There are plenty of reasons why businesses are now more globalised – the internet, international trade agreements, new purchasing power in emerging economies.
But it’s also down to the bottom line. For two years running, Regus research has shown that exporting firms enjoy greater revenue and profit growth than firms that only operate domestically. A US study shows exporting companies not only grow faster, but are over 8 per cent less likely to go out of business than non-exporters.
The case for exporting is convincing, but it is still a large step, especially for SMEs. Here are five tips for making it work:
1. Get out your atlas
Many of the world’s “new” export markets are vast, and it pays to look beyond the better-known cities. For example, in Brazil, the UK Trade & Investment department states that in the “second-tier” city of Recife, “access to contacts is easier and less competitive than in the more established Brazilian markets”.
And India’s fastest-growing cities include second- and third-tier cities like Ahmedabad, Bhubaneswar, Indore and Nagpur, while better-known cities like Bangalore may already be saturated.
Lower-tier cities often have a greater talent pool and offer incentives such as state and regional support and low-tax enterprise zones. So it’s worth thinking regionally, not just in the BRICs but in developed countries.
2. You’re never alone
There are numerous resources available to would-be exporters. Government bodies like UK Trade & Investment provide numerous services, including local market information and introductions, market research, and advice on financial support available in specific regions and sectors.
Other valuable sources of information and support include local embassies and consulates, chambers of commerce, and trade associations.
Businesses already active in a country often smooth the way for others. In our centres we constantly see customers gaining useful tips from their fellow customers or our staff – from a recommendation for a good law firm, to good steers on local accommodation or partners.
3. Research, research, and then more research
For companies thinking about expanding to a new market, the first things to research are:
- Is there a market for its products?
- Can it compete with local firms and other suppliers?
A yes to both of these questions opens up many more research tasks, including: how to enter the market (eg joint venture, subsidiary, or local agents); how to reach potential customers; local taxation and licensing rules; after-sales service; intellectual property rights; choice of location; due diligence on potential partners… the list goes on.
It’s daunting, but necessary, and it can prevent money and time being wasted on unforeseen problems.
4. Flexibility is essential
There are always uncertainties in tackling a new market, from red tape to faster-than-expected growth.
Flexible arrangements for aspects like premises and staffing help firms navigate the inevitable uncertainties of expanding abroad. They allow businesses to upsize or downsize according to progress, without having to commit to long leases or long-term overheads or invest capital upfront.
Multinationals that are veterans of opening up new markets are firm adherents of the need for flexibilty – for example, Toshiba Europe, TomTom, Google and Twitter have regularly used our flexible workplaces when opening a new local operation.
5. Mind your manners
There’s a local market for your products, you’ve accessed finance, made great contacts… and then you bitterly offend a potential business partner with an etiquette faux pas.
In every country there is etiquette to learn – from not showing the soles of your feet in Egypt to always receiving a business card with two hands in many Asian countries. And the “rules” about who you shake hands with, who you don’t shake hands with, and when it’s OK or not OK to turn down a cup of tea are very much a cultural assault course for the business traveller.
Guidebooks help, but the best source of local information is people. If you’re not sure, ask someone – and preferably do so before you offend your new-found business partners.
John Spencer is UK CEO at Regus.
Share this story