Why exports are crucial to business success

Why exports are crucial to business success

Companies from throughout Scotland are discovering the benefits of exporting – from growing sales to minimising risk – while learning how to conquer challenges.

When business is going well, it’s all too easy to put your feet up and enjoy your success. But what happens if sales start to slow or a big customer suddenly stops placing orders – where will growth come from then?

For many companies, the answer is overseas. Again and again, Scottish companies have found that exporting their products and services is an important way to grow their business. While some businesses develop exports at a later stage, overseas sales were always part of the plan for Robert Ransom, who founded his company, Highfern, in 2014 to launch the Angels’ Nectar blended malt Scotch whisky. Ransom had spent ten years working at Glenfarclas distillery and had previously exported food, with 75% of Angels’ Nectar’s sales now coming from overseas.

“Even though I’d worked in exports since leaving university, I’d been sheltered from some of the bureaucracy,” Ransom says. “Some countries will have different hurdles to overcome, but these hurdles break up the market, creating niches to explore and develop, so think positively – if you can overcome a hurdle that’s put your competitors off a market, you’ll have that market to yourself.

“Without exports, I would have a very different business model. For whisky, the UK is the most competitive market. If I didn’t export then I couldn’t bottle whisky at the volumes I do and get the accompanying economies of scale.”

Angels NectarRansom’s tip for companies considering exporting is to tap into the expertise of Scotland’s enterprise agencies – which include Scottish Enterprise (SE), Scottish Development International (SDI) and Highlands and Islands Enterprise (HIE) – including their export adviser. He also recommends the events the agencies run, especially the overseas market visits.

“Although I’ve travelled extensively through my export sales jobs over the years, I’d never had that much experience of France and so I went on a market visit organised by SDI,” he says. “I learned a lot about the market and got a few leads too and I’m pleased to say that Angels’ Nectar is now available in France.

“We’ve also taken part in the Showcasing Scotland event at Gleneagles. From the most recent one, we are working on an order to go to China, and Angels’ Nectar is now listed with a wholesaler in the south-west of England.”

Like many entrepreneurs, Cass McNamara, the founder and chief executive of BirthSparks, didn’t set out to become an exporter. “I didn’t have a particular vision about exporting – in my mind, we were going to sell predominantly in the UK,” she explains.

McNamara, who worked as a midwife for the National Health Service (NHS) and then in private practice, launched her Comfortable Upright Birth (CUB) support in 2014. “I didn’t intend to turn the invention into a business, I just wanted to prove the concept would work, but then I was fortunate to be one of the first Edge Fund winners, which helped me to develop the prototype,” she says.

McNamara launched CUB at the Triennial International Event for Midwives in Prague and, to her surprise, came back with £200,000-worth of orders from 40 countries. “I thought our business was going to be born in Britain, but we were born global,” she laughs.

“It was a bit of a baptism of fire because I didn’t know a lot about exporting or customs regulations, so I had to learn pretty quick. It was a process of trial and error learning how to export, but now it’s very easy for us to do and we export to 68 countries at the moment, with distributors in nine countries.”

Early hurdles to overcome included finding out how to generate the necessary shipping documents. BirthSparks now uses an automated system via FedEx, which generates customs documents for each market.

McNamara praises the four-day introduction to exporting course run by SDI as “phenomenally helpful” when she was starting out, as was being able to pick up the phone and ask questions of her account manager. Now, mainly down to export growth, BirthSparks employs a team of five people, with turnover expected to hit the £1m mark this year.

“If we’d only been selling in the UK then we would have been limiting ourselves to a country with a relatively-low birth rate,” explains McNamara. “About 70% of our business is international, so if we’d not exported then we would be a much smaller business.

“You’re not going to know everything before you start exporting – you really just have to start doing it because there will always be things that you don’t know about. I’d recommend people find a good system that generates all the correct customs documents and clearances, depending on the country they’re exporting to.

Cass“If I had to give advice to somebody when they’re thinking about exporting then I’d say it’s like everything else in business – you just have to do it and take the step. Sometimes you’re not 100% sure about the step you’re taking, but businesses are like babies and learn by experimenting; sometimes you’re going to fall down and sometimes you’re going to take a step, but that’s how you learn and grow.”

Both McNamara and Ransom have enjoyed the benefits of exporting and have avoided the disadvantages of being reliant on a single market. Focusing solely on domestic customers instead of having a global outlook could lead to a saturated market, stagnant sales, falling profits and threats from external factors such as the entry of rivals.

“From a company’s point-of-view, the benefit of exporting is that they can expand their market overseas and so become less-dependant on any single market,” explains Kristell Clunie, an international senior executive at SDI. “That helps companies to spread their risk – instead of putting all their eggs into the same basket they have more sources of income coming from different markets.

“Through more exporting, they will hopefully get more production going and so have economies of scales and better margins. Potentially there will be less competition in some markets while, for seasonal products, they would have the seasonal offset of going to markets further afield.”

Clunie also points to the benefits of the trade visits that the agency organises to overseas markets. “Over the past two years, we’ve taken companies to European markets like Belgium and France, we’ve been to Scandinavia and the most-recent one was to the US,” she says.

“The visits are for companies that are new to exporting or are new to specific markets. They’re cross-sectoral visits, so the companies can come from different industries and, because the visits are cross-sectoral, it means companies aren’t travelling with their competitors.

“Because of that, I find that companies open up to each other and it can actually lead to future business collaboration. They are often willing to share their contacts with each other and they keep in touch afterwards as well to share ideas.”

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For more information on the export support available visit scottish-enterprise.com/exportadvice or if you are based in the Highlands and Islands region visit hie.co.uk/exportadvice