Nick Baird, chief executive, UK Trade & Investment, explains why British companies should make exporting their number one business goal
As the world focused on London and the UK this summer with the Olympics and Paralympics taking centre stage, it wasn't just the competitors and sports fans that flocked here.
We welcomed top international and UK business & government leaders including IMF managing director Christine Lagarde, Google chairman Eric Schmidt, Spotify CEO Daniel Ek, Sony chairman Howard Stringer and Sir Martin Sorrell in a landmark series of Global Business Summits over the course of the Olympic and Paralympic Games, which are expected to generate over £13bn in benefits to the UK economy over the next four years.
Developed by UK Trade & Investment, the British Business Embassy captured the imagination of global business leaders visiting the UK by showcasing the best of what Britain has to offer in some of our most successful industries such as fashion, architecture, technology, life sciences, advanced engineering, automotive and aerospace.
The series of events began with the Global Investment Conference followed by a series of sector days held at Lancaster House between 26 July and 9 September 2012. Each event involved UK based and international business leaders from around the world who met with a broad range of British companies. Many of these UK businesses were SMEs, seeking to interest international buyers in their products.
Indeed, with so much international focus and spotlight on the UK, there has never been a better time to maximise the opportunities around the world and for businesses to look at their business prospects overseas.
I know it's a difficult economic climate, with slow UK growth and uncertainty throughout Europe, so this may seem like Mission Impossible, or at least Mission Very Unlikely. When I travel around the country meeting businesses, they are worried about over-stretching their resources, investing in activity that has no sure return, and about whether now is the right time to expand.
These are legitimate concerns. Whether you are selling at home or overseas, there is always an equation of risk versus return, and a wrong decision can be the difference between success and failure.
I'm not saying that exporting is easy. But, when you have done your research properly, it is probably a lot easier than you might imagine, and the rewards can transform your business. It's certainly worth asking the question.
There are good reasons to start exporting. Statistics show that exporters become more productive, more resilient and more profitable.
A lot of this is common sense. If you find new markets, you will sell more, and extend the commercial lifespan of your products and services, and could also find a return on your investment in R&D. On average, there is a rise in productivity of 35% in the first year alone.
Sometimes, you find you can sell at a higher margin - if you are the first to offer a product or service in a new market, for example - resulting in greater profitability.
And by spreading eggs between baskets, your firm will be better able to cope with a downturn in a single market.
For those that are still unsure, the alternative question is: "what happens if I don't start selling overseas?" In a globalised world, competition is always on the increase. Your competitors may already be exporting, and overseas firms may be eyeing your existing markets. No business can afford to sit still, and it's better to be a player than a sitting target.
I know that there are risks, but there are also rewards.
As Robbie Swales, director of Steps, a London drama-based corporate training company knows only too well, having made his first foray into the Indian market back in March 2010. He acknowledges that Steps' breakthrough in India has been one of success and challenge in equal measure and in particular, advises companies to be ready to adapt their financial model to suit the Indian marketplace - don't assume an existing model will work.
With just 18 employees in the UK, Steps is punching above its weight with clients including HSBC, Accenture and American Express in India. It now boasts 40 freelance trainers across India.
There were two turning points for Steps' success in India. The first was winning a UKTI scholarship to visit the market and learn about the business culture there. And the second was finding a local partner with the talent and insight to launch and grow Steps in India. Mohan Madgulkar, already an independent trainer in India, approached Steps as he was keen to help them expand in India. Proving his worth, he was appointed as a senior associate in India at the end of 2010.
Robbie makes frequent trips to India to check on business and build Steps' client base. Earlier in the summer he returned from a three week trip, where he carried out auditions in Kolkata, training in Guwahati, Assam for Aircel (an Indian mobile phone provider) and delivered diversity training for a global bank in Bengalaru.
Robbie's three tips for doing business in India
1. Indians don't like to say no - be patient and acknowledge that there will be challenges especially in negotiations, if you do this you won't get frustrated.
2. Integrate your expertise with local talent - find a trustworthy local representative or partner to build your business - we couldn't have done it without Mohan.
3. Use an Indian pay-as-you-go SIM card when you're there - it's much cheaper than using your UK mobile.
The lesson here is that it's vital to get your research done. That's why UK Trade & Investment will provide trade advice to companies looking to export.
UKTI was awarded £45m in the Chancellor's Autumn Statement last year so that we can double the number of small and medium-sized firms we help each year to 50,000. We have provided extra trade advisors and have extended access to programmes such as Passport to Export for new exporters, and Gateway to Global Growth for experienced exporters. These advisors will help your firm to identify markets, find the right people to speak to in these markets, get you to trade shows and generally make the path as smooth as possible.
The Government is funding these services for sound economic reasons.
If we raise the number of firms that export to one in four from one in five, then we will generate billions for the UK economy and create tens of thousands of jobs.
Some 90% of the firms UKTI helps are small and medium-sized. Three quarters of them have fewer than 50 employees. It is estimated that these businesses have benefited to the value of £6 billion last year, generating more than 126,000 jobs in the UK.
Our traditional trade partners are Europe and the US, and there are still opportunities in these markets. However, it is in the UK's long term interests that we start building relationships with countries that are growing fast such as China, India or Brazil.
UKTI has identified high value opportunities - contracts worth over £1bn - that UK firms can band together to bid for.
And the really good news is that UK Export Finance, formerly known as the Export Credits Guarantee Department, is now offering help to firms of all sizes. Firms can buy insurance against the risk of not being paid on overseas contracts and get help with working capital so that they can take on large export orders they would otherwise have to turn down.
Some firms worry that no one will want their products overseas.
I travel regularly to many of the 97 markets in which UKTI operates. I know that there is huge demand for British products and services around the world, particularly in areas where the fast-growing middle classes want to spend on the things that the UK is so good at producing.
Making the decisions that will help your business expand is never easy, but deciding to venture overseas for the first time can be the best decision you make. The fact is that the majority of firms that start exporting don't look back, and make overseas sales a core part of their business plan in the future.
My hope is that by the end of 2012 many more UK companies will have started their export journey and already be seeing the benefits. So that as 2013 starts you'll be asking yourself not whether you should sell abroad but: "Which market should I sell to next?"
TOP FIVE EXPORTING TIPS
DO YOUR RESEARCH It will help prevent costly mistakes, boost your chances of choosing the right market and show you how to sell your product and services in that market.
CONSOLIDATE There will be some markets and products that are not as profitable as others - focus on the ones that are most likely to continue to help you build sales and margins.
REVIEW YOUR USP AND EXISTING CUSTOMERS Do you know why customers buy from you and not your competitors? Are you able to offer your existing customers a better service, improved or new products and attractive pricing deals?
CONSIDER NEW MARKETS UKTI market research and introduction services can be a cost-effective way of investigating new markets and finding new partners.
GET OUT MORE Although it's important to focus on key customers, it's easy to overlook the importance of devoting time to networking and finding new customers or new products for existing customers.
For companies interested in exploring the opportunities in Asia, there are a series of UKTI regional events due to be held 15-26th October 2012. For more information or to register your place please visit www.businessinasia.co.uk
For more information about how UKTI can help you on your export journey visit: www.ukti.gov.uk
