Growth and exporting: Take your business to the next level

Clive Lewis, head of SME issues at the ICAEW, explains that in light of improving confidence, business owners need to make sure that groundwork is completed before expansion.

There haave recently been a number of business surveys suggesting that confidence is pretty strong among UK businesses.

After a period of reduced demand, cost-cutting and strict cash flow management, many businesses have experienced an increase in their order book and increased sales. Consequently they are dusting off expansion plans and considering how to meet the increased demand.

Of course UK businesses have been here before with a temporary upsurge in demand, but this time there is reason to think that this might be longer lasting. And the confidence is trickling down to small businesses. So if you are a small business, perhaps been trading long enough to become established, how should you respond to an apparent increase in demand for your products or services?

Here is the rate of business confidence in the UK from 2008 – 2018

Source: OECD
Source: OECD

Start with a plan

You may already have a business plan, but perhaps you are now getting to the point where it needs to be updated to take the business to the next level.

If you’re looking to grow your business you need to consider how you will achieve it. Is it selling existing products or services to new markets, or new products or services to existing markets?

If you’re considering selling overseas for the first time, there is help available from UK Trade & Investment. The process of trading abroad can be very costly in terms of time and resources so it’s best to get all the help and advice you can. Your current customers (and suppliers) may also be able to help with locating overseas markets so it’s worth having a conversation with them to find out if and where they export and what advice they would offer.

What additional resources do you need to increase sales?

If you’re planning to expand your business it is vital you identify what resources you need to meet increased sales. Do you need more or better equipment or more staff with particular skills? If exporting, you might need new language skills or an upgraded website. You will almost certainly need improved information systems to track the increased workload. You also will need to consider how you get your product to the customer.

Consider your financing requirements

A significant increase in sales usually requires an increase in working capital such as stocks and debtors, increased operating expenses such as a bigger marketing budget or more staff and / or capital investment in the equipment mentioned above. Where is this money going to come from?

Of course increased sales should eventually result in increased profits but this can take time to turn into cash in the bank. So it is advisable to produce cash flow and profit and loss forecasts to show to finance providers. Again there are government schemes to help with financing exports.

Case study: Torro Cases

Torro Cases has an annual turnover of £2 million, and a team of seven full-time staff. The firm, which currently exports in bulk via Amazon to six countries, including Germany, France, Italy, Spain, Japan and the US – more than 25 per cent of its sales are made overseas. Co-founders Michael Farnsworth and William Johnson say that before you start selling in a new market doing your research is critical. They say, ‘Speak to consumers in your target markets and ask them for their thoughts and feedback. You’ll be surprised about what works where – and may need to update product descriptions and online listings so they resonate better in each market.’

Selling overseas means taking payments in foreign currencies, and without specialist support, it’s easy to lose out to bad exchange rates and slow transfers when moving international revenues back to sterling. ‘We partner with OFX, who helped us to develop a personalised currency strategy that has evolved with our company and its needs. The best strategy will protect your business from currency challenges, helping you to keep costs down and bring more money home,’ says Farnsworth and Johnson.

Partner with experts who can support you from day one, leaving you with more time to focus on the things you do best. If you don’t know where to start, the Department for International Trade (DIT) has an extensive network of specialists that can provide advice and support to UK businesses looking to export. Meanwhile, choosing to sell through a major marketplace like Amazon can save you from having to source your own fulfilment and logistics partners.

Consider what new or additional risks increased sales might bring

Expanding into new markets or customers brings new risks. The customers may be unfamiliar to you so it is vital you get credit checks on them to ensure they will pay for your product. Equally important is to ensure the time and effort you invest in developing a business relationship with them will not be wasted.

Watch the below video on how to boost international sales

How can technology help with sales?

The internet has made selling a product from the UK more achievable. There are several ways of securing payment online. Template websites can now include built-in e-commerce facilities and shopping carts can be added on. However many start-up and early stage businesses use platform sites such as eBay and Amazon. So if you are planning growth it may be advisable to invest in the technology to make your website another channel to potential customers.

Sources of help for growing businesses in export markets

Taking a business to the next level requires a clear vision and determination. It can help to talk to other businesses which have already achieved what you are seeking to do. This might be through a mentoring scheme or an established network. There is nothing new under the sun and finding appropriate support and advice can make the task much less of a challenge.

Useful resource

ICAEW Business Advice Service, helping with company expansion and exporting, is an easy way to start.

Michael Somerville

Michael Somerville

Michael was senior reporter for GrowthBusiness.co.uk from 2018 to 2019.