Or what to do when your market isn’t at home
We all know that the UK has 1% of the world population, about 4% of world GDP and that we still have the world’s sixth largest economy. Despite our travails, the UK leads Europe in a range of innovation indicators and venture finance.
I grew up in a mid-sized instrumentation company where our sales were 95% export. I spent years in Germany, the USA and Japan devising, developing and delivering sales and marketing programmes to take our products around the world. The home market simply isn’t big enough to feed the aspirations of a growth-oriented technology business.
But that was in the land of established companies – what does this all mean for UK based entrepreneurs who are trying to get their technology businesses off the ground?
Robin and I were at a Cambridge Network Emerging Markets meeting on Monday evening which focused on the dos and don’ts of addressing emerging markets. Of course this was far too big a subject for the evening or indeed for this article. Here is a distillation of ideas focused on the planning process rather than individual territories.
- Do research the market for your product / service quite thoroughly. Start with the world as a whole, then focus on regions, countries and regions within those countries.Do select a limited number of ‘A’ list target countries and focus on developing one at a time in your business plan
- Do research customer preferences within each selected territory. The world isn’t homogeneous, and you will need to adjust your sales & marketing strategy and perhaps your product / service if you want to gain market share. Be prepared to have failures and make mistakes on the way. You can learn from them and adapt.
- Do learn enough about the local language, culture and pleasantries to ensure that you project the right image when you’re there. Successful export captures the heart of the customer as well as the mind.
- Do ask for help from people who have experience in developing sales and support channels and negotiating contracts abroad (my plug for Qi3)
- Do ensure that you have the right financial (currency, tax, cash flow) and legal (contract law, agency, IP) support
- Do consider where your company should be based, and where manufacturing or services should be delivered. If half your market is in China, why not relocate there?
- Do resource your export initiative. Relationships with customers, staff, agents, distributors and manufacturing partners all need nurturing.
- Do control costs. Travel the cheapest way possible, but stay in a respectable hotel to impress your clients.
- Don’t ignore the rest of the world. Your technology may have originated in your lab, garage or bathroom, but there may well be many more potential customers in the USA, China or Germany.
- Don’t spend all your time flying round the world to meet people. I’ve just seen a funding round fail because the CEO was so desperate to prove that he could build US customer relationships that he couldn’t present his business plan to investors. I’m a firm believer in building relationships face to face but then using telephone, email, Skype and web conferencing to keep them bubbling.
- Don’t overstretch yourself. Select your markets carefully and build them one at a time. And don’t export for the sake of it. If the home market is a decent size and less expensive to service, start here.
- Don’t be proud of collecting air miles or sitting in airports. Your family misses you when you’re away. I often encounter people who travel to China or Cambodia when they could be selling in Cambridge, Cardiff or Copenhagen.
Lastly, people often ask me whether I think UKTI is useful. In short, it is an excellent source of information and reports which you must access. Beyond that it depends on the individuals you are dealing with, many of whom are helpful and experienced. Beware when they’re in sales mode.
There are plenty of people around with the sort of export experience that Qi3 offers, so ask for help and build the world into your business plan.