Entering into overseas trade can open up significant new opportunities for British businesses, but it also brings with it some substantial risks. Fluctuating currencies, volatile international economies and geopolitical conflicts can all threaten the livelihood of even the most established export business, so how can SMEs overcome these challenges?
Aldermore invites seasoned exporters, Magic Whiteboard co-founder Neil Westwood and Superfood Market co-founder Gemma Price, to share their experiences.
Neil Westwood, co-founder of Magic Whiteboard
For Neil Westwood, co-founder of innovative stationery brand Magic Whiteboard, Europe’s current economic climate has been a major consideration for the brand’s recent export plans.
“We’ve just started exporting to France so obviously the strong pound isn’t particularly helpful because it makes our goods look more expensive in that market, but in the short term we’re lowering our prices in those markets to give them a bit of extra help,” he explains, adding, “We try to manage all our costs in the UK so that they’re really low, which is within our control, but to be honest we can’t do anything if Europe is undergoing quantitative easing.”
This challenge has been compounded by relatively high prices in the US market, where the company sources materials for its product range.
“With the dollar exchange rate, you’re not getting as many dollars to the pound so as we pay in dollars it’s making the cost of producing our goods more expensive as well. So we’re getting hit on both sides at the moment,” he states.
Despite this, Westwood has managed to minimise the impact this has had on the business:
“Most of our exports are actually outside Europe anyway so we are quite diversified. We export to 20 countries and Europe is just a small part of it. Generally if one market goes down, the other goes up, so we don’t worry about it too much. Our main market is America. We tend to go for the English-speaking markets first and then the non-English speaking markets later as it’s just a bit easier to deal with people who speak the same language and where the culture is the same. ”
In fact, Westwood admits his overall experience of exporting has been highly positive, mentioning:
“There’s plenty of support: there’s the Chamber of Commerce and UK Trade and Investment provide lots of support. It’s remarkably straightforward we find. As long as you make sure you get paid in advance it’s just the same as selling to the UK. You’ve just got to make sure all the paperwork is accurate and the weights of the palettes and that sort of thing. If you get that correct then there won’t be a problem at customs, but if you get it wrong, for example, we’ve had a palette sent back from America which is very costly, though that’s just happened once in five years.”
Gemma Price, co-founder of Superfood Market
Serial entrepreneur Gemma Price, behind online health-food store Superfood Market and specialist exporters Wellbeing International, has also faced hurdles when it comes to international trade.
“Some markets can become volatile at certain times for businesses,” she concedes, elaborating, “We had invested significantly for trying to develop a presence in the Russian market, including market visits, trade shows and meeting distributors. Unfortunately then the crisis in Ukraine started to escalate. Sanctions placed on trade with Russia, and the outright ban Russia imposed on European food products, meant that all of the leg work that we’d done fell by the wayside and was now redundant.”
Setbacks like this have taught Price the value of taking full advantage of the free export support available within the UK.
“Really tap into the expertise that’s out there. You’re never going to be able to do this in-house so really the best way to do it is to connect with all the different support systems that are there for businesses around the world” she advises other SMEs leaders. “A good start for that is to speak to your local Chamber of Commerce and to your local UK Trade and Investment office. Just by having those two initial meetings, you’re then connected to the entire network.”
This support can be particularly useful for overcoming challenges when export markets face difficulty, suggests Price:
“Look at the advice of the foreign and commonwealth office, who publish regular travel updates. Those are a great resource to find out what’s actually going on in the market and it’s free to subscribe via email.”
“Open to Export has a free to use forum for anybody involved in international trade,” she continues. “It’s an open forum so any business can post a question asking for help with their exports and just like any forum hundreds of responses are posted to each question giving that business guidance. Then you have UKTI with the Business Opportunities Feed, where hosts throughout Europe will post business opportunities in their market which are then emailed out to businesses.”
Alongside services from the Enterprise Europe Network and the growing number of overseas business networks, Price feels the time is ripe for businesses to begin trading abroad.
“There’s definitely a lot more support available now,” she is pleased to report. “There are really quite a lot of export opportunities at the moment.”
For product-centric businesses selling directly to consumers, Price points to the increasing prevalence of online marketplaces such as amazon and its foreign counterparts.
“My business trades on a dozen or more international marketplaces and we see hundreds of orders from them constantly. I think for B2C the opportunity is in ecommerce and definitely through marketplace expansion that is quick, cost-effective and can be done as soon as you’re ready. A simple Google search for ‘What is the largest market place in x country’ will point you in the right direction.”
By contrast, she feels traditional methods such as trade shows still hold sway in business to business markets, urging SMEs to explore the tax grants and government funding available to help them attend events overseas:
“You can have the best website in the world, you can send a market specialist, appoint a sales representative or hire an agent in each of those territories or markets but ultimately if all the key players from that territory are going to congregate in one room for a weekend and you’re serious about taking on that territory, you really need to put your business there.”
In terms of deciding which market to target, Price also has several tips for SMEs.
“If your primary language is English, then almost a ‘quick win’, though I despise that term, is the English speaking market, so Australia, New Zealand, America and Canada,” she states. “The good thing about hitting those markets is that when we enjoy one season, Australia and New Zealand are enjoying the polar opposite. If you have summer stock in the UK when we’re coming into winter and you may be looking to discount or try to clear that stock, that tends to be the prime time when there’s a really heightened demand for those products in Australia and New Zealand.”
"I wouldn’t really encourage an SME that hasn’t cracked Europe and hasn’t cracked English speaking territories to set their sights beyond Europe for exports right now,” she adds, concluding, “It’s kind of a general progression rather than throwing yourself in at the deep end.”
Take a look at Aldermore’s trade finance services to learn more about what our bank can do for businesses trading around the globe.