Understanding your customers is a fundamental first step before taking your business overseas
Allyson Stewart, Chief Executive at International Marketing Partners Ltd, Anthony Goodwin, CEO and Founder for Antal, Arne Mielken, Managing Director for Customs Manager Ltd, Chris Forbes, Co-founder of The Cheeky Panda, Nohman Ahmed, Co-founder for Crept Protect joined us for the second day of Elite Business on 12 March in the Overseas Expansion panel, discussing the dos and don’ts when it comes to expanding your business overseas, and how to invest in the EU market as businesses face extra red tape in post-Brexit trade.
How do you know which country to invest your business in, and when is the right time? Research is important. Anthony Goodwin, CEO and Founder for Antal said he was inspired to take his business abroad after reading the news and hearing about corporations expanding to overseas markets. A lot of people told me don’t go, don’t do it. Don’t go to China, Russia or India and told me it could only be done by the locals, Anthony said. That’s a red rag to a bull in entrepreneurial terms. If someone tells you not to do something, certainly you’re going to try and do it. I would give credit to the people now who have been with the business for 10 or 15 years. They’ve been terrific. But inspiring me, in the beginning, was all the articles that journalists wrote about the developing markets opening up and the opportunities there. It was about the research. Actually, I didn’t do a lot of research, I just read the news. And I read the business press, who was opening up across the world… We just followed the clients.
Businesses now face extra red tape dealing with European customers and suppliers as a result of Brexit. Britain has left the EU’s single market and customs union and British exports to the EU have dropped significantly. Despite that, can businesses still retain the EU as a key marketplace? Arne Mielken, Managing Director for Customs Manager Ltd, believes it is possible but only if you understand the regulations and your customers’ attitudes on post-Brexit trade.
It’s about understanding your customers first of all and asking them what’s their attitude towards Brexit is, Arne said. Are they going to be able to import these goods, or do they want the most seamless experience possible? What we need to ask ourselves is how can we work around this ‘border’. And there’s a lot of ways, we have government regulations that are in some cases burdensome, but free trade agreements help. So, it’s understanding what’s changed, dealing with that, searching websites and asking people like me, as well as setting best practices and processes up so you can get into that market. So, it’s about communication, talking to the Europeans and getting excited about these new rules. And once you understand these new rules, the world is your oyster.
Your business will inevitably face obstacles and challenges when expanding overseas. Nohman Ahmed, Co-founder of Crept Protect, advised businesses to keep up to date with trade regulations because they change very often ‘ and it can spell disaster if you do not follow them. We work very hard in driving confidence in our clients. A massive challenge for us was expanding very quickly very fast, Nohman said. We sell a vast array of shoe care products and they are hazardous products with materials which are permitted in some territories and some not, so we had a very generalist view once we started. And starting to understand the regulations on labelling, hazardous storage and transport. In the local regions, they vastly differ… A massive challenge for us was getting in that consistency but doing it within regulations… For us we spoke with the Chamber of Commerce, we worked with hazardous storage consultants, we have distribution hubs all over the world. And again, we just learnt so much ourselves. It’s important to learn at the outset but always stay up to date. These regulations change very often and it could really cause significant damage to your business if it’s not followed.
When expanding overseas, it is important to understand the culture and people’s way of life. Allyson advised businesses to have good knowledge of how potential customers could use your product or service, so you can determine the right overseas territory for you to invest in. Until you immerse in the culture and understand how does a consumer or B2B client use your product or your service, or misuse it, Allyson said. A lot of innovation has come from people misusing your stuff… Understanding how people live and how they use products differently, that sort of research is invaluable. You’ve got to go, you’ve got to immerse and suspend judgment and not say, ‘They’re wrong!’ My family and friends always ask, ‘Why do the British drive on the wrong side of the road?’ It’s not the wrong side, it’s the right side there!
When exporting your goods overseas, it is important to understand your rates of sale as sometimes buyers can overestimate that. It is important to be realistic and understand your margins, as you can end up losing out on profits. Also, have a contingency plan in case one of your supply chains shuts down ‘ and never put all your eggs in one basket.
During Covid-19, we saw a spike in toilet tissue which drove sales but at the same time we lost all our B2B businesses, Chris said. So having different areas of the market that you’re trading in is important so if you lose one revenue stream you still have some revenue, as you don’t have all your eggs in one basket. And secondly, when one form of supply chain shuts down, what’s your contingency plan? We’ve seen with retailers as well they will overestimate the number of sales they want and products they need… We’ve had our fingers burnt a few times where someone said prepare £300,000 of product and they sold £50,000, and we’re sitting on £250,000 and it takes us 6 to 9 months to shift it through, it becomes less profitable because you’re not working on those types of margins… Just look at your rates of sale and estimate exactly what your expectations are, and not what the buyer will tell you.