When you build a business from scratch, one thing you might do in the process of that is build up debt. Many entrepreneurs pile on massive amounts of debt to get the company off the ground and continue research and development efforts.
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All that debt can result in intense stress on the entrepreneur as they figure out ways to demonstrate to shareholders that they have a plan in place to eliminate it and turn a profit. However, there are ways to get rid of the debt quickly.
How to eliminate debt
One way to reduce or eliminate debt is to license your product into another market. After all, you've spent a lot of money to bring that product to market, so it makes sense to license it to a larger prime market and receive an upfront licensing fee and residual payments through royalties.
Licensing your product to a large prime market will offset your losses without increasing expenses while also entering your product into a fast-growing market that drives revenue through royalties. You should apply for a patent to protect your proprietary invention, including in the markets you license in.
A patent filed in the U.S. doesn't necessarily cover your invention in other countries. However, you can seek patent protection in multiple countries through the Patent Cooperation Treaty, which will help you seek international protection for your inventions.
Expansion abroad
If you started in the U.S. and are now looking at other countries to expand into. Whereas Africa is considered the final frontier to many global entrepreneurs, countries like India, Malaysia and Indonesia represent high GDP growth rates with an impressive jump on the G20 ladder. These countries are examples of where corporations can bet on the future. Then of course, there is China - which is one of the most enviable markets companies seek to break into: this includes big tech companies who dream of having access to the largest population in the world.
Expanding into China
Beyond the U.S, if we focus on the 2nd largest economy in the world - which may well overtake the U.S. in the near future which many U.S. companies have found to be a goldmine for revenue. China is especially interested in technology. They want to adopt new technology and understand they cannot create it all themselves.
If you do decide to target China with your business, there are some things you should know. For example, many business owners who have already expanded into China have found that dealing with the government as a foreign business owner can be tricky.
Additionally, cultural practices differ in various countries, so you should keep that in mind as you work with distributors and other companies that enable you to do business in China. Another factor is wealth distribution. In the U.S., wealth is fairly evenly distributed across the country, but in China, it is localized in certain parts of the country.
Growing without extra capital
One benefit of expanding internationally is the fact that additional manufacturing facilities could be set up without extra capital laid out. You will have to make sure that you have the right agreements in place to protect your IP, and you might have to occasionally send over U.S. resources to assist in several aspects of operations. However, under the right structure and conditions, sales and revenue can grow exponentially without taking on any additional debt.
Internationalization is key
International expansion is an integral part of any company's growth plan. Every entrepreneur revisits the Ansoff matrix from time to time to assess future growth opportunities. In the quadrants of new product new market, or existing product, existing market - that is where it helps that America is back in business when it comes to international trading and global opportunities.
About the Author
As the CEO of Summer Atlantic Capital, Michael Calderone specializes in identifying cutting edge technologies and introducing them into the Chinese market through Joint ventures and or licensing arrangements.
