Australian firms set out to crack American market
Software developer Dolphinworxs is about to tread a well-worn path that has brought many an Australian company to fame and fortune. The Melbourne-based business is hoping to crack the US market with its specialised software for small and medium printing companies.
Chief executive Stephanie Gaddin says encouraging market research has the company aiming for a launch date in 12 to 18 months.
"We're expecting growth to be successful and to make some money out of it," she says. "It's exciting and nerve-racking, like standing on top of a roller-coaster, but that comes with the territory."
Ms Gaddin, husband Trentin Barnard and business partner Tobie van Dyk began exploring the US market with a trip to Silicon Valley three months ago. She says she was shocked by the size of the US market, recalling how an American printer with a whopping $18 million turnover described himself as a medium-size business. But she says the printer was still struggling against competition from the likes of Vistaprint, and that is where Dolphinworxs is hoping to fill a gap.
Ms Gaddin says there is a niche in the US market largely ignored by the big players. She hopes her company's cloud desktop printing software will give smaller companies and even individuals a more competitive edge.
Global business manager of commercialisation adviser Pyksis Mark Gustowski says many Australian entrepreneurs chase the US market but few understand how much larger it is.
"The biggest reason companies fail is in recognising the US market is enormous and the Australian market is very small - it represents just 2 per cent of the US market," he says. "They think they can go there and tackle the whole market. But in the US, you have to focus on a really deep vertical or industry sector."
Mr Gustowski says Australian business owners are attracted by the potential revenue jackpot, but underestimate the market differences. "For small business it's a huge market that has a lot of money in it. But success here doesn't equal success there. You can't use the same business model in the US as the one used in Australia."
Glenys Drayton, chief executive of Victorian-based Conni washable incontinence and bedwetting products, attended a trade show in the US and secured deals with retailers Amazon and Walgreens.
"When we pitched to the retailers, I thought we didn't have a chance, but those trade shows really paid off," she says.
Before launching in the US in March last year, Ms Drayton says she spent months researching the market. "I went online and did a lot of research and quickly established there was a massive market with a huge reliance on disposable products."
Conni employs one person in the US but this is set to increase next year when Drayton relocates there.
Mr Gustowski says establishing reliable contacts, particularly distributors, in the US is crucial to success. "It's really important to use trusted distribution networks. If you don't have distribution channels, how are you going to get your product to your customers?"
To make inroads in the US market, entrepreneurs need to rely on a wide network of professionals, including accountants and intellectual property attorneys. Mentors, too, are invaluable. They could be other Australians who have already forged business success in the US, or Americans working in the same industry.
Mr Gustowski says companies must do their homework and prepare a generous budget before testing the US waters. "The worst-case scenario is a company that's gone to the US with no safeguards and has put their Australian operations in jeopardy," he says.
"A well-planned market entry strategy has everything from distribution networks, where the business will be set up, details about mentors and employees. And you need to have a good succession plan in place while the CEO focuses on business on the other side of the world."
Small-business owners may be daunted by the sheer size of the US market, but they have certain advantages over big businesses.
"Small businesses have the ability to be more agile and to move with market need," Mr Gustowski says. "Whereas bigger business can take too long to move, small business can make decisions on the spot and don't have to say, 'I'll get back to you after speaking to the board'."
Like any tough challenge, Mr Gustowski says cracking the US market takes persistence and perseverance. "Very few companies have success, but the ones who do have a strong desire to succeed."