach you what to do, your only other option is to learn by trial and error … and that’s a way that is too hard, too expensive and too personally stressful for most people.
The take-away here is this. There are huge opportunities on offer for small companies to grow internationally and there’s never been a better time to “go global”, but it’s much, much easier to do, and far more likely to succeed, if you start with a strategy and a clear idea of what you’ll need as you move forward.