Guaranteeing business growth in 2017
With everything that’s happened recently in the world of politics, it’s really crucial that business owners prepare for uncertain times ahead.
Brexit is making it tricky for businesses to predict the type of trade deals that Britain will negotiate and how to best plan for the future. The Prime Minister’s negotiating strategy is to keep her cards close to her chest, so there’s not much information that SMEs can use to forecast the year ahead.
In America, Trump’s politics resulted in generating an even greater sense of uncertainty. The consequences for companies, their owners and employees are difficult to predict. This makes the challenge even more daunting for businesses to prepare for, when it seems like they should be prepared for just about anything.
William Johnson is the co-founder and CEO of Torro Cases, a Newcastle based business, which designs and produces smartphone covers and men’s accessories. Here, he explains how he has navigated through uncertainty successfully, and continued to grow his company in spite of choppy waters.
Does it still make sense for small British businesses to sell overseas?
Absolutely. The statistics speak for themselves. In North America alone, nearly 200 million people shopped online in 2016. Online trading is hot territory at the moment, and the best place to go if you want to maximise your business potential, making it easier to reach a larger, more diverse market.
Although we founded Torro in Newcastle, we started selling outside the UK early on, and now deal across Europe and the US. Our most successful international market is Germany, which is currently seeing considerable growth.
If you want to start selling overseas, investigate each target market to see where your specialist sector is underserved. Ensure that you do some thorough research into your competitors too, so you aren’t caught off guard by local rivals. Emerging markets also provide opportunities if you’re willing to venture beyond the familiar. You may also be the first to enter the market, offering you a significant advantage when selling here.
How have you dealt with unexpected movements in exchange rates?
Exchange rates can be the first things to shift when global politics start to change. When trading internationally, awareness of currency markets is important. Selling to customers abroad means you’ll be taking payments in foreign currencies that require conversion back into sterling. This could limit your access to cash-flow, which may negatively impact your business.
In the past, we used our bank for foreign exchange and Amazon processed international payments; meaning, we had to accept their exchange rate. Recent political events, such as Brexit, woke us up to the fact that we really needed a more strategic approach. With a poor exchange rate and little to no expert guidance, we faced the sobering thought of having to put up our prices, which impacts customer loyalty.
After shopping around, we chose OFX.com, an international payments specialist that supported our business via focused advice and strong rates. They also offered a payments solution designed specifically for marketplace sellers, which linked up with Amazon directly. On their advice, we started converting euros from our sales in Europe into dollars, which helped us avoid a weak pound and ensure we kept our prices low. In total, we’ve retained almost £150,000 since changing our currency strategy earlier this year.
What’s your top tip for businesses entering today’s market?
Differentiation is key. In a crowded and complex marketplace, you need a level of uniqueness which will stand you in good stead, regardless of what comes your way.
When smartphones became the next big thing, we realised that the products themselves were very expensive, but there were no cases or covers to do them justice. Cases were either made of cheap plastic or were really overpriced, so we jumped onto the space in the middle - high-quality, affordable cases. Having identified this gap in the market, we grew a ‘hobby’ business to one with over a hundred thousand global customers.
So, find your niche, give it your all, and watch your business boom.
What final advice would you give to other small businesses considering international expansion?
Planning and preparation are paramount. You can’t avoid surprises, but you can protect your business. Everyone is busy, but by keeping an eye on the latest news stories, you’ll be clued into key political events. It’s also worth signing up for some free expert advice. Daily commentary, bulletins or currency updates will keep you updated on the news. It can be tempting to view things like Brexit as detached from your reality and day-to-day life, but it’s important to remember that decisions taken can have a real impact on your business. Having a robust plan in place for the future will help enormously. If you’re prepared for the unexpected, you’re halfway there.
William Johnson is the co-founder of Torro Cases, a Newcastle-based business that produces quality leather smartphone cases and men’s accessories. http://www.torrocases.co.uk/