A trio of Manitoba businesses offers advice on how to grow business internationally
By Jim Timlick
In today’s ultra-competitive business environment, companies need to look beyond their own backyard to achieve significant market growth. “I think that’s just part of the game now,” says James Reimer, general manager of Morden-based Decor Cabinets Ltd.
“If you want to be a growing company, you have to look internationally. It’s not something to be scared of. It’s just a matter of going in with your eyes open and understanding what the risks are and what speed bumps there might be along the way. It’s a necessity to grow.”
MBiz spoke with three Manitoba-based companies about the success they have enjoyed in international markets, how they achieved it, the challenges they faced along the way and what advice they have for other companies looking to do likewise.
Opeing the Door to Expansion
Decor Cabinets was established in 1977 and has grown to become one of the leading manufacturers in Canada for custom cabinetry for kitchens and bathrooms. The company’s initial market was the Canadian Prairies but in 1994 it targeted the American Midwest as part of its first foray into the U.S. marketplace.
Today, about 55 per cent of the company’s sales are to the U.S. and it is currently looking to add Texas, Tennessee and North Carolina to its network of dealers. Chief financial officer Dave Schellenberg says the strength of the American market and the favourable U.S. dollar have been the main drivers of the com-pany’s current expansion south of the border.
Despite its sizeable footprint in the U.S., Schellenberg acknowledges Decor faced some challenges in attempting to crack the American market. First and foremost was dealing with the red tape and U.S. Customs requirements, such as country-of-origin labelling, that are part of doing business in that country.
“From a self-review standpoint, we weren’t quite where we wanted to be in that regard initially,” Schellenberg says.
“We eventually brought on the internal expertise to make sure we were in full compliance with all the regulations out there. It was a bit of a learning curve but we did quite well with bringing in the expertise to get us there.”
General manager James Reimer’s advice to businesses looking to expand into the U.S. market is to do their homework regarding any tariffs or regulatory hurdles that could impact their ability to enter that market. They should also be aware that those hurdles can vary from one industry to another.
“Just because our industry doesn’t face significant regulatory or tariff hurdles doesn’t mean that other industries won’t,” Reimer says. “The food industry is a big one, the transportation industry, the construction industry, especially for anything contract-related, could face different hurdles that we don’t.”
Schellenberg says while it makes sense for many Canadian companies to enter the U.S. market, they should do so cautiously. He warns companies against targeting too many markets simultaneously since that has the potential to create multiple headaches.
“You can kind of go under the radar when you’re small, but when you get a bit bigger you have to start dealing with different state taxes and laws,” he says.
“Each state can operate quite differently with their tax and regulatory structure. For example, some harmonize their policy to the Canada-United States-Mexico Agreement regarding taxation on sales made within the state and some do not. It can get complex if you are a small player wanting to go into multiple markets.”
Schellenberg’s final piece of advice to companies looking to do business in the U.S. or elsewhere is don’t feel like you have to go it alone. He says there are a number of government-sponsored supports available to companies looking to expand into new foreign markets. That includes Export Development Canada, which provides a number of free services such as market research that can help determine where a company’s product might be a good fit.
On the Cutting Edge of International Sales
Steinbach-based Lynn & Liana Designs was launched in 2018 by CEO and co-founder Melissa Funk, her husband Evan and her parents Candice and Mike Cancade. It manufactures and distributes handmade charcuterie boards and serving trays embossed with a special plant-based resin to create a one-of-a-kind design on each board or tray.
When the company started six years ago in Funk’s basement, its primary market was a network of local markets and giftshops. Today, it has its own manufacturing facility in Steinbach that employs a team of 16 people and produces between 300 and 400 pieces a day, which are distributed to a network of dealers in the U.S. and as far away as Europe and the Middle East. They also supply their products to a number of large corporate clients including major sports teams and well-known tech companies.
Lynn & Liana Designs’ big break came in the summer of 2018 when one of its U.S. customers suggested Funk’s family attend the New York Now wholesale tradeshow in New York City to grow its customer base. Her husband, along with her parents, returned home from the show with 40 new customers and “a ton of orders,” she says, laughing.
The company’s expansion into the U.S. happened almost organically and without incident, according to Funk. Expansion into Europe was far more challenging. Most of the company’s European customers wanted their orders to be shipped from within the European Union to avoid any delays or customs issues.
As a result, Funk and her family decided to open a third-party warehouse in the Netherlands where their products are now shipped from to fulfil European orders. Mike Cancade says that still poses a logistical challenge in terms of making sure the warehouse is stocked with six to eight weeks’ worth of product at any given time.
“This has been far more challenging than the U.S.,” Cancade says. Funk’s advice to businesses considering expansion into the U.S. or other international markets is to think big.
“Allow yourself to dream big and push those dreams and see if they’re feasible and if they make sense. Don’t sell yourself short,” she says.
Cancade adds business owners shouldn’t be afraid to venture into foreign markets. “Don’t be scared of borders. They can be a bit of a challenge but don’t be intimidated by them,” he explains.
Cancade also recommends businesses access free services offered by the provincial and federal governments as well as their local chamber of commerce. His company has worked with Canadian trade commissioners in several countries and he says they provided invalu-able support in helping get their products into new markets.
Harvesting Lessons from Around the World
Bushel Plus is a harvest optimization company based in Brandon that was established by founder and CEO Marcel Kringe in 2016. The company has gained attention worldwide for its SmartPan system that is designed to easily and accurately measure grain loss at harvest with any kind of combine and features a unique combination of hardware and software components.
Kringe, who studied agronomy and agricultural engineering, started Bushel Plus as a hobby while working full-time as agronomist for Cargill in Brandon and the Red River Valley. His original motivation was to “make life easier” for some farmer friends by coming up with a fast, safe, simple way to measure grain loss and boost yields.
The system quickly caught on thanks to word of mouth in the farm community, and Kringe was suddenly receiving calls from farmers across Canada and as far away as Australia wanting to know how they could get their hands on the device. That led to him quitting his day job so he could devote himself full-time to his own business.
Eight years later he is now shipping his product to 35 countries including the U.S., Australia, New Zealand, Japan, Germany, England and Chile. And his company has gone from shipping a few individual units at a time to transporting 40-foot Sea Can shipping contain-ers full of product at any given moment.
Kringe says expanding his busi-ness internationally wasn’t originally part of his plan. “It wasn’t really me that decided that. It was the customers that decided that. I got so many calls from the U.S. and Australia I finally said I guess we can ship to the U.S. and Australia,” he says, laughing.
Rules and regulations differ around the world, and it’s important to pay attention to everything from different power plugs in other countries to mandatory certifications of equipment. For example, Kringe says “you can’t sell anything in Europe” without proper CE marking, which indicates that a product has been assessed by a third party to meet EU regulations.
“That is an additional cost I never factored in,” he says.
Another complication with doing business internationally is the myriad shipping rules and regulations that must be followed and how they can vary from country to country — and even from region to region within a country.
“As an entrepreneur starting a business, it’s tough finding the time to read all that information, to understand it,” Kringe says. “The biggest thing is finding someone who can explain all these things to you. You have to navigate that jungle of bureaucracy. When you are by yourself or you have a small team, that can be tough to do.”
Kringe, who was born in Germany, advises companies looking to do business in Europe to carefully select the markets that are a good fit for them. He says companies can waste a lot of time and money trying to enter a market if they aren’t prepared to navigate cultural or language differences.
“Different countries, different cultures. In some countries, people can be very direct and efficient so you’ve got to be prepared that they’re going to tell you how it is. They don’t care about your feelings,” he says. “If you are five minutes late for a meeting, that can be a no-go for them.”
Kringe also encourages entrepreneurs to network with other business owners who already have a presence in some of the markets they are looking to enter and ask for any tips or advice they might have.
“Don’t be afraid to talk to people who have done it before. When I was getting started I went to my buddies, I went to other people and I’d say ‘Hey, who do you use for a lawyer? Who do you use as an accountant?’ That really helped me,” Kringe says.
“Today, Bushel Plus Ltd. has expanded into other products and employs 35 people in three countries, and without this great innovative team that I am fortunate to work with every day, this would not be possible.” ■
