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Tag: export

Why we’re passionate about High Value Manufacturing

After this week’s announcement of the Qi3 Accelerator Bootcamp, friends are asking me why we’re doing it.  Are we mad? How will we make money? And, above all, why High Value Manufacturing (HVM)?

The simple answer is that we’re doing it because we see the need!  After reviewing nearly 400 prospects, we see a common set of areas in which businesses need to improve if they wish to attract investment.  Let’s be clear here, I’m not just talking about seed stage ideas.  I’m expecting that the bootcamp will be most attractive to young established businesses looking for early or expansion stage capital.  We’ll be helping on all aspects of engineering businesses, from managing technology and product development, go to market strategy, finances and Intellectual Property.

When I attended the NESTA Startup Factories conference  last summer, it became obvious to me that, whilst Accelerator Programmes were flourishing in the software and Internet space, few people had tried them in ‘harder tech’.  When we set up the partnership with Cambridge’s ideaSpace, it seemed natural to run a bootcamp as a one-off pilot to test our evaluation process and the concept of such a programme.  We aim to support 8 businesses with tough love through an intensive 3-day process, and we’ve attracted a range of top notch coaches and mentors to get the best out of this short, sharp shock.

But above all, it’s about having fun working with ambitious people in the field I love.  I grew up at Oxford Instruments, a mid-sized engineering company where the customer was king and the love of technology and manufacturing was deeply ingrained.  I’ve spent my life selling and marketing other people’s technical inventions around the world.  For me, HVM means making real engineered products, be they destined for environmental sustainability, healthcare, industry or defence.  My pleasure as an investor is seeing engineering and commercial jobs created here in the UK, and products exported across the globe.

We’ve been fortunate to attract partnership from ideaSpace, sponsorship from Harrison Clark, Williams Powell, Synergy Energy and Wren Capital, and support from NESTA and the Technology Strategy Board.  Bootcamp participants will have to contribute a token amount towards their accommodation in Cambridge’s lovely Madingley Hall, and we’ll make up the balance of the costs ourselves.  We are not seeking equity stakes in the companies that participate, although we’ll naturally be keen to see if they are attractive investments at the end of the process.

So are we just do-gooders?  Well perhaps.  I see it as a superb experiment, an opportunity to help some great businesses, committed entrepreneurs, and work with experienced mentors whilst having great fun.

To join the bootcamp apply here.  It’s a one-off; entries close on 4th May and the bootcamp will be held on 23rd – 25th July.

My next posting will be the one about the aubergine…

Export or Stagnate

I could even say ‘export or die’.  Predictions are bound to have huge error bars, but we know certain facts about UK technology and engineering business:

  • The UK is the 22nd most populous nation, with 0.9% of the world’s population
  • We have the 7th largest nominal Gross Domestic Product (GDP) at 3.5% of the world’s output
  • We are still the world’s 6th largest manufacturing economy
  • The US, Europe and Asia are our main trading partners, with the US alone accounting for 30-50% of global demand for many technology products and services.
  • The world economic outlook forecasts 2012 GDP growth of 1.6% in the UK

Compare the following forecasts

  • EU 1.4% (including Germany at 1.3%)
  • US 1.8%
  • China 9.0%
  • India 7.5%
  • Emerging Economies as a whole 6.0%
  • Worldwide 4.0%

The nature of technology is that it sees no national boundaries – your business should be born global.  Technology products and services can be sold worldwide with adaptation to local customer preferences.

Qi3’s recent survey of the instrumentation industry showed clearly that those companies which invested in export sales have performed better in today’s turbulent economic environment.  They have a broader exposure to demand in the growing economies, especially in Asia.

So what will you do to increase your exports in 2012?

Advice for Entrepreneurs: Part Five – Export Strategy

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.

Dos

  • 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’ts:

  • 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.

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