How to build your business outside the UK - Sunday Times

Companies can be held back by the obsession with exporting goods produced at home. They could thrive by creating manufacturing hubs overseas

An hour’s drive north from my Yorkshire home is one of this country’s great manufacturers and exporters, celebrating its 130th anniversary this year. Barbour’s headquarters in South Shields, just outside Newcastle, is where some of its famous waxed jackets are made by hand.

Recently revealing record revenues of almost £350 million, Barbour is a success story to be hugely proud of — not just because it manufactures in the UK, but because it sells in 55 countries.

Whenever I’ve started a business, or been brought in to advise a growing one, I have always tried to raise everyone’s horizons. Why must our instinct be to see a great business as a British business, rather than a global one?

We have the talent, ideas, reputation and experience. Sometimes what we lack is the ambition, limited by an old-fashioned attitude that views manufacturing success through the prism of exporting goods made here in the UK.

Last week, entries closed for the Department for Business and Trade's Made in the UK, Sold to the World awards. It’s a brilliant government initiative, but I’d like to see more celebratory language and awards for those businesses with even loftier ambitions — those that sell their products or services in international markets, even if they don’t originate in the UK.

When manufacturing is outsourced overseas, revenues and profits are still repatriated to the UK — and, with corporation tax paid here, the British economy reaps the rewards.

Sintela, the Bristol-based remote sensors developer, is a prime example. It’s one of our fastest-growing companies and made 90 per cent of its £10.4 million in sales overseas last year, in part because of the hubs it has set up in India and the US. Perhaps government-sponsored trade missions could be just as focused on setting up subsidiaries of British businesses in new countries, as they are on selling British-made goods. A few months ago, Lord Bamford’s JCB announced it is building a second factory in the US, which will join its 22 others around the world in countries such as Brazil and India, far from the firm’s Staffordshire base.

Maybe we need a mindset shift. We’re a small island with gifted business leaders. Like JCB, we need to think of how to grow businesses ten times the size of what they would be if based solely in the UK. With low costs and favourable tax rates, Britain is a brilliant place from which to build and grow an international business, as long as you follow the right advice.

First, identify if there is a potential competitor already operating successfully in the territory you want to expand into. If there is, good. That proves your idea is already working and there is potential for growth. Second-mover advantage allows you to take what’s working, then adapt and improve it.

Second, seek countries where you have to change only 10-15 per cent of your business model. For instance, clothing companies often have to adapt according to the different shapes and sizes of international customers. The mistake would be to launch different styles as well. Keep the core business as is and change the minimum to be successful. If you need to radically change your product or business model, then think again about going in to that country.

Third, going global means setting up local. You cannot maximise your international potential if you direct everything from the UK. You need a presence in-country — a small office and team — with a smart outsourcing strategy that enables you to rent warehousing and logistics skills. The UK fitness clothing brand Gymshark has done this with the ecommerce firm Radial to fuel its expansion in North America and Canada. Look at countries where your UK export sales are already highest, because they will offer a better chance of faster growth.

Then, find a local mentor in your chosen country — one with insights that no amount of data can match. If they are convinced by you and your idea, they might even offer their expertise, contacts and knowledge free.

Next, don’t delegate international development. As the founder or chief executive, you need to be on the ground doing the research, talking to potential customers, learning the culture and imparting knowledge of your business to as many people as possible. This means hiring a chief operating officer to run your day-to-day business back in the UK, before recruiting a local team in that new territory.

Be prepared to invest and take profits backwards. Things take time, so be patient. Don’t make any rash decisions until you have worked your socks off for 12 months, and don’t run before you can walk.

Make sure also that you have perfected and grown your business, product and service range in your home country before trying to export it. If you expand too early, that’s an undisciplined pursuit of more that could have a negative impact on your UK business.

I know from my own experience how fantastically ambitious British businesses and their leaders are. But sometimes growth depends on extending our reach rather than simply nurturing what we have.