Beermat Club:
Ask Mike
How do we expand internationally?
Q. Image Source is one of the largest independent picture libraries. Half of Image Source's sales are in the US, but it also has a significant business in Germany, France and Japan. It has opened offices in New York and would like to open other bases in Los Angeles and Tokyo in the near future. It would like to develop customer relationships globally, whilst accessing new digital markets. With the company looking to open offices in different corners of the world, how can they keep everyone singing from the same hymn sheet and avoid interoffice rivalry? Also, the business owners would like to develop the Image Source brand, but being a small business, do not have a lot of resources.
A. Too few British companies think about their global potential, according to William Sargent, joint chief executive of Framestore CFC, a small but international London-based visual effects and animation studio.
Mr Sargent, whose company's credits include blockbuster films such as Charlie and the Chocolate Factory and most of the Harry Potter series, is an example of a small British agency doing business with large Hollywood studios. His advice for Duncan Grossart at Image Source is to be patient. "We started as a global business in 1986, but didn't do anything global for five years."
Mr Sargent recently began travelling to India in search of business leads although he does not expect to pick up any work in the country for a few years.
"You have got to invest in your market knowledge a lot before you do anything," he says. "Do things now that won't pay off for a few years. Don't waste time on it, but certainly invest your time in places."
Mr Sargent has resisted opening an office in Los Angeles even though Hollywood accounts for a large chunk of Framestore's revenues.
Instead Mr Sargent made Framestore look like a local LA outfit by flying out for the leading award ceremonies and paying a PR agency to ensure he appeared in the kinds of publications read by film industry insiders.
"I always took a table at the awards and was always at the three or four big parties each year, which was as much as the guys in LA saw each other anyway," he says.
Mike Southon, co-author of start-up guide book The Beermat Entrepreneur, says office expansion should be driven by customers rather market analysis, selling remotely first, then hiring locally if prospects look good.
"Hiring from competitors or from the client themselves can cause problems, so I recommend hiring someone who sold a different product but who has a good relationship with target customers."
Phil Miller, visiting fellow at Cranfield University's School of Management, who created and later sold a graphics and digital printing business in the late 1990s, believes Mr Grossart's growth plans are ambitious.
"You better love travelling because people want to see the top person," he says.
Mr Miller proposes using local partners rather than setting up further offices in the US and Japan. "It would mean that Image Source would have to work with lower margins, but it would be less risky and give them an entrée into the culture."
First published in the Financial Times: 2nd September 2006