Chain Reaction

Do you have what it takes to run a string of stores Siberia?
Magazine Contributor
3 min read

This story appears in the April 1998 issue of Entrepreneur. Subscribe »

Picture this: A Minneapolis native moves to Siberia to open a chain of restaurants based on an American staple hardly anyone there has ever heard of. Sound outlandish?

Not to 32-year-old Eric Shogren. In the summer of 1996, he opened the doors to his first Pizza restaurant in Siberia. Today, the chain boasts seven locations throughout Novosibirsk, a city of approximately 2 million people. But despite the obvious achievement, Shogren is the first to admit the difficulties inherent in such a venture. "Sometimes I tell people it's a rewarding experience if you can do it," he says, "but it falls into that category of `Don't try this at home.'?

But with the right frame of mind--and the right resources--you can drastically increase your chances of launching a successful chain on foreign soil. Because it's a difficult venture to undertake alone, Shogren brought in his two brothers, Brad and Mike, as partners. It's also essential to hook up with the right foreign company before launching a business overseas: Locals can provide cultural and bureaucratic know-how that only comes with firsthand experience.

Beyond language and cultural barriers, financing will be a problem if you don't obtain strong backing at home first--especially when you've relocated thousands of miles away to a place like Eastern Europe, where banks either fail on a regular basis or penalize borrowers with sky-high interest rates.

Another stumbling block? Staying grounded about your goals. When you've taken an innovative product to a foreign land where opportunities abound, the temptation to expand too quickly is all too real.

Which is not to say that obstacles should deter those with a knack for international business. The main thing to remember? You'll have more difficulties than you expect, says Shogren. "But the rewards are out there," he adds. "I suppose if it were easy, everybody would be doing it."

Need To Know

What to ask before you launch an international chain.

Experts agree, launching a new chain of stores in America is risky enough. But what if your aspirations prompt you to debut your concept in a foreign land instead? We asked Wesley Johnston, a professor of marketing at Georgia State University in Atlanta, to highlight the factors that can either make or break your business.

  • Will the product sell well in the targeted ? Think market research. The good news is most American products and services are embraced overseas. But, for example, if many of your potential consumers are typically lactose-intolerant, you'd want to steer clear of opening an eatery that sells cheese pizza, says Johnston.
  • Is your target market familiar with your product or service? If not, be prepared to invest a lot of time and money in consumer education. On the flip side, if you're the first one to introduce a new and exciting concept, "The product then becomes synonymous with your company name or chain," Johnston explains.
  • Do you feel comfortable in that country? Since you'll probably have to temporarily live there to operate the chain in its early stages, you'll need a working knowledge of the language and culture.
  • Consider the infrastructure. Can you get Western-style accommodations and support? How good are the roads? Is your supply guaranteed? What about the reliability of hot water?

"It's a big, big world out there," Johnston contends. "I don't think there's any one idea that won't work somewhere."

Contact Source

Mike Shogren, c/o Siberia- Pizza, 3020 Irving Ave. S., Minneapolis, MN 55408, (612) 844-6434


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