By Jayne Archbold, CEO, Sage Enterprise Market Europe
Exporting is big business. For European countries, the majority of exporting happens within the European Union but the US and, increasingly, China are important markets. Exporting is a key economic driver. According to the European Union’s latest Eurostat figures, the trade in goods between EU member states was valued at €2,839 billion in 2013. This was about two thirds higher than the level recorded for exports from EU countries to non-member countries.
The question is, should your mid-market business be exporting? The Sage Business Index survey recently found that 63% of mid-market businesses are currently exporting. It also found that on average, nearly a quarter of exporting businesses’ turnover came from outside their domestic market.
Exporting businesses were optimistic about the year ahead, according to the survey. Nearly two-thirds of exporting mid-market businesses expect export turnover to increase over the next year while the survey found that a third of mid-market businesses saw their levels of exports grow in the last year.
When is it right to consider looking overseas for growth? I think there are several key factors to keep in mind.
Is your product or service ready?
If your service or product is already a success domestically, then will it work overseas? You need to do your research into the competition, similar products, pricing and regulations that may affect trade. What are the economic conditions in potential markets and are there different route to market mechanisms?
According to the Business Index survey, 30% of mid-market businesses thought logistics was the biggest barrier to exporting.
Another major hurdle to being ready to export is the effort needed to get to grips with overseas regulations, tax regimes and other legal requirements. Get the right advice and make sure you are not taken by surprise.
Is your business ready?
Everyone in the leadership team of your business has to be on board if you are taking the step to export. People must be committed to put the necessary resources behind it, both in financial and employee terms.
There are the logistics and marketing efforts to commit to and money must be found to support overseas travel, research and distribution. What’s more there must be systems in place to deal with international sales. That could include digital channels and support staff. All this takes resourcing and planning. Is the company fully behind the move? If not, it may be time to rethink.
Have you got a plan?
Just diving into a foreign market to “see how it goes” is a recipe for failure. You would be surprised at how often this happens! Make a full export plan, taking in the considerations above. Take into account international marketing efforts, including the need to modify products, translation of materials to the correct standard and overseas fulfilment of orders.
While there may be uncertainty in the economies in some countries, a factor cited by some mid-market businesses as a barrier to exporting, exporting, done properly, can bring growth, revenue and profit.
• Get abroad: business owners and senior executives need to visit the new markets regularly. A good place to start are trade shows. This is to establish networks and to get a clearer view of the challenges and opportunities.
• Start with what you know: it is best to develop your key products for the foreign market – rather than strike out in a totally new direction – and then adjust them for local conditions.
• People matter: look to hire the right employees with the skill sets that are going to count – the right language skills, cultural knowledge and relevant technical expertise for the market in question. But above all, they must reflect the values of your company too.
• Internal engagement: spread the word within your business about the details of your strategy. Getting the business behind the new venture is important in the push overseas.
• Get a mentor: using a mentor who has experience with exporting can make the difference between success and failure. Mentoring can help businesses to make the right changes at the right times.