Picture shows: Owen Paterson, Secretary of State for environment, food and rural affairs (Left) and Exolta Partner Ross van Geest (Right) discussing export opportunities at ANUGA 2013.
The opportunity for small and medium sized companies to grow revenues through exporting should not be overlooked in 2014. Exolta Partner, Ross van Geest explores the extent of the opportunity and provides some practical guidance.
In many sectors in the UK, but particularly FMCG, the market is oversaturated with hundreds of products competing for the same shelf space. Whilst the UK retail market is seen by many manufacturers as the jewel in the European crown, it is extremely hard to crack, especially for SME’s with small marketing budgets. Whilst many businesses continue to battle it out for shelf space in the UK there are perhaps easier wins to be had on the global stage.
Whilst doing business in international markets is by no means easy, there are also a number of benefits. Many emerging market customers perceive that goods manufactured in the EU are vastly superior to local products and imitations from China. As the emerging consumers wealth increases so too does their appetite for European products. This desire for European goods, coupled with reduced competition and lower barriers to entry suggests that certain export markets could perhaps be easier wins.
Whilst starting to export could seem like a minefield there is a great deal of help available to UK based SME’s. UK Trade and Investment (UKTi) is a very good starting point. The UKTi Passport to Export programme is available to all companies that are new to exporting, have fewer than 250 employees and a turnover less than £50m.
A starting point
Passport to Export is a great starting point for new exporters as it costs just £500 to enter, making it accessible to very small companies. In return business’s gain access to a sector specific export adviser with extensive knowledge of the market and indeed contacts. Equally useful is the £3k of match funding that can be utilised in year one to help cover the cost of business travel abroad. Undoubtedly the most attractive benefit is the option to be part of the British Pavilions at various international trade shows throughout the first year of membership. Participating in trade missions to various export markets should also not be undervalued.
International trade shows such as ANUGA, held every other year in Germany brings some 6,500 buyers to the largest food and drink exhibition in the world. The British Pavilion brings together some 100 companies mainly through pod sized stands of circa 1.5 metres squared. The net cost after heavy subsidy from UKTi is circa £1,500 plus travel for the 5 day event. This is extremely cheap by any means for companies that are used to buying stands for trade shows in the UK.
The main question though is what businesses can realistically expect from attending international shows such as ANUGA, SIAL and Gulfood. Obviously this depends greatly on the company and its product offering. However if the product offering is innovative, truly different and creates real value and desirability then the sky is the limit. It would therefore not be unrealistic to identify potential distributors from all over the world and generate new business to cover the cost of the show 50 times over.
UK business’s are also currently benefiting greatly from the ‘Britain is Great‘ initiative which has received considerable investment to showcase Britain and everything it has to offer to the rest of the world.
Beyond UKTi there is also a great deal of support from UK banks. Lloyds SME Commercial Banking team in London have been extremely supportive of their clients looking to start exporting. Help and assistance includes very competitive FX rates and execution, invoice financing and debtor protection. In addition the bank is a very useful source to obtain credit ratings and lending values for overseas clients and expect regular visits from your bank manager to help with your business and make the occasional introduction to potential clients.
With the rest of the world being so accessible, exporting really could give many SME’s the 100% revenue growth for 2014 that they are looking for. Want to know more or need some help with your plans? Please do get in touch.Download this article as a PDF