LOOK BEYOND THE UK TO CASH IN ON GROWTH
THE UK is full of chief executives facing the harsh reality of uncertain home markets for years to come. So, with forecast sales flatlining – what is an entrepreneur to do?
Successful companies are finding new customers and markets beyond our shores. In our recent global survey of over 400 companies, India (34 per cent) and China (33 per cent) were cited as the most attractive economies for potential exports – followed by Brazil, Russia and Singapore.
However, entrepreneurs need to understand the particular needs of such differing markets. The strategy is higher risk than staying in familiar territories, so many adopt a step-by-step approach. Initially, entrepreneurs often use an agent to test the waters. This could be followed by a joint venture with a local partner, before a full blown trading operation. Throughout, it is important to keep a keen eye on the opportunities and risks, and brief shareholders, bankers, key employees and advisers on developments to maintain their support and exploit their existing knowledge and connections to those markets. The best companies maintain agility in entering – and knowing when to exit – a new market, learning how to cater to its customers’ demands.
Those with drive, passion and agility can produce extraordinary results. In one recent example, a family run shoe businesses in the UK, through collaboration with one of its suppliers in India, decided to cater to the country’s growing middle class. The company began a joint venture with an Indian partner and a concept that played on the British design, while also innovating with up-to-date and efficient retailing – such as through store layout and connecting sales forecasting to supply chain management. They now have a 50 per cent share of a rapidly expanding Indian company.
In another case, the chief executive of an architect firm, specialised in prestige brand car showroom design, has been asked by his customer, who is already doing well in China, to visit the country. They plan to replicate the high standard UK showrooms in cities like Shanghai, where local suppliers do not have the know-how. The company is receiving an influx of orders, with enormous opportunity for expansion.
There are many examples of businesses, big and small, who have entered these fast growth markets. For the many that have not yet taken the plunge I think it offers the best opportunity for growth and there is still a window of opportunity. In a recent report, we set out the opportunity for an increase in net exports, which we estimate could give the UK economy a £20bn lift by 2020. At the very least, we should aim to match the EU average of one in four SMEs exporting by 2020 – compared with only one in five currently.
In the end, pretty much the oldest lessons in the book applies to entrepreneurs addressing markets in far flung corners of the world – getting face time with the customer, understanding in depth what works for them, and how you can deliver a profit. For those seeking growth, the clear message is to rack up more air miles.
Stuart Watson is Ernst & Young UK leader of Entrepreneur Of The Year.