Start local and start strong

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To succeed in new markets, you need international know-how that aligns with the core common purpose that distinguishes your company from the rest.

Q: What are the biggest differences which you encounter when doing business in varied markets such as Britain and the United States, Japan or Australia?

Understanding the local culture and needs of a community is one of the most important prerequisites for expanding any business abroad.

Yet companies often try to export their way of doing things to countries overseas, and wind up getting into trouble. They introduce their services or products without researching how their business might be received, or whether there is a gap in local markets.

In the 1970s, when our team at Virgin began thinking about taking our record business abroad, I looked for people in the different markets who could lead our efforts on the ground and help to ensure that we were balancing local interests with Virgin’s strong culture. If you want to succeed in different markets, you must be sure that your international know-how aligns with the core common purpose that distinguishes your company from the rest.

A good example of this is Virgin’s expansion in the United States. We’ve been doing business in America for more than 40 years and have relished the country’s open attitude toward businesses that challenge the status quo. In fact, in Virgin’s early days, it was almost easier to gain momentum for some of our projects in the US than in other countries because Americans tend to favour entrepreneurs who are willing to take chances. From the beginning they welcomed us, an upstart from across the pond with a sense of adventure.

In the US, we could sometimes choose to play up our Britishness and style in order to more effectively take on larger domestic companies. That was the case with Virgin Records and Virgin Megastores, enterprises in which our distinctive look, feel and brand of music made us stand apart from the local competition.

American customers took to our different approach, and the news media warmed to our adventurous (and sometimes cheeky) approach to marketing and publicising our businesses. Over the years, we expanded our music and retail operations into the aviation, hotel, and mobile phone industries in the US – and now we’re pioneering commercial space travel. In each case, we studied gaps in the markets and worked out how we could meet those needs. For the most part, we’ve struck the right the balance.

But entrepreneurs have to be prepared for occasional failures. Our reliance on fostering a sense of fun and on entering markets as the plucky new outsider was not always enough. For instance, Virgin Cola’s efforts to take on the might of the two global soft drinks giants, Coca-Cola and Pepsi, both strong US institutions, did not go as planned.

With our ventures in peer-to-peer lending, the comics market and private jet charters, we either did not have the right business model or the scale to succeed in a marketplace as big as the US, so we did the right thing and after giving our ideas a try, closed the businesses down.

However, we found that there are more stigmas around business failure in Britain whereas in the US, failure is considered a rite of passage. American investors often have no second thoughts about backing an entrepreneur who has gone through a tough time. Our experience with Virgin America, based in San Francisco, is a good example of engaging the right strategy. At the beginning, we thought that if we focused on gaining local support in California, and built a broader base and awareness, consumers would consider Virgin America to be the state’s airline. So we brought Virgin to California and blended our long history in aviation with know-how from local executives to create an airline that has won Conde Nast’s “best US airline” award for nine years running.

If you know the local market well, you can fill the gaps local companies have left open. Virgin America’s onboard experience – from the lighting to the entertainment – was designed to shake up the domestic aviation market, which was failing its passengers. It appealed to the aspirational, mobile and tech-savvy market in and around San Francisco and Los Angeles.

The excellent customer service we provided and cheeky tone of our advertising and social media content helped to shape the airline and its culture, which is spreading beyond our San Francisco headquarters to other cities in the US.

Above all, you have to keep on innovating and experimenting, even in those new markets. We have just one of our Virgin Hotels open in Chicago right now, so we’re at the start of the journey. But we know that winning a core loyal following in a country as big as America will give us a strong base with which to grow and expand.

The key is always to start local, and start strong. — Distributed by The New York Times Syndicate

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Sir Richard Charles Nicholas Branson is the founder of the Virgin Group. He became an entrepreneur at 16 and made his first million at the age of 25.