The famous late explorer – Christopher Columbus made four voyages across the Atlantic Ocean during his lifetime. He initially left his home country Spain in search of a direct route via sea from Asia to Europe. Colombus never discovered this route (because it did not exist!), however, he stumbled upon a New World, the Americas. Explorers like himself were amongst the brave of their generation: they were often frustrated with the lack of opportunities in their home countries and imagined the unimaginable: new worlds that were full of possibility. Daring path-breakers such as Colombus were able to bring into reality the visions they saw in their mind’s eye, conquering and transforming these new environments, albeit not without controversy!
Many family business founders find themselves on a similar voyage as they journey from generation one to generation two: the business may be in a season of maturity, characterized by declining rate of growth, or may face extraordinarily difficult business conditions in their home country. In spite of these challenges, these curious path-breaking founders envision possibility in their mind’s eye. The courageous amongst the curious will take action to take new territories, pursuing international expansion, and enlarging the empire.
Pursuit of New Frontiers provides an excellent opportunity to diversify the family business, reducing geography risk. In addition, it provides a great opportunity to potentially earn foreign currency, reducing the business’ exposure to the ever-dancing foreign exchange rates domestically. The family may expand the empire thereby enhancing its ability to sustain wealth for an additional generation.
The truth is that explorations are not without significant risk: some explorers succumbed bad weather, starvation or illness. Others did not even survive the journey! In fact, Colombus nearly died during his first journey in 1492: the fleet was attacked and burned and he had to swim to safety to the Portuguese coastline.
Similarly, founders may face obstacles in pursuing international expansion: challenges in raising appropriate, affordable finance and challenges in navigating this unknown terrain – understanding its economy, customs, culture, network and regulations.
However challenges do not deter the bravest: a resourceful and creative group that are solutions-driven, founders often contemplate a range of solutions including:
Foreign debt and equity – through international commercial banks, private funds or development finance institutions;
Stock-market listing to access capital for growth and raise finance for further development;
Partial sale of the business to raise funds to pursue international expansion; and/or
Joint Ventures with a local partner.
