Saturday, 15 December 2012

The Secret to Exporting - the reality





The flavour of the month is export. The logic is unassailable. The economy needs more sales. There’s no-one buying here so export. Sell to people in other countries. Get them to buy our products and services. (So, what’s the secret...?)

In fact, exporting has been described as the solution to our current economic woes: our big businesses are screwed so that leaves the smaller businesses (some four million of them) to lead the growth renaissance. One trouble: not many export; not many want to; not many know how. (So, what’s the secret to this exporting malarkey...?)

While export has become the goal, the vision, for much of the current economic plan, the irony is that no-one quite seems to know how to do it. There are no books on the subject; there are no websites able to give the potential exporter what they are looking for (aside from lots of sweeping generalisations).

As a consequence, the Government is investing in helping small businesses to export. The UKTI is the public face that seeks to offer advice, guidance, support, suppliers and networks to help the business owner to export or export more. As I get to meet their people I find myself impressed by their knowledge and enthusiasm to help. More importantly, I meet business people impressed by them. (So, what’s the secret...?)

The problem, of course, is that the business owner is looking for an instruction manual, a ‘how-to’ guide and no such thing exists. And, of course, no such thing can exist because exporting is not a homogenised activity. Every export target is different.

As solid background there are things you need to understand: the big picture (how things work), finance, banking, export, market entry, logistics, legals, and every one of these subjects is different depending on what you are selling to whom. So, no universal answers available here. You need to talk to quite tightly-defined experts who understand what you are endeavouring to do.

I recently analysed some 50 companies I have worked with to try and get to the root of what does and what does not work in practice. No simple task. However, while the findings seemed confusing and conflicting at first, a very clear pattern does emerge.

The businesses were measured on the following criteria. The results were a victory for common sense. No more, no less:
  • Success – was measured in terms of profitability and - return on investment
  • Time horizon – was the company looking for quick wins or were they in it for the long game?
  • Size and number of employees – the natural change points were less than 10 employees; 10-100; more than 100
  • A clear champion in the company – more than just an internal sponsor but a champion committed to make the export strategy work
  • A clear partnership – again a clearly defined and highly committed person, this time working in the partner company/ies – probably the key success factor
  • A scale-able, clone-able, transferable business model
  • Closeness in terms of language
  • Ansoff matrix ‘closeness’: sticking to a similar product/similar market
  • Closeness and some sense of understanding or empathy.
Marking successes and failures according to these criteria gave a very clear view of what was required to make an export expedition work. 

This was not a foolproof method but it seems that it can be used to indicate, if not predict, the likelihood of success or failure. 

I can hear the howls of derision from the academics as they criticise my lack of intellectual rigour. However, this model seems to be ‘good enough’ to tell us whether a prospective exporter should proceed.
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