Although UK exporters have traditionally lagged behind their European rivals, there are many opportunities on the world stage for British business, while the barriers appear to be primarily psychological

The UK hasn’t been a great place for exports in recent years, and British entrepreneurs all too often view overseas markets as too far away and risky. Along with our poor grasp of languages, this has led to a fear of the foreign, which our European neighbours have largely overcome. However, the trade barriers preventing an entrepreneur from running a successful global enterprise are mainly imaginary. There’s no reason not to think globally. In fact, there are several advantages of being a UK business – language being one of them. And, with many home markets in decline, more opportunities are just what a growing business like yours requires.

Getting started

No matter what you sell or are looking to buy, time spent on research will be worthwhile. But before you blow huge amounts on a consultant, see what you can achieve yourself. You know your business and what underlies it, and the over-arching question is: can you make money out of that territory?

More specifically, you need to know if there’s a genuine demand there for your products and services or if there are good buying opportunities. Consider the competition, how advanced the market is and other key economic, social and even political factors that underpin your business here.

Steve Leach, founder of internet marketing firm Bigmouthmedia, was considering moving into Europe, but was uncertain which country to target first. His business was already trading in the US, but he felt that the market there was too advanced and that Europe would offer better opportunities. “Once we’d spent time in the US, we realised we were behind the game and had some serious competitors. A market that is more advanced is more difficult to compete with,” explains Leach.

“New York was about six to 12 months ahead of the UK, but France and Germany were lagging behind. Also, in terms of exiting, we could see that four of the top six companies in our sector were US businesses. However, what these well-established US firms didn’t have was a presence in Europe, which is a highly fragmented set of territories.”

So Leach and his team began researching Europe for a country to launch in. They looked at factors such as broadband penetration, e-commerce spend and what proportion of the population used the internet. Germany was identified as the prime candidate, and an office was opened in Munich. Later, it merged with the German business, Global Media, in a £40m deal, and the combined group is now one of the biggest companies of its kind in Europe.

First contact

Once you have identified your target, some more detailed information is called for. The government’s UK Trade and Investment (UKTI) is a good early port of call, as it provides free advice, one-to-one mentoring and also organises trade missions for those considering expanding abroad. You’ll also be well advised to find a lawyer and accountant with direct experience in the region you are heading for. Entrepreneurs say they spend a lot of time consulting their advisers, so be choosy and make sure you find one that you can form a good relationship with.

Forging local links in the target territory is also invaluable for inside knowledge and contacts. Of course, you’ll want to visit the country to gauge the feeling on the ground, but having a local guide is a great way to save time and money. A language school is one place to find native speakers who you could hire on a part-time basis to do research for you, and entrepreneurs have used this method successfully before. There’s nothing like first-hand experience, and getting to know people face-to-face. Entrepreneurs that trade overseas need to absorb something of the country they are dealing in.

You might be concerned that your new office will start to run out of kilter with your existing brand. Margaret Manning, founder of digital communications company Reading Room, solved this problem with an ‘office in a box’ when her company was expanding into Australia. “We recruited three people from the UK and an Australian,” she explains. “We then put them in a separate room, gave them their own computer system and got them to work together for three months with their own clients, before shipping them over to Australia.”

Trading partners

The specifics of creating a successful operation differs from one territory to the next, and business cultures vary hugely. A mistake many companies make is thinking they can do business ‘the British way’ when abroad.

Certainly, businesses trading in the US or China need to operate in an American or Chinese way, and work hard to adapt to the local culture and employ natives. But for all concerned in overseas trade, a leap of faith is inevitable, and you’ll need a good local partner to make your business work with new clients or suppliers.

Agents that buy and sell on your behalf, as well as looking after stock and providing after-sales support, are the crucial link between you and the principals in the territory. A bad name is easy to acquire but hard to shake off, so choose with care and think about the long-term when doing so. Les Lockwood is the chief executive of Powerlase, which sells high-powered lasers used by semi-conductor manufacturers. His business span out of London’s Imperial College in 2001, but primarily sells to clients in south-east Asia. Lockwood has decades of experience working in the region and recognises the importance of a top class agent.

“Most of our clients are multinationals and it is incredibly important that, when you try to break into these accounts, you can provide a high level of product support after you make the sale,” he says. “A lot of companies think they can make a quick sale, but it is easy to get a bad reputation, which can seriously affect your growth. The guys who fail are those trying to make a quick buck.”

Lockwood says speaking to potential clients is a good way to get recommendations. It’s a simple and effective method, but entrepreneurs still need to spend time with their overseas partners.

Martin Ruda is the founder of the Tall Group, which makes documents such as cheques, voting forms and identification papers. The fall in cheque book use in the UK means his home market is in decline, but in 2006, he spotted that there was still money to be made in emerging economies with growing financial services sectors. Today, revenue from exports is in the region of 15% of the company’s turnover. Ruda advises entrepreneurs to get to know their agents.

“Spend time with them and do as much due diligence as possible,” he recommends. “Examine their operations and meet their people. There may not be that much business infrastructure in place, which can raise concerns, but see what introductions they can make. It’s a good sign if they’re prepared to visit you. These things have to be a two-way street.”

Cultural differences

As with all relationships, there should be some give and take. But some cultural differences must be observed or relationships will suffer. While there are too many to list here, remember that customs like strong family ties, a rigid hierarchy and respect for age are part of the package when dealing in many other countries. Unintentional slights or signs of disrespect can lose you business and cause irrevocable damage to your reputation.

Get advice from those who have been there before and spend time in the country to learn the nuances and niceties of doing business there. Don’t automatically assume that what works here, works there. On the whole, entrepreneurs have found that British business has a decent reputation overseas and a company that is successful in the UK can expect a decent level of respect – just don’t push it.

Some areas, such as employment law, can be a big headache. UK business owners often lament the lack of entrepreneurial spirit in UK company law, but what takes place on the continent is far less business friendly. Employee rights are accrued far more rapidly in much of the European Union than here, and it might surprise you just how litigious hiring, firing and making redundancies can be. As always, it is best to get advice, particularly on employment law, which can vary hugely from country to country.

Language barriers?

One of the big psychological barriers to trading overseas is the fear that you won’t be able to communicate effectively on the ground. Get over it. English is one of the most widely spoken languages around and with the growth of digital communications and global media, this isn’t going to change soon. While you’re probably aware that almost anyone from Scandinavia is going to be fluent in English, most well-educated Europeans are too. In emerging markets, the desire to trade with Europeans and Americans has also driven the learning of English – so like Leach, you can be surprised by how well understood you’ll be.

“One of the things I was pleasantly surprised by was that English is the language of business,” says Leach. “If I am recruiting an MD, I don’t have to specify language skills, as English is expected.”

The legacy of the British Empire also means many key decision makers in Asia, Africa and the Middle East are fluent in our language and often choose to ape our financial, legal and, to some extent, political institutions, too. Compared to entrepreneurs in so many other countries, UK business owners are blessed, and need to consign their island mentalities to the dustbin. The nuances and specifics may trip you up from time to time, but this is certainly not an insurmountable problem. “The difficulties can be the subtleties, especially in emails, but it is more of an irritation than an obstacle,” says Leach.

Payment methods

Another big psychological barrier is the fear of not getting paid or being ripped off. If you are dealing in emerging markets or places where payment culture is weak, insist on using irrevocable letters of credit. These aren’t very common in Europe, but are the norm in much of Africa or Asia. Most entrepreneurs will also only take sterling payments, with some also accepting the euro or US dollar.

Payment cultures vary, and without wishing to play to stereotypes, anecdotal evidence suggests that: Germans are the most prompt payers in Europe; US businesses are typically faster than Brits; Japanese companies live and die by their word and often pay 50% upfront; Middle Eastern businesses are heavily influenced by the closeness of the relationship and written assurances are not seen as binding; and emerging markets are often thought to be somewhat erratic, partly due to a lack of supporting legislation. However, it’s best not to over-generalise and, in all business deals, it’s the strength of the relationship and the nature of the relevant parties that is key.

The current weak pound is benefiting exporters enormously, providing a real competitive advantage. Manning says she is prepared to accept currency of any denomination, but she also uses hedging when taking payments to ensure she doesn’t get caught out by volatile markets.

“Because we were hedging, the devaluation of the pound hasn’t hit profits, but it has really affected exports, because we are cheaper and very competitive and that’s been really useful,” she says. “We hedge everything – it isn’t complex or expensive and you have to have certainty in business.”

Thinking of India?

Dr Devendra Kodwani, a lecturer in finance at the Open University Business School, highlights a number of the opportunities that are available for those entrepreneurs who are considering conducting business in India

“Energy is a big issue in India. Electricity is very expensive and the government is keen to find renewable sources of power. Anything that solves this problem will attract interest from the middle classes, which number 350 million. The insurance market also has many gaps to fill, which is also of interest to the middle class. Perhaps what could be of even more interest to experienced entrepreneurs is the demand for skills and training for doing business. Indians are very keen to do more business with the outside world, particularly in the UK and the rest of Europe. People who are prepared to offer their business skills to help Indians explore opportunities in the outside world would be very well received. In the UK, companies receive quite a high level of support from the Department of Business, Enterprise and Regulatory Reform, however Indian businesses don’t enjoy the same opportunities.”