Member Article

Export Week: London SMEs on the future of the eurozone and UKTI success stories

To mark Export Week, we spoke to business leaders across London about the importance of exporting, the UKTI and the part played by the Eurozone in this key facet of the UK’s economy.

According to a report from Lloyds Bank Commercial Banking, over half (52 per cent) of businesses in the capital forecast an increase their export activity during H2. Meanwhile, over a quarter (27 per cent) of London firms were concerned over weakening domestic demand for products and services.

The report found that export levels are solid amongst SMEs in London, with a third (33 per cent ) of local firms currently selling their goods or services abroad. For those already trading internationally, the activity generates nearly two-fifths (39 per cent) of their total sales turnover.

Andrew Charnley, Head of Trade & Working Capital at Lloyds Bank Commercial Banking for London and the South (pictured below), commented: “This is the time of year where SMEs across the city are looking overseas for new opportunities. Yet regardless of the level of preparation, rarely do first-time exporters cover all the bases.”

“Getting paid on time in the domestic market can be difficult, but when your customer talks a different language and resides in another time zone, the risk of late payments is even greater.”

“UKTI was founded to help UK enterprises navigate these minefields, and earlier this year we announced a strategic partnership with them to help increase exports and attract inward investment. During Export Week, UKTI will provide support to first time exporters across the capital. For those ambitious businesses looking to catch their big break overseas, this is an opportunity they cannot pass up.”

UK Trade and Investment’s London Regional Director, Parveen Thornhill, highlights the importance of researching a target market when exporting.

“It’s all about targeting the right market and that’s where a lot of our services kick in,” she said. “We help businesses understand where demand for their products and services lie and importantly, how to access that demand.”

“Our advice is always to identify the right export opportunity in the right market and then the right route. Business growth can happen anywhere in the world, you just need the right advice!”

Ormsby Street is behind the small business credit-checking tool CreditHQ, and works with 25,000 small business, many of whom have run into difficulties with currency markets. Martin says the UK’s position outside the Euro Zone opens up a whole world of foreign exchange risk.

He told Bdaily: “UK small businesses are increasingly attracted by the size and potential of a European customer base. When this happens, the UK’s position outside the Euro Zone means that UK businesses will be trading in foreign currency.

“This immediately opens up a whole world of foreign exchange risk (FX Risk), where a contract is priced in local currency and the small business takes the risk that exchange rates will change and the value received by the business will be lower (or perhaps higher) than was priced.”

“In addition to this potential cost, because foreign exchange trading is more typical for larger companies, the cost in moving money from one currency to another can also be steep through conventional sources such as a bank.

“It may be difficult or impossible to set up a foreign currency account where money can be transacted and held before being transferred at an advantageous time. All of this adds significant cost and risk to foreign trading, which are a real barrier to SMEs looking to export.”

Miguel Angel Sanchez, CEO of Momit

Innovative London-based energy solutions provider, Momit works with the end user and retailers in the UK and throughout Europe to provide cost-effective, smart energy solutions for home and business, from our smart or home thermostats, to extension kits and my budget app to keep control of rising energy costs.

“Momit was always going to be an export company.” Itzel Regalado, Marketing Manager at Momit told me. “Our products are internationally used – it’s a true ‘lifestyle’ smart home product, which means that any country can use it!

“Our ambition was to start exporting as soon as possible and achieve relationships with core retailers in all countries (of home/ energy and smart products) so that we can raise our brand profile – this has been a core development and helped us to create customers in several countries.”

Will Butler-Adams OBE, CEO of Brompton Bicycle and Ambassador for the International Festival for Business 2016 raises the issue of making long term, strategic plans before embarking on an exporting venture.

“We used to export 25% but realised that we were too reliant on one market, the UK,” he explained. “So some ten years ago we took a strategic approach to dampen our gross margin (highest margin was to sales to the UK where we are the distributor) in order to nurture new markets.”

“Typically there is a three to five year incubation period when we open in a new market before it begins to get going, so we had to develop the new markets when we didn’t need them knowing that in five years we would need them to help sustain growth.

“Not only that but it is a blast and great fun to explore different parts of the world and see how our bike can help improve urban living.”

Brompton Bicycle, which is based in Brentford, exports nearly 80 per cent of its bikes to 44 countries including Germany, Spain, USA, Japan, Benelux, Singapore as well as to smaller marketings including Colombia, Dubai and Russia.

For Will, the eurozone is key to Brompton’s export strategy, he continued: “Managing currency and differing import and export duty globally is a real challenge.

“The world is global and customers can’t understand why there should be such price variances when they know that transport is not expensive.

“They are unaware of the impact of currency and duty and so believe somehow that we or our distributors are taking them for a ride, which isn’t true. We do not have this problem with the Eurozone which is a joy. The more free trade we can negotiate the better.”

Will and the Brompton team have worked closely with UKTI on the GREAT Campaign, and have been on visits to Brazil and Turkey while working in conjunction with our distributors with embassies around the world.

Will concluded: “I am an Ambassador for the International Festival of Business 2016 next year in Liverpool, which is a great opportunity for British business. Instead of us having to go in search of the business round the world the world is coming to us!

“There is no excuse for businesses not to get involved and explore what opportunities there are out there for export.”

Claire Curzon, managing director of Brighter Direction (pictured above), echoes Will’s thoughts on the eurozone, she told me: “We believe it’s important for the UK to remain as part of the Eurozone, not only from a commercial perspective when it comes to client engagement but also from an economic one.”

“Our view is very much alongside the general government view that being part of a larger collaboration is good for business.”

The London-based marketing agency exports its services across Europe and further afield.

“Our exporting strategy was developed organically,” Claire continued. “We only developed activity in this area due to demand, from receiving several international enquiries for our services from global organisations in help around predominately training (marketing and sales) and consultancy on specific projects such as Crisis Management – mainly developed through corporate companies.

“From this ‘demand’ we saw the gap in the market and started to offer this as a solution/ service on outbound promotional campaigns, which has grown our company and reputation significantly in niche areas.”

We do find that certain countries have tended to focus on core areas, so Africa for example has a very strong requirement for Crisis Management, Sales & Marketing Executive Training – while Belgium are more driven towards the needs of their export strategy into the UK market.

Brighter Directions are another UKTI success story, having worked with the organisation regularly over the past three years, Claire concluded: “We are looking to continue to grow our exporting strategy over the next 3-5 years, we now have capacity and expertise to expand the niche services wider afield, such as Crisis Management and Reputation Training.”

Share your view on exporting with us @BdailySouthEast or tweet me direct @Ellen_Forster

This was posted in Bdaily's Members' News section by Ellen Forster .