Member Article

Exporting is GREAT for the mid-market

This Export Week Sage announced its partnership with the government’s Exporting is GREAT initiative to encourage more of its businesses to drive growth though exporting over the next five years.

The need is acute. According to our research marking Export Week and the launch of the Exporting is GREAT, 75 per cent of small-to-medium-sized enterprises are not currently selling overseas – and have no plans to. We questioned 400 firms and found that seven per cent export to Europe alone, 16 per cent export globally, but the rest do not export or have any intention of opening up internationally.

By now Export Week is a fixture in the business calendar, but in some respects it’s rather a shame that it needs to exist. Britain has historically been an exporting nation, famed for British quality and British standards. Napoleon called us a nation of shopkeepers, but really we’ve always been a nation of inventors and manufacturers in the first instance.

There’s no denying that rules and regulations, languages and money movements can cause decision paralysis for the unprepared. From the outside exporting can look complicated to learn. But there’s also no denying that the opportunity that exporting represents is huge and ready to be tapped with a little forethought.

Enterprises from the UK have cracked the exporting code time and time again, and there’s no reason that more can’t follow. Similar businesses in other countries export far more in terms of the number of businesses taking part as well as volume of goods and services.

Right now the UK is currently only sixth in the league table of intra-EU trade. We lag Germany, France, Netherlands, Italy and Belgium. In fact, UK export value within the 28 state EU actually contracted two per cent in the period from 2002 to 2013. However Germany increased by over 50 per cent; Netherlands by over 84 per cent; Belgium by over 43 per cent. So in relative terms the UK has been losing market share.

This represents a huge missed opportunity – or an opportunity yet to be seized by many firms – particularly those Enterprise businesses of over 250 employees, and is why Sage is partnering with the government on Exporting is GREAT The initiative aims to inspire and support 100,000 additional UK exporters to sell their goods and services overseas by 2020.

The first question is, ‘should your Enterprise business be exporting?’

The last Sage Business Index survey found that 63 per cent of Enterprise businesses are currently exporting. It also found that on average, nearly a quarter of exporting businesses’ turnover came from outside their domestic market.

Moreover, exporting businesses were optimistic about the year ahead. Nearly two-thirds of exporting businesses expected export turnover to increase over 2015, while the Business Index found that a third of businesses saw their levels of exports grow in the last year.

So the future could well be rosy for those ready to take the plunge. Setting the right time to do so just takes preparation.

Expert advice

One growing business that’s been through the decision making process and now exports to 16 markets is Sage customer Blue Eyed Sun, manufacturer and exporter of handmade greetings cards. Blue Eyed Sun’s managing director, Jeremy Corner said: “We made a decision to look abroad and grow internationally a few years ago. We planned to grow by three countries a year. Our route to making contact with partners such as international distributors was to attend relevant trade shows and network, network, network!”

Jeremy’s business now on-boards four countries a year – above target – and international sales make up 20 per cent of turnover.

Only when his home market business was on a firm footing did Jeremy decide it was time to investigate potential export markets.

“Make the most of your current market where it’s easier to make profits that can be reinvested in other ventures. Once you think you are capable draw up a detailed plan of action. It’s smart to ensure that someone on your team can manage this process end to end. Be realistic, if no one has the time or skills to work on this long term then hire someone in.”

The Exporting is GREAT online resource is a smart first point of contact to any business unsure of how to start.

Parveen Thornhill, London Regional Director for UKTI explains: “The UK is well respected overseas and our businesses start with advantages in terms reputation, government support and mentoring. It’s well worth finding local experts to assist you identifying the right export opportunities for your sector, and your business.”

Parveen continued, “Up against both local and international competition you are only as good as your preparatory work. It’s important to stay agile. Your strategy needs to be competitive and, in this fast changing world, adaptable. The competitive environment will change around you and you can address this with a clear risk profile between your potential markets. Have a strong base, aim to appeal to more than one market and take time to consider positioning; and don’t forget about protecting your Intellectual Property and ultimately your brand.

Top tips

Communication – your new partners need to be able to understand you. Going right back to basics, ensure you are talking to them in simple and short sentences. British colloquialisms don’t translate at all. So don’t tell a German to keep all their eggs in one basket, or tell a Brazilian that you’re backing the wrong horse.

Financing your export – Financing ventures in new territories can be a stopper for businesses looking to spread their wings, but support is out there. The Government will help businesses export via UKTI and they’ll also help you finance it. The Chancellor has recently doubled the export finance fund to £3bn. And companies such as Sage are meeting the demands of customers by providing solutions that require reduced CAPEX or OPEX investment through flexible cloud business management solutions. These will reduce the initial outlay for IT provision and also enable businesses to streamline the manpower needed to maintain them.

Keep an eye on the administration – selling in new markets, whether directly, through partners or franchises, always creates forms to fill in and formalities to comply with. It’s important to understand what you’re doing and when you need to do it else your timelines can derail. Here’s where expert partners like the UKTI come in, to assist you in acquiring the knowledge and skills for the markets and businesses suitable for you.

Don’t take the eye of the ball at home – Usually your new export markets will offer you less margin. Be aware that even if you’re doing well that you’re not making as much money as you are from your loyal customers at home. So don’t neglect your higher value customers. Doing so is a real risk to the core of the business.

Timing is everything – Changes in currency conversion rates can wipe out your profits or increase your gains. It makes sense to time your sales and purchases to make the most of favourable rates. Similarly, when you wish to bring money back home from foreign investments and bank accounts, if you can wait for the best rates (which often cycle somewhat predictably) you can make your hard earned cash work even harder.

Technology – Use the right tools to ensure you stay on track and tie together your expanding markets, people and functions. With the right business solutions your business can be multi-currency, multi-language and keep you legislatively compliant without hiring multi-lingual staff to manage administrating the process and enable intentional trade to become frictionless.

Currency conversations and impact on cash reserves can be quickly calculated in accounting and business management software, ensuring that ensures you know what the business can afford and accurately forecast for expansion. Cloud computing solutions make the right data available for far flung employees working in different time zones, aiding collaboration through effective mobility.

The right payments partner can keep you compliant with international financial regulations and ensure that you don’t need to store customer payment details on your own servers, if that’s a concern. Customer relationship management solutions can help you keep track of your prospects and best customers and offer them personalised care.

What are you waiting for?!

There is nothing standing in the way of any UK enterprise who wants to take the plunge. The government is demonstrating its commitment by providing support through UKTI to all businesses. It’s even more powerful when we’re all in it together, and that’s why companies like Sage need to fight to enable their customers and partners to export and support them on their journey. It’s a virtuous circle that leads to an ecosystem of partners and benefits to customers, businesses and UK PLC as a whole.

Sage is supporting the UKTI initiative Exporting is GREAT as we truly believe that the more we export the more we will provide opportunity for UK businesses to be a mighty force on the international stage.

Who wouldn’t want to be GREAT, rather than OK?

This was posted in Bdaily's Members' News section by Brendan Flattery .