Golden rules for global growth

Follow these principles to ensure your international expansion is as trouble-free as possible.

Figures from the Office for National Statistics showed a 9.5 per cent rise in exports to £21.3 billion in February, and the trade gap – the difference between imports and exports – fell by £6.2 billion, the lowest level in three years. With currency rates in the UK’s favour, now may be a good time to start importing goods or expanding abroad. So check out our tips on how to achieve success in the international marketplace.

Gather intelligence

‘Research the local industries and do a lot of networking before you start. That way you should get an idea about the culture and the demand for the product,’ says Luciano Batista, a lecturer in operations management at the Open University. The last thing you want to is to waste time and money by finding out too late that another business is already providing the same product or service. ‘Work out your unique selling point in that market,’ counsels Batista.

Build bridges

Margaret Manning, CEO of digital agency Reading Room has offices in the UK and Australia and believes the key to a smooth-running global business is making sure that all bases are working to the same objectives. ‘You can’t just buy an office, hire new staff and expect them to know exactly how things operate. It’s similar to having a long distance relationship. If you’ve only been with the person for a couple of weeks and they move, the chances are it won’t work.’ One of Manning’s key tactics is to take core players from the central office and place them in other bases. ‘We also train all key members of staff in our London office,’ she says.

Ready for lift off?

It’s easy to get caught up in the excitement of global expansion. Mark  Milton, director of fine jewellery company PepperPink, exports his products to Ireland, Australia and New Zealand, but finding the right market has been hard. ‘In the past I tried several times to export into Europe but the language barrier proved a big problem and the different standards and regulations made it too difficult. My biggest piece of advice to entrepreneurs thinking about exporting is to start by looking at your domestic operations. If you’re not doing things spotlessly at home, then hold off expanding overseas as it will be even more difficult to manage remotely.’ It’s a point echoed by Manning. ‘Focus on no more than one or maybe two new markets at a time, otherwise you will be biting off more than you can chew.’

Taxing systems

Getting the legal structure right can be one of the biggest stumbling blocks for entrepreneurs setting up abroad, says Tony Cohen, head of entrepreneurial business at professional services firm Deloitte. ‘Whether you are running a subsidiary of the UK operation, a new company, a partnership or a joint venture with someone operating within the local jurisdiction, you will need to look at the tax and legal implications of each model and decide which one suits you best.’ Cohen adds that companies should be wary of going to a local adviser who is used to giving domestic advice, as different rules often apply to foreign enterprises.

Importing cost

Andrea D’Ercole, managing director of food and drinks company ItalyAbroad.com, imports goods to sell in the UK. ‘We have a person based in Italy who oversees all our supplier deliveries before the goods get shipped out to make sure everything is running to schedule,’ he reports. The skill comes in matching supply to demand. ‘We don’t want our imports to arrive late, but we don’t want them to come early otherwise it will cost extra money in storage costs,’ he says.

Related: Top strategies for importing goods into the UK

Greasing palms

For companies looking to win contracts abroad, the new Bribery Act is something they should take into account when planning transactions. John Burbidge-King, CEO of business risk consultants Interchange Solutions, says: ‘If you appoint an agent who acts on your behalf to secure a deal with a local official and money exchanges hands, even if the company is unaware of this, it could now be subject to investigation.’ If this happens, the investigators will want to know that you take this issue seriously and have adequate prevention procedures in place, adds Burbidge-King: ‘Make sure you have a policy for appointing overseas representatives and that you carry out due diligence on them. All of this will help your case should you find yourself falling foul of the new laws.’

Lost in translation

Not being aware of how suppliers do business could see you lose money, says ItalyAbroad’s D’Ercole. He advises: ‘Get to know the culture. For example, in Italy it’s more common to negotiate with prices than in the UK. Asking for a discount is something suppliers will factor into the initial cost they’ll give you, whereas here it isn’t always expected,’ he says.

Team up

Entering into a joint venture could be an easy way into an unfamiliar market. ‘Going solo can be more difficult because you are on a learning curve,’ says Batista. ‘Instead you could partner with a local business, or with a British business that has already developed local knowledge in that area and has developed the right experience.’

Keep in touch

‘Regular communication is vital,’ stresses Reading Room’s Margaret Manning. ‘You need to ensure timescales and responsibilities are clear, and that can be tough when you’re in opposite time zones. We have constant and planned communication. It’s no good just speaking when there’s a problem. To start with you must invest a lot of time. Not doing that was a mistake I made at the beginning.’

Rates of exchange

For ItalyAbroad’s D’Ercole, exchange rates have become a concern due to fluctuations between the pound and the euro. ‘If a sudden change affects costs negatively, it’s not as if we can go back to the client and ask them to pay more, so we have to absorb the expense,’ he reveals. ‘To offset this we use a broker and buy currency in bulk. If it’s a particularly good rate one day, we’ll buy more than we immediately need to pay suppliers and keep the rest to settle future payments.’

Related: Currency control when exporting

Support grants

UK Trade and Investment offers support grants for companies looking to expand into new markets. Andrew Foyle, founder of educational products group BLi Education, says he recently received one to do research in Malaysia and Singapore. ‘It’s a useful way to decide whether you want to enter a new market or not, although you should also weigh up the time and cost involved of putting together your proposal [to UKTI] to win the money.’

Under the volcano

For any business, continuity plans are essential. But as recent events in Iceland have shown, it isn’t always possible to predict where the next disruption is coming from. Milton says: ‘It was very difficult to imagine something like that happening, so we didn’t have a scenario set up and to be honest I’m not sure how we could have done things differently. We were able to get some of the goods across to Madrid and get them flown out from there but when you’re exporting to Australia and New Zealand, air freight is the only option.’ Reading Room’s Manning says following the volcanic eruption she contacted all her employees working abroad to ensure they were well provided for and could carry on with business as usual. ‘Unexpected disruptions such as the Icelandic volcano erupting can cost a fortune if you’re not prepared. [In any emergency] our plans consist of ensuring that key workers can continue to work from home,’ she says.

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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