Managing risk and global growth: Entrepreneurs’ tips and views!
Don’t rush into international growth or make it a priority and do it fast? Entrepreneurs discuss the merits of both and how to mitigate the risks
Foreign markets can prove a graveyard for the British business that goes in too fast. On the same token, not pursuing an overseas growth agenda can seriously limit a company’s ability to reach its full potential.
So what do you do? While there’s no one-size-fits-all or even a right and wrong, we gathered entrepreneurs running fast-growing UK businesses with an international element for a roundtable discussion sponsored by Santander. You can read more about their companies and backgrounds here.
When the question of whether companies are too slow to go global or are fools that rush in was asked, their tips and thoughts proved fascinating. Here are some of the choice comments:
Take your time, don’t rush in!
Exhaust domestic opportunities before committing to going global
John Stapleton, co-founder of fresh ready meals companies New Covent Garden Soup Company and Little Dish:
“For the FMCG (fast moving consumer goods) market the UK is quite a big place to start with over 60 million people. Stick to the nitty gritty and get that done and then see. The Irish market is very small, so that’s easy to do next as they speak English. And then you consolidate.
“At New Covent Garden Soups we had oodles to do fighting with supply and demand before we ever thought of doing something outside the UK. And Little Dish is the same. We had 10 years of growth and when we sold New Covent Garden less than 10% of our revenues were from export because there was so much demand at home and the convenient chilled food sector – which fresh soup became a part of – was growing dramatically.”
Research, research, research
Dave Sherrington, business development director at global bank Santander:
“Doing extensive research in advance is absolutely key if you’re thinking of taking your business overseas. At Santander, we run several international trade missions throughout the year, to markets we’re familiar with, such as South America and Europe, where we can help with setting up meetings with potential partners and suppliers and so on.
“It’s a great way for business owners to start making contacts and building relationships in new markets.”
Invest in people who can make the right connections overseas
Jazz Gandhum, founder of e-learning platform e-Careers and sports drink company iPro Sport Corporation:
“I convinced the non-executive director of the UKTI to become the chairman in our business. It’s all about people. Sometimes you get a nugget that’s worth its weight in gold. It came about through six degrees of separation. He sat down and fell in love with the business and we said ‘what can we do to get you involved?’.
“The same happened with the sports drink business. It’s worth investing in contacts and connections and then you’re employing someone you know you can trust. The guy who’s running your business internationally is representing your brand and you, which is why I have reservations about just scaling internationally.”
If planning to exit, leave the big international growth opportunity for an acquirer
“One of the strategic reasons that we decided we were not going to go after international markets was that we wanted to sell the upside of what the opportunity would be to go international. We were hot-housing in the UK and Ireland and could then potentially sell it to an international trade seller like Nestle. They would have the experience, expertise and marketing dollars to roll it out on a European level at the very least. So, don’t go half-hearted and frankly mess it up and then indicate to someone who might have bought it that it wasn’t internationally scalable. We did a bit by selling to some stores in France, Belgium and Holland but we were conscious not to go outside of that and risk our international play to a potential suitor.”
Put people on planes and trains before you boots on the ground overseas
Ben Whitaker, co-founder of global train ticketing app Masabi:
“New remote hires can rarely pull themselves up by their bootstraps in an untested market, so we put people on planes until we secured the first buys. We didn’t put the expensive beachhead in until we’d established the market would really work and made local reference deployments to attract good local talent, and for them to use as credentials. Of course if you’re taking something that’s well understood you can have more confidence that a new person could sell it.”
Don’t hang about, get there fast!
Go global from the very start and find new opportunities
“A friend of mine Pete Storey had run the infrastructure for a few online insurance companies and decided he was going to run his own and instead of starting it here in the UK, close to him and the market he understood best, he did a quick cast around of countries with plenty of international travel and looked for where there was much less competition.
“Everywhere 1Cover Insurance has gone next has not been about where is close and convenient it’s been about ‘where have I got a load of international travellers and no strong competition yet?’. Let’s go in and execute well. It’s not that the concept is new. So it’s almost turning on its head this idea that people will see a great idea, go back to their home country, and do it there.”
Launch into new overseas markets to compete for bigger contracts
Dale Lovell, chief digital officer of native advertising specialist Adyoulike:
“Why go international? We work in digital advertising and know there’s bigger marketing budgets available when you go international. A typical campaign in the UK or France might be £20-30,000, but if you can show you’ve got international reach as a business you can tap into the global marketing budgets, which might be a £200,000 campaign. So for us there’s a definite financial benefit and a lot of that budget is controlled in the UK as well.”
Be prepared to fail with international growth and don’t see it as failure
“We’re very keen not to repeat the frequent British tendency of ‘Henman-itis’, otherwise known as ‘choking at the semi-finals’ and going no further than the SME category. More UK companies should be going the distance in the future, and where appropriate for their product – going international rather than selling up early. That additional reach takes commitment from the entrepreneur and the backers.”
“15 years ago to have tried to be an entrepreneur and failed was a black mark that was hard to get past – the impression would be that you’re a bit Only Fools and Horses and a fantasist, whereas in the US if you’ve tried something and it hasn’t happened you’re probably better now at managing because you’ve seen what the failure curve looks like, you’ll identify it earlier, you will never go down to rock bottom again. We have got better in the UK at recognising that your first business might not always be right, but you learn and get better.”
Connections can open up new markets to scale fast internationally
Simon Ellson, co-founder of shopping centre experiential advertising company Nexus Engage:
“For us it was also about the speed of growth – how fast you could scale the business. Deal with it organically or go VC-funded, the feeling among the other board members was that by franchising it we can scale it really quickly. With the right people in place you could start 10 or 15 franchises in a single year in 10 or 15 countries and you could add what’s looking like it’ll be 20% of our turnover just from South Africa all in one go.
“I’ve been lucky in that I’ve worked globally and as a result my personal network is now much larger than it might otherwise be and if I pick the countries carefully I feel confident I could pick a great sales director reasonably easily.”
This feature is the third of a series following a roundtable discussion sponsored by Santander on international growth. Click the buttons to read parts one and two and find out more about Santander’s Breakthrough International programme here.