Canagan has achieved rapid global growth in a short space of time while sticking to its values. Founder and MD Eddie Milbourne told us how.
Exporting is the aim for many ambitious scaleups of all kinds, but it often seems like an uphill struggle.
Canagan, a pet product producer, is one of the UK’s great untold exporting success stories. Having launched in 2012, the business now exports pet products to more than 35 countries in Europe, Asia and the Middle East and last year had a turnover of £21.5m.
We caught up with Eddie Milbourne, founder and managing director, to hear the highs and lows of exporting.
What does scaling up mean to you?
Our focus is on exporting. We export to over 35 countries and have set the goal of being in 50 countries with a turnover of £50m by 2021. We will continue to only serve independent pet specialty retailers and not supermarkets or pet food chains. It’s important to us to scale up without forfeiting the values of the company.
What challenges have you experienced in the scaling up process?
We have launched in the US, where we have invested £2m so far. The US is the most competitive market we have entered and is saturated with lots of products. It’s going to be a huge challenge growing a business there.
Another problem we have faced has been that as we grow, we are increasingly exposed to credit risk. We receive limited credit insurance from our bank and from credit insurance companies but there is still a large unsecured proportion of debt which we would be exposed to should our customers default.
How has Canagan been affected by Brexit?
Since the referendum, the most direct impact on business has been the devaluation of the pound which has lost roughly 20 per cent of its trade-weighted value. The effects of this are far from positive with inflation rising and the input and commodity costs of running a business rising higher. On top of this, there is always the risk that consumer spending will slow down.
Yet this devaluation has given a much-needed boost to UK exports, as consumers overseas are finding British goods more affordable. That’s why it’s essential British companies start taking a more global outlook to increase profits. This is a great time to start trying to get a foot in the door in foreign markets.
How do you deal with fluctuating currencies? Has the weak pound been good or bad for you?
As previously stated, stepping up investment in the production of exportable goods and services can lead to big opportunities, particularly when the pound has weakened. Investing in currencies in advance can help to avoid any nasty surprises however.
What has been your biggest overall challenge with exporting? How have you countered this?
Canagan is a global business exporting to 5,000 pet stores in 35 different countries. Email and phone just do not offer the same opportunities as face-to-face meetings and so we’ve made travel a big part of our networking model. My son James has taken over 70 flights in the last year. Our team also try to visit all our major distributors and retailers twice a year. It’s a great way to show our commitment to them, wherever in the world they might be.
What countries might Canagan look to target with exports next, and why?
We are focusing our next efforts on the Asian markets. British products are very sought after particularly in China and the pet industry is booming over there at the moment. Of course, we are also investing in the American market, which will be a huge challenge for the business, but a risk we felt would be worth taking.
Would you encourage other businesses to look into exporting?
With the devaluation of the pound and the subsequent interest in the British market from abroad, I would encourage all British businesses to consider exporting. This is a great time to try and get involved in foreign markets because British products are cheaper but still globally respected.
How can you tell if exporting is growing too fast?
If you can expand without compromising the principles of your business then the sky is the limit. We have always wanted to only supply independent retailers, rather than supermarkets. If I ever felt I was in a position where I had to compromise on those values then I would suspect we are growing too fast.
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