Roger Branch

Expanding a business to the US during difficult economic times is like a trek to the Himalayas. It can be done, and it can be rewarding, but you had better be fit, plan well, and realise the air is much thinner at altitude.

To complete the metaphor, fitness relates to the strength of the business’s balance sheet, to plan well equates to the ability to adjust your thinking to new market conditions, and thin air equates to the fact that cash is much harder to come by in a recessionary global credit crunch.

Businesses need to consider a number of factors when expanding offshore, especially to the US, New Zealand’s second-largest trading partner. According to Mike Hearn, executive director of the American Chamber of Commerce, you have to realise that you don’t know what you don’t know.

“You need a presence in the US,” says Mr. Hearn, “but

where you locate should be based not only on where your customers are, but on tax and labor law implications, which vary from state to state.”

Hiring decisions are also crucial, he says. “You need to hire Americans and adjust your expectations of how much to pay. Paying for performance is a given and some form of equity becomes almost necessary to hire top talent into key roles.”

Miles Valentine, chief executive of Zeacom, a global communication technology company based in New Zealand, knows the US

expansion issues first hand. Zeacom now has 35 US-based employees.

“First, the chief executive has to relocate to the US,” Mr. Valentine says. “US buyers want to see that you’re committed to the market. He also recommends psychometric testing and deep reference checking that goes beyond the given referees.

“Also, recognise that Americans like working for a New Zealand company,” he adds. “We New Zealanders tend to be less formal and hierarchical. Opening a beer at work at 5pm on a Friday surprises our American friends in a positive way.”

These are not the best of times economically, but the conventional wisdom applies even more. It boils down to two things – cash and people. Executives need to reassess the assumptions of the length of a sales cycle, especially in a down market.

Companies with a three-month “normal” sale cycle may need to budget for six or even more. Additionally, closing the sale is not the same as getting paid, and some customers will turn into slow or even no-payers out of self preservation. Smart companies expanding into a down economy will plan

ahead for a higher burn rate before expecting a return. Cash is king.

Making the right hiring decisions is arguably the number one factor in US success. While hiring top talent, or “A+ players,” is always the best strategy, the problem is that B+ players can look like A+ unless you have a good benchmark. While hiring B+ players won’t be an obviously bad choice, it is a deceptively bad move for a business’s long term health. The problems will be chronic,

not acute, and therefore harder to spot.

In perilous times, it is more important than ever to steer a course between fear and rashness. While prudence and financial discipline are called for, so is a measure of boldness. There will be opportunities to capitalise on competitor’s weaknesses, which may surface as opportunities to gain market share from them, or to make acquisitions at attractive or even fire sale prices. Once again, cash is king.

Re t u r n i n g t o t h e Himalayan trek metaphor, it is also useful to have an experienced guide.

The NZTE Beachheads programme and a number of qualified commercial firms can provide the best practices and lessons learned from experience.

Roger Branch is associate director of Kinross Partners, an executive search firm specialising in building management teams for growth companies in NZ and their US operations. He is also on the Council of the NZ Angels Association and teaches short courses at the University of Auckland Business School.

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PEOPLE IN BUSINESS

US bound: expanding into thin air

APPOINTMENTS

Plan-b, a business continuity company providing contingency services to s o m e o f New Zea-land’s major organisa-tions, has appointed Mark Hardie general manager of sales and marketing. He has a long history in the IT servic-es sector in New Zealand, including roles as the head of sales and marketing of Gen-I, then Optimation. Steve Hughson has been appointed business develop-ment man-ager for the

Waikato, based at Plan-b’s new Business Recovery Centre in Hamilton. He has over 15 years experience in sales both in Wellington where he worked for IBM, Computerland and Gen-i, and in Hamilton where again he worked for Gen-i.

Sherridan Cook has been elected a partner of national law firm Buddle Findlay. An expert in industrial relations, employment contracts, remuneration and holidays, as well as dispute resolution and health and safety, he recently joined the firm’s Auckland office. He consulted to the government

advisory group on the Holi-days Act 2003, and is a mem-ber of the NZ Society of Construction Law.

Andrew Mayne has been promoted to associate status at Col-liers Interna-t iona l i n Welling-ton. He joined Col-liers in Feb-ruary 2005 when he returned from the London property market. He has been instru-mental in some of the largest industrial transactions in the Wellington region in recent times.

/ The National Business Review November 28, 2008

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The chief executive needs to re-locate to the US to get things moving

Appointment notices should be sent to appointments@nbr.co.nz with a high-resolution jpeg image. Hard copy can be sent to PO Box 1734, Auckland

Roger Branch

HAVE GREAT EXPECTATIONS

The expectation for many small and medium sized businesses is to grow successfully. Contractors can helpachieve that goal by providing experience and skills without a high ongoing cost. To get the best contractorsfor your business, no matter what its size, phone Carmen Bailey, Jane Wimsett, Nick Logan, Kelly George,Johnny Bass or Elizabeth Amery 09 359 9033. They put the right contractors, in the right place, at the right time.