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Friday, 7 June 2013

Friday Guest Blog: Could Exporting Make You Millions?


By Dan Davis, DDH Global Limited
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 local SMEs have also built up considerable export businesses.  The following quotes are from SMEs based in the North-West:
"Exports are critical. Very, very important to our business. We have developed and had great success with our product in the UK, but the true volume potential will come from exports, and we're definitely starting to see that". Sports Sector.

"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.

So why is it that so many businesses are missing out? 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.
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 product and the acquisition of new skills may also form part of what's required to make a business truly "export-fit". If done right, exporting can transform a business and hugely increase its valuation.
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 profitably exported product, should be seen as merely representing a guide:-
  • a truly differentiated product / niche offering
  • 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, dissuaded by the apparent complexity, uncertainty and risk. Much of this is around mind-set – an understandable 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 your business.

If you have a great product and curious to know more of how exporting transforms the fortunes of businesses, I would welcome hearing from you. Please contact me on 0161 485 2926 or email to dan.davis@ddhglobal.com.



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