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« Extend your channel via export: a ripe opportunity for SMEs | Main | Find out more about Shirlaws »
Wednesday
May152013

Do you have an exportable product? Could your product make you millions in new markets?

By Dan Davis, Shirlaws Coach

High profile businesses, such as Jaguar Land Rover, Rolls Royce and Cambridge-based ARM Holdings are selling over 75% of their product into overseas markets. A number of SMEs have also built up considerable export businesses.  The following quotes are from SMEs based in the North-West of England:

  • "We could no longer exist without exports. If we had not made moves a few years back, given the increasing globalisation of our industry, I don't believe we would be around today." IT sector.
  • "Exports have been fundamental to our growth. We are now exporting 60-65% of our output and expect this to climb to 80% within the next five years as we continue to grow." Light Engineering sector.

At the same time we hear that "the value of UK exports to Ireland is greater than the combined value of our exports to China, India, Brazil and Russia" (The Foreign & Commonwealth Office, 2011).

Taken together, the above clearly suggests there is a huge untapped opportunity for UK businesses seeking to internationalise... but many have yet to seize the opportunity. For businesses that have an exportable product (and many may not realise they do), the opportunity exists to participate in a market with a population one hundred times larger than the UK, and generally showing stronger year-on-year growth. It takes a great deal of effort to develop and launch a product successfully in local markets, so with all that hard work done, it surely makes sense to consider extending the reach of your business to the very greatest extent through growing your channels into export markets.

Shirlaws helps businesses seeking to export. At its most obvious level, exporting is about growing sales in new markets and ensuring the necessary supportive infrastructure is in place; Shirlaws has been helping businesses from the outset with these challenges, boosting clients' profitability as a consequence. Companies that now consider exporting a way of life are also likely to have significantly boosted the valuation of their businesses as a consequence of demonstrating there is international demand for their products. Shirlaws can assist businesses to further build their valuation by also working with them to positively impact their multiple.

If exporting may be of interest to your business, what's the next step? Let's first of all recognise what exporting isn't; it's not an opportunist venture or something that can be successfully pursued half-heartedly or driven by short-term objectives. Success is realised when an exportable product is complemented by a supportive unified long-term vision for the business, enthusiastically endorsed at all levels of the organisation. A refreshing of the current positioning of the business and the acquisition of new skills may also form part of what's required to make a business truly "export-fit". Many of you will recognise how these themes dovetail with Shirlaws' frameworks and areas of expertise - both culturally and commercially.

Which products typically perform well in overseas markets? Some products very obviously lend themselves to exporting - it's inconceivable that Samsung or Apple would offer their products to one country only - their market is wherever there is humankind; national borders are a mere detail. For a manufacturer of fresh foods with a 3 day shelf-life, options may be more limited; although if there is demand for the product, solutions may still exist to internationalise. Every product deserves to be considered on its own merits. In that context, the following attributes, often present in a successful exported product, should be seen as merely representing a guide:-

  • a truly differentiated product / niche offering
  • a system offering or the prospect of repeating sales - one-off projects need to be high value to warrant the upfront marketing cost
  • secure technology / intellectual property
  • high product value relative to shipping cost
  • minimal need for overseas infrastructure (at least initially) - e.g. local office, engineering support, etc.

Many smaller businesses are wary of export, dissauded by the apparent complexity, uncertainty and risk. Much of this is around mind-set - a natural aversion to the unfamiliar. If such psychological barriers can be overcome then there is a potentially transformational growth opportunity that can greatly enhance the value of the business.

 

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