The 15 biggest DON’Ts for first-time exporters
Lara Morgan built a £20m global business. Read on to discover the major mistakes new exporters make – and how to get it right
Forget the DOs of exporting for a moment. There are 15 things you most definitely shouldn’t do.
Lara Morgan’s first business Pacific Direct built an enviable reputation for manufacturing and selling brand-licensed toiletries to the world’s hotel industry.
After 17 years of hard slog she sold the business for £20m. Here, the no-nonsense entrepreneur shares some major mishaps businesses can make when trading overseas.
1. Don’t travel without having done your full delivered price costing to a market in the currency of international trade = US$.
2. Don’t miss opportunities to extend holiday trips to do proper days of market research – saves you a fortune and might pay for the holiday.
3. Don’t ship fresh air. Maximise your pallet loads to minimise shipment costs, and do not make assumptions about how goods are stored, transported, stocked and delivered. Ask all the questions about service expectations for every new market you start trading in. Can you provide a better service than that which is currently offered? Middle Eastern Hotels always used to buy in full container loads but as the market matured this changed and they expected stock at local source. Move with the times.
4. If you are certain of a market being a solid place to start – don’t delay. Taking a share of the international cake can be a whole lot more profitable and rewarding than fighting locally where our cake is not growing quite as quickly as faster developing nations.
5. Do not assume you have to speak the local language. English will get you everywhere.
6. Don’t clash with a country’s national days. Respect local culture, festivals and holidays. You can waste a whole load of time being caught out by national days!
7. You need not have a massive glamorous over-engineered stand to attract good enquiries. Make your product or service look professional, use language translated brochures so you are committed to the market and make the effort to learn greetings in whichever country you travel to. Make friends, you will have a ball.
8. You need not stay in the most expensive place in town. Exploratory trips need to be budgeted for properly, covering the whole value of the trip and time away from selling at home. If you do not set yourself targets, timescales and goals you are wasting focus and energy that might gain better results elsewhere.
9. Don’t get hung up on the biggest win first. You could consider partnering the biggest competitor in a new market just to establish the potential of that territory. Don’t get hung up with big legal costs and contractual issues – put a trial probationary period against performance agreed targets and if things work out – stay – and grow. If they don’t, just leave and grow differently.
10. Don’t apply a universal margin. Just because you sell abroad it does not immediately mean less margin. It can be quite the opposite. Always sell at the price the market is willing to bear – and not at a margin controlled output (applying the same margin wherever you are). You could be missing out on significant upsides abroad.
11. Do not think your contracts of England and Wales have any power outside the British Isles. Your bank can help keeping control over payment and never give credit in early trading. If someone is serious about your product they will find the funds.
12. Don’t jump in head first. You can take time to establish a formal office, established address and always consider local part-space office options – to give yourself a local address without ridiculous expense. You need not over complicate set-up costs. Build a revenue and profit stream and then establish further local team investment.
13. Don’t ever stop visiting your team abroad, supporting them in person on big pitches and getting them back to head office to share in updates. The culture, the product development, and the business systems are priceless. This is the most important ongoing investment you will make in the retention of great staff.
14. Do not see banks as your enemy. I retained 99% of Pacific Direct and grew the 57th fastest growing independent company in the UK by using the bank’s services and finance to help me grow internationally. Credit finance is expensive but might also still allow you to start doing foreign deals. Don’t over trade abroad and thus put the base at risk.
15. And finally but most valuably… Don’t close your mind to anything. Try everything, test new foods, get up early to visit the pyramids, stay a Friday night so you can sell on Saturday in the Middle East, learn about local traditions and interesting histories, meet wonderful and colourful people all over the world that will welcome you with a smile and nearly always an ambition to do great business.
Lara Morgan is one of the UK’s most successful entrepreneurs, who grew and sold a majority share in her business Pacific Direct for £20m. She is founder of Company Shortcuts, a consultancy dedicated to excellence in sales and leadership. www.companyshortcuts.com