Small companies sharing a big market

YOU don't have to be a mammoth corporation with a bottomless pit of capital to make it big overseas.

Les Spark
Les Spark

A HORSE called Tiffany with a bad back was the unlikely catalyst for the creation of a globally successful firm in a tiny village in Teesdale.

Tiffany’s owner Les Spark, an endurance riding enthusiast, set about designing a saddle which would allow him to ride the horse without being thrown to the ground in anger at her own discomfort. And so the flexible, and apparently ultra-comfortable, Free N Easy saddle was born.

Seventeen years later, the saddle is sold in 20 countries across five continents and has given the village of Low Selset, near Barnard Castle, its own international success story.

This month Mr Spark shared his exporting experiences when he met with budding entrepreneurs at an event in Newcastle’s Baltic Centre for Contemporary Art.

Event organiser Enterprise UK brought together a string of small but successful exporters to uncover the secret of exporting without involving heavy investment.

Mr Spark explained why export markets are not reserved for large, blue chip players with budgets to burn and multi-million-pound expansion strategies.

“We are a very small company and we have exported on a shoestring,” he said.

However, he also explained why the path to global domination is far from straightforward.

“We had someone go on to our website from America and said ‘we like what you are doing’. We Googled her and decided she was our target market, so we went across to see her. We got on the airplane and went to America.

“There’s a misconception that if you invent a new mousetrap, the world will beat a path to your door – but that’s absolute rubbish. That’s why the advertising industry exists.

“We have had to provide extreme customer support, which we can now do on the internet. It’s a high value item [from around £2,000 to buy] so that means the customer doesn’t buy it without thinking very carefully about it.

“That means there needs to be a lot of contact with us to have comfort when buying something as expensive as that. We can afford to give people that personal attention as one sale gives us a lot of money.”

New Zealand, Uruguay and Japan are just some of the countries the firm, which employs just five people, has sold to. But it has learned the hard way about how to handle the risks and unseen pitfalls of going global.

At one stage it was approached by a German and an American party who both saw the commercial potential of the product in their respective countries.

Mr Spark said: “By about 2000 we got carried away and we were approached from America from someone who wanted to sell it across America and another person who wanted to sell it in Germany.

“Our mistake was that we had priced for direct sales. We didn’t add the margin for selling it through agents.

2003 was our biggest year of overseas sales – turnover was around £155,000 and half of our production went to the US that year but we made big losses. We were very vulnerable to currency fluctuations.”

Ultimately the company parted company with the two agents and it is now flourishing independently on the world’s stage.

“We don’t have a big enough market in the UK. There are much bigger markets in America and France.

“We have gone out and focused on our niche market. We have to try and become familiar faces to the French and German riders. They are very conservative about buying from abroad.

“We go to trade shows and racing events in France and little by little this is now growing and that is how we are going to continue. We think we are on the way to being a successful small business selling overseas.”

The Government’s UK Trade and Investment (UKTI) body believes that small business leaders should not be afraid to follow the example of people like Mr Spark and at least dip their toe in a foreign market.

Craig Daglish – a Tyneside-based UKTI international trade advisor – told delegates at the Baltic that small firms with shoestring budgets should think long and hard when choosing their first export market.

He said: “Before committing to and spending on overseas visits, you need to find out as much as you can about what’s the best way to target those markets.

“I can’t stress enough about how important it is to do research. Find out as much as you can about the market for your particular product and whether you can sell it their profitably.

“My advice for small businesses to reduce your costs, think about the markets you select very carefully.”

He also urges small business entrepreneurs not to over-stretch themselves when they embark on their maiden international voyage.

“I get a lot of clients who may have seen a report on TV the night before on China or India and want to export there.

“But those markets are graveyards for small UK businesses. Target small English-speaking markets or markets that are relatively close to the UK. It’s no secret that the most popular markets for UK businesses are places like Ireland, the Netherlands and Denmark – small markets which provide a good starting point for a lot of beginner exporters.”

While Mr Daglish admits that becoming a global success is a long and arduous task, he is also keen to stress that it could prove a hugely positive step for small firms.

“I think its a good time to be looking at exporting and there are some markets in Europe that are starting to recover ahead of the UK.

“Developing international markets is a long-term thing. It takes time and research but there is support available. There are a significant number of small businesses that do succeed selling overseas.”

Whitley Bay-based entrepreneur Jenny Hayes certainly learned the hard way about the importance of choosing export markets carefully.

Today her bespoke dressmaking business Crimson Closet is successfully dressing customers as far afield as France and Denmark and is currently looking into the possibility of breaking into New Zealand and Australia.

However its journey into export markets has not been easy.

When the fashion designer first looked at expanding overseas, she took an ambitious trip to the Far East.

“We jumped on a plane to China and we then went to India. Trying to take on China or India at that time was really, really difficult.

“After that Business Link introduced us to UKTI. We opened into Scandinavia which was a lot easier and in a year and a half we had gone into Estonia, Iceland, Finland and Norway.”

Ms Hayes, like most owners of small firms which have navigated their way into an overseas market, has shown that the most cost-effective tool in becoming an exporter is a website – as North East Chamber of Commerce policy adviser Jonathan Walker explains.

“Smaller businesses have fewer resources and exporting does require a bit of an outlay. But they should definitely consider it now, especially with the exchange rate low at the moment.

“For a small initial outlay, the financial rewards of the internet can be a great tool for generating sales abroad.”

He also said networking is also a thrifty way to access international clients.

“Find out what other firms in the region did to break into a market and use their contacts to your advantage.”

Page 3: A world-wide sensation

A world-wide sensation

WHILE the market for men’s make-up in the UK is dogged by stigma, in other parts of the world it is much more socially acceptable, much to the delight of a small firm in County Durham.

Claire Mitchell runs men’s make-up company Aston Mitchell from her home in Bowes, near Barnard Castle, with her long-time friend Kate Jones.

Without any predetermined intention to sell overseas, in just a few years the firm has been a global sensation, selling to places as far flung as Brazil, Argentina and Japan - and even working with Barack Obama’s make-up artist.

Ms Mitchell, whose website was launched for just £750 - half of which was paid for by Business Link - said: "We didn’t plan to have any global suppliers or customers. We decided that the business we wanted to have had to be an emerging market, and had to be web-based.

"We went all over the place when we started sourcing make-up and selling has been quite easy but when we are buying, we are at the mercy of the exchange rate and have had to deal with the issue of freight costs."

"Having a website means no-one knows how big we are and we can also do customer service via text message. We’ve tried to make the website a one-stop shop for guys who can’t go down the pub and ask what colour make-up they should wear."

In its first month the company sold less to the UK than it did to Brazil and Argentina and now, 30% of its sales go overseas.

Page 4: Building trust with customers

Building trust with customers

IF you’ve ever handed in your cast-off clothing to a charity shop in the Tyneside area then there’s every chance that it’s found its way to Eastern Europe.

Eventex, based on Newcastle’s Quayside, buys second-hand clothing in bulk from charity shops and, more recently, from individual homes and sells it to retailers and distributors in Eastern Europe.

While part of its revenue is donated to charity, it is a profitable enterprise with clients in the likes of Warsaw, Krakow and Prague. In terms of becoming a first-time exporter on a shoestring, the company’s managing director Stephen Gardiner believes the key to breaking into Eastern Europe is creating a trusted reputation and agreeing amicable payment terms.

He said: "The biggest challenge was building rapport with the customers and getting to know what their demands were - there was a lot of travelling to places like the Ukraine involved.

 

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