While traveling abroad, have you ever stumbled upon a new product or service and thought it could work in Canada? Often these ideas are forgotten, but for many entrepreneurs, these foreign encounters offer a treasure trove of business opportunities that can be successfully launched on home turf.
Derek Beech and his partner Collis Verdicchio are two such entrepreneurs. During a visit to Peru, Mr. Beech discovered super soft Alpaca fiber rugs. Research showed that the rugs were not for sale in North America so the two paired up and, in 2009, Sumaq Rugs was born.
The company, which has eight employees located at offices in both Montreal and Vancouver, specializes in South American rugs using animals raised at high altitude in order to produce resilient fibers. From choosing the right animals to the processing, spinning, dying and weaving, the co-founders are involved in every step of the way.
Sumaq Rugs has had interest in clients from all over North America, including industry veterans who are surprised to discover the unique weave, which is due to the special loom the weavers use.
But it wasn’t all smooth sailing: The first hurdle they encountered was feedback from clients who didn’t hold back when asked for an opinion. “Your stuff feels great but it looks horrible” or “your colours are no good and they don’t meet the trends,” were typical responses.
“Our designs were very geometric, whereas the designs in North America that trend and do well are very symmetrical,” explained Mr. Beech.
It became clear that the South American style rugs were not going to sell without adapting to North American tastes first. “We modernized the whole look so it’s contemporary, but still has a South American feel,” says Mr. Beech, “ It was definitely trial and error.”
The pair learned that they had to adapt quickly. “We had to be ... open to changing and evolving, and use every relationship you have to make that happen,” says Mr. Verdicchio. The two relied on feedback to perfect their luxurious rugs, which feature a rare double-sided fully reversible weave. They also worked with the local Peruvian artisans to update the designs and colours. Doing so required considerable cultural sensitivity given that the weavers had been making rugs the same way for generations.
After years of hard work success is starting to come. Over the last three years they’ve more than doubled their business each year and are turning a profit.
The two are now looking to expand their offerings with a new collection of rugs out of Brazil. “It’s a crazy road and it takes an insane amount of time,” says Mr. Verdicchio “I don’t think many people realize how long it can take to fine tune something to North American tastes.”
But not all imported business ideas need a major overhaul. In fact, sometimes ideas can be implemented with some minor tweaking and a gut feeling that, if it works abroad, it will work at home.
Take Amazing Clubs Canada for example. Micah Johnston came up with the idea for a Canadian based gourmet gift-of-the-month club when he wanted to give a membership as a gift for his grandmother. All of the U.S.-based companies were unwilling to ship to Canada. “I even said I’d pay for extra shipping and it was still no, so I thought we should start our own company,” says Mr. Johnston.
Research showed that the U.S. had three to five large players and around 100 to 1,000 smaller ones involved in the business. In Canada? There was no one.
“We just did the math and even on the low-end we knew we’d have quite a bit of demand,” says Mr. Johnston. He launched Amazing Clubs Canada in 2009 and has averaged 308 per cent year over year growth since then.
There are only a few areas where Mr. Johnston has had to differ his offerings from the American model. The most notable example is also their best seller: beer. Market research showed that the Canadian beer drinker was a little more sophisticated than his American counterparts, which led to the inclusion of a wider, international selection.
As relatively simple as it was for Mr. Johnston to launch his business in Canada, this isn’t always the case.
Educating potential customers about an idea new to Canada, even if it’s wildly successful abroad, can be a formidable challenge for entrepreneurs. Ned Loach and Robert Gontier of 360 Screenings learned this first-hand when they started their immersive cinematic business after experiencing something similar while living in the U.K.
360 Screenings is a complete sensory experience that allows customers to really get into the mindset of the movie. The actual film is kept a secret, but from the moment the audience steps into the event location there are actors, food, props and décor that all provide clues as to what will be shown. Not only are viewers there to watch the film, they also get to experience elements of the film first hand.
“It’s such a brand new concept that it was important for us to get the word out there,” says Mr. Gontier. “It’s an amazing film screening and a theatrical event mashed with a little bit of mystery and the actual movie is a secret. Audiences like to know what they are coming to see so it was a huge learning curve for us to get the trust of the audiences.”
Mr. Gontier and Mr. Loach researched what was going on not only in the UK, but in Australia and New York before launching their first screening. They understood that it was important to make it as appropriate as possible for their Canadian audiences by tailoring the location and interactive portion of the evening for the local crowds.
“We were very careful with the way that we created the interactive elements of the night as we weren’t sure if the people who came to our events would be willing to immerse themselves and really interact with the actors,” says Mr. Loach.
It turns out that the Canadian market is eager for this type of art form, and in two years the couple (in both business and in life), have gone from screenings attracting 100 people to over 500 attendees. “I think that one of the most joyous things about taking inspiration from other people and making it your own is that you can bring it back to your home market and really put your spin on it,” says Mr. Gontier.
Bringing ideas from abroad back to the domestic market is actually quite common, and there are clear benefits to using this approach, according to Louis Hebert, Professor of Strategy at HEC Montréal. “The big advantage of using a product already marketed elsewhere is that it has already been tested,” he says, “however, it may still require local adaptation and you still need to test it domestically.”
To test ideas domestically, firms are encouraged to go directly to the market for feedback. It’s all about quick turnaround, an important element in today’s fast changing marketplace. “What’s key are agility and the capability to produce a new version of a product very quickly. Test the market-get feedback-improve – it’s a continuous loop of improvement until you have a winner,” says Dr. Hebert.
With a non-stop flow of ideas crisscrossing the world, opportunities are there for those willing to take the chance. Mr. Verdicchio sums his advice up nicely: “Entrepreneurs need to have a keen eye for something that’s unique, see past the downsides, envision the end product and keep in mind what the Canadian market accepts.”
Five tips for developing an imported business idea
1. Research if the product is already on the market.
2. Before investing heavily get domestic market feedback.
3. Use personal networks and potential clients for advice.
4. Expect to have to perform some modifications.
5. Be patient and open-minded when dealing with other cultures.