15 : EXPORTING

exporting

How to avoid recession

- the economic case

for exportingOuch! That was the reaction echoing in businesses across the country as they absorbed the implications for years to come of the recent Autumn Statement. With an expected contraction in GDP of 2% and the implicit damage to confidence running alongside high inflation, energy costs and interest rates as well as increases in taxation, many businesses will be battening down the hatches, looking to cut costs to survive.

But it doesn’t need to be that way.

A self-fulfilling aspect of all the talk about recession is that consumers lose confidence and cut back on spending. The ensuing reduction in businesses’ sales resulting from this may seem inevitable but there is a simple route out of this decline – look for new customers. That is not intended to sound glib, but the obvious answer to a reduction in requirements by existing customers is to find new ones. That is obvious I hear you mutter, but what do you think we have been trying to do for years! Ah yes, I will reply, but are you simply looking amongst 68m people in the UK, or amongst the 8 billion people across the world?

Quite simply, exporting is just selling, but to a massively wider pool of potential customers.

So, if it is that simple, why isn’t everybody doing it, I hear you ask, hopefully in a more interested tone. That, I have to admit, is a mystery that eludes me, but will come back to. Exporting is obvious and not that difficult. I have been doing it for over 30 years, across a range of industries, across all continents (well, ok, not Antarctica!) so it can’t be that difficult. I recently spoke to a group of aspiring exporters at the recent Export Academy LIVE! roadshow event in Manchester, run by the Department for International Trade as part of International Trade Week. The subject was International Marketing Strategy 101, and those kind souls that listened to me for an hour realised that “International Marketing” has exactly the same principals as “Marketing”. In each you adapt to your audience. The reality of exporting is that you don’t sell to individual countries, you do the same as you would in the UK, you sell to markets; those markets that are the best match for the products or services you offer. When you understand the nature of the markets you are selling to at home, then you simply apply the same criteria across the world.

It really is that simple.

In early November I attended a meeting of Export Champions from across the UK at the magnificent Lancaster House, in London. The importance of the event can be judged that we were addressed by Andrew Bowie on his first day as Export Minister and he took the time to meet and listen to the real-world experiences and advice of this group of business people, most from smaller companies, who have shown how it can be done. Their experiences are regularly used in promotional material, it is not a secret… So, if it is so obvious and achievable, why aren’t more companies exporting?

avoid recession in your business

Is it the perception that it is too difficult? That isn’t true.

Is it that you need to make massive investments? Also not true.

Is it much riskier? Doesn’t need to be.

It must be then that margins aren’t sustainable? Very much not true. Exporting can add to the bottom line as well as the top line. Sales margins are based on pricing and costs and it is always important to get that right. But in looking at sales margins you also need to consider economies of scale, indirect costs such as marketing and advertising, sales, local deliveries etc. When exporting through a distributor you can control many of these with an adequate but fixed margin for the distributor leaving them to take care of the onward selling once the products have reached the market. So even if your Gross Margin is lower your Net Margin can be higher. This can reduce risk, help control costs and give a real boost to the business.

So again, why don’t more companies export? Well let me ask you: please contact me and let me know why you don’t want to try and I will help you understand if and how you could go about it. Exporting more is not just the answer for so many businesses, it is also the answer for the country.

Time to get on with the antirecession plan.

Useful links: gov.uk/business-and-industry/exporting gov.uk/government/publications/export-strategy-made-in-the-uk-sold-to-the-world/ made-in-the-uk-sold-to-the-world-web-version export.org.uk britishchambers.org.uk

Tony Goodman MBE

is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com