“I want the message to go out that we are backing our exporters – so that wherever you are around the world you can’t fail to see: Made in Britain.”
So said George Osborne in last month’s Budget speech.
Britain has a poor recent record when it comes to export. In the first decade of this century the UK’s share of global exports fell from 5.3% to 4.1%. Contrast that with the increase over the same period in Germany from 8.9% to 9.3%- we are definitely missing a trick.
While only one out of every five British businesses actively exports, over 30% of the trades on MarketInvoice are to overseas debtors.
We’d like to think we know a thing or two about the export game, and so we’ve put together a few facts and tips designed to encourage you to explore new market opportunities.
Of course there are clear benefits to our economy.
The UKTI has said they want 100,000 more UK companies to be exporting by 2020- that’s because with this kind of business, we’d be stronger. It’s estimated that if Britain had focused its attention on growing exports to high growth markets in 2000, by 2010 GDP would have been bolstered an extra 1%, the equivalent of £15bn extra.
These high growth markets, specifically the ‘BRIC’ countries (Brazil, Russia, India and China), are a much bigger focus for businesses across the pond. In the USA, as well as in Germany, 11% of exports are to BRIC territories. Contrast that with only 4% of our exports here in the UK.
High growth markets like China, where there’s a huge 1.3bn population, or Brazil, where they’re enjoying prosperity as well as the world cup this summer, provide great opportunities for UK businesses.
Whether you’re a manufacturer, a software company, a retailer or a service provider, now is a great time to look at expanding into new markets.
What’s more, diversifying may well make you stronger. Here in the UK, companies that do export are 11% more likely to survive from year to year. We’re also seeing stronger growth from exporters than from other businesses, with 57% of UK exporters seeing sales rise over the last year.
Let’s get started
So now you’ve decided to take the plunge- congratulations! Going abroad is a big step for any business.
First off you’ll want to decide which territory to target. Having talked already about BRIC countries, there are also a huge number of other places you could take your sales team.
Think about the EU- yes, there are some noteworthy economic problems in parts, but it’s still a huge single market that means you don’t have to think about the burden of internal direct tariffs. In parts of Europe there are markets hungry for new products, and travel there and back is also easier for you and your team.
Then there are the much-publicised BRIC countries, and even more exotic locations. What you have to consider are the market conditions in your chosen territory:
- Are there enough potential customers?
- If there are lots of potential customers, could the demand actually be overwhelming?
- Is there a high demand for what you do?
- Is there a colossal competitor that just happened to get there first?
Remember- a narrower focus on a smaller country could actually be the right choice. It’ll enable you to do some initial test and learn on how your product or service translates- you can see what works, and what you’ll need to change.
Get some advice
Once you’ve decided ‘where’, it’s time to start looking at ‘who’.
You probably already have contacts living in the country you’d like to target- if not, take another look at your LinkedIn, or ask friends for names. Speak to as many people in your chosen market as possible, and take on board their advice.
Speaking to people as well as sourcing advice from local government and trade bodies will help you understand your new network. Ask around and you might even stumble across the perfect introducers who can source you some customers.
Clearly you’re going to need to tweak your sales pitch and your marketing material.
What matters to your new potential customers might be radically different to what matters to the folks back home.
Remember, too, that UK businesses already have several advantages when selling into foreign markets:
You might not think it to look at our national rail services, but the UK’s infrastructure is pretty top notch compared to the global average. We can ship products anywhere easily- a great advantage.
- Central location
We’re well placed between the Far East, Europe and America- great for when clients need to arrange deliveries or meetings at your HQ.
- English language
Just by chance, you and your team speak the most used international language for business, making communication across the globe so much easier.
- Prestige and heritage
There’s a feeling that British brands are better quality and are made to certain standards. Take Burberry, for example- one of our biggest fashion exporters.
Always include the team
When thinking about how you sell to your new foreign market, don’t forget to ask your team for their opinions.
Involving your UK staff is a great way to get them on board at the beginning of this exciting new journey. Ideally you need a team that’s raring to go, excited about the opportunity, and even happy to consider moving abroad if necessary.
Look at your prices
If you’re beginning to export, your pricing strategy will need to change.
Not only will you be incurring different costs, and perhaps significant extra cost, but your new customers may well need to have pricing tailored to their specific need.
You’ll need to research what potential customers might pay and make sure that your prices leave room for a healthy profit margin. You might have customs tax to add, currency exchange fees or additional logistics costs- these all need to be factored in.
Remember, too, that export can present cashflow problems if you’re dealing with large deals that take time for your customers to process and pay. It’s early stages now but when you think about pricing you might want to consider finance solutions that can help.
Unfortunately the banks tend not to fund export, deeming it too risky- but thankfully there are some out there who can help (including MarketInvoice!).
Let’s get exporting!
When we surveyed UK business owners in our annual survey last December, only 12% of respondents said they would be looking to export in 2014.
We’re keen to help with the UKTI’s mission to get more British businesses selling abroad. We’re already helping hundreds of exporters control their cashflow by selling their invoices on our platform.
One of our clients happens to be the British Exporters Association (BExA) Young Exporter of the Year. Geoffrey de Mowbray is CEO of DINTS International, a company that supplies vehicles, equipment and parts to African mining companies.
He uses MarketInvoice because the big corporates he supplies take time to pay invoices. “It’s a model that works like communities in Africa”, he says, referring to our platform that brings together businesses needing finance with investors seeking a return. “If someone has a problem, people pull together to help”.
We’re here to help exporters in the UK, and we’d love to hear your tips for businesses that are thinking about export for the first time. Tweet us @marketinvoice to have your say.
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