It seems every time I turn on the TV or Radio I am regaled with stories about the economic doom threatening the UK economy. Don’t get me wrong I know we are in a mess, but having run a business in Latvia, which suffered a 22% drop in GDP in 2008/9 I also understand that it does not need to be terminal.
Indeed I would go further, I don’t think there has ever been a better time to run an SME, yes it is impossible to get the banks to lend you money, but SME’s have the flexibility to be able to respond quickly to threats and opportunities, and that has never been more important than it is now.
The key to success in the new economic world is going to be able to take a truly global view of your business whatever its size. The UK and Scottish government are desperate to get business working overseas for obvious reasons, at the best the UK economy will be flat for the next 3 or 4 years, and if the Euro goes down it could be back into serious recession. Other markets outside of the EU will not be affected as badly, so much better to be selling product into a market that is growing at 5-10% a year.
But the government only tells UK business half the story, internationalisation is about so much more than export. For a business to improve its profitability it either needs to sell more, or it needs to improve its efficiency. I spend my time working with businesses looking at how they can benefit from internationalisation. When I do this I am looking at both revenue and costs.
I thought it might be useful if I explained the various areas of internationalisation as I see it:
Export: this is obvious, the selling of your product into a new market, however it is not as easy as it sounds. You need to have the correct strategy in place, what will you sell, where will you sell it, and how will you sell it (direct, agents, distributors etc). You need to look at all these as well as local legal issues etc. But do it correctly and it can be a game changer for your business.
Outsourcing: I am seeing a big increase in this, many UK companies which have outsourced to Asia are now looking to bring that back to Europe as they want to order in smaller quantities on quicker turn-around times. I am also seeing companies which have never considered the option, now wanting to see if outsourcing is a viable way of cutting costs. You would be surprised how many companies this works for.
Establishing an office or facility: This is taking outsourcing one stage further, establishing your own team. There are pros and cons to this, the saving is bigger, you can control more closely and you may be able to access local grant support, however it is a big commitment.
Supply Chain Development: As part of getting more efficient more companies are beginning to look further afield for suppliers,
I have worked with companies of all shapes and sizes helping them go through the process of understanding what internationalisation means to their business, and then developing and delivering a coherent strategy in the markets of which I have experience.
I am always happy to have an initial chat with any company interested in exploring these topics, and for client s of the Alba Innovation Centre I am offering a free internationalisation audit, which will highlight the areas of the business which should be considered when thinking of going global.
So remember the current economic conditions offer a great opportunity for SMEs to out manoeuvre their bigger competitors, things are not going to go back to how they were, so my advice is to embrace the change.
Charles Cormack Cormack Consultancy Baltic Ltd