According to pseudo-scientific evidence, frogs have some kind of body thermostat that makes it impossible for them to realise when slow changes in ambient temperature become a threat.
The hotly disputed notion argues that if a live frog is placed into a pan of water and brought to the boil, it will jump out. But if the heating process is gradual enough, the frog will not move and will be boiled to death.
All very interesting to some, perhaps, but what on earth, you are probably asking yourself, does this have to do with exporting? I’ll tell you.
One of the key elements of successful exporting is the recognition and understanding that the differences in culture in another country lead to business practice also being a bit different. A business that has achieved success in its home market often needs to go right back to basics to be successful elsewhere. For one thing, building a recognised business or brands at home often doesn’t mean diddly squit in another place. You are nobody. But for the newcomer to the market who hails from another place, it’s even worse than that. Your market doesn’t know you and you know less than that about the market. Research and study as much as you like, I can almost guarantee that there will be aspects of any new market that will surprise.
I have often said that, when preparing to enter a new market, I need to leave all my prejudices and assumptions at the border. Even when dealing with supposedly familiar countries in Western Europe, I have found this to be true. In our industry, with its highly trained professional operators and worldly wise business managers, something that is accepted as normal practice in one country can be quite alien just across the border. The Single European Market? Forget it! There is no such thing.
So in order to succeed in exporting, we need to keep our thinking heads on and be prepared to question all our assumptions and prejudices. I have found that a product that was easily accepted in The Netherlands was rejected out of hand by people from the same profession just over the border in Belgium. Basic practices in such things as health care and safety procedures can vary wildly too, and this can have far-reaching implications for anyone supplying these or related markets.
So anyone involved in export sales begins to accept, and even expect surprises. That’s why I call this The Accidental Exporter, because in truth there is a very large element of accident or surprise in all export business. I find that as much as I think I get to know a particular market, something can still come along and cause me to reassess what I thought I knew about that place.
This is where the frog comes in. Particularly in periods of severe economic or social change, as we are going through now, this survival technique used by exporters of avoiding assumptions and accepting surprises as part of the job can also leave us vulnerable to not noticing when something is changing. This is most extreme in places where a severe upheaval is beginning to take place. When the countries of the former Eastern Europe rose up against their communist regimes, foreign business people who were supposedly well acquainted with those places were often among the last to realise that something was afoot. It’s the same now with the Arab Spring. We get so used to things being a bit different that we risk being immune to noticing when there are severe changes that are likely to affect us and our business. This is particularly true where the changes are gradual. Political protests are not unusual in many countries, and in some places such unrest is known to become violent from time to time. Visitors to such places are used to that, and learn to keep their heads down and avoid the usual hot spots. But these very survival techniques can cause us to either fail to notice, or else to dismiss when something really fundamental is happening.
The recent economic crisis looks to me like its going to be with us for some time to come, and perhaps even get much worse. Exporters need to be able to assess the impact of this on their business as well as on their own personal safety. Keep abreast of developments by reading reliable news reports and maintaining contact with commercial staff at Embassies abroad. Try to avoid the temptation to shrug off reports of changes by telling yourself you have seen it all before. In the present economic situation, it’s quite possible that we are going to see some pretty fundamental changes.
I want to look at payment issues. Future updates will cover pricing, including price-setting and ways of handling foreign currency payments. Firstly, I want to discuss the matter of getting paid.
Of all the obstacles that a new exporter fears, the most daunting is often getting paid.
Someone once told me that sales are the life blood of any business. If that’s so, then I’d suggest that money is the oxygen. A business can often survive for a short while without new sales, but a lack of cash will kill it stone dead.
For a business that is new to exporting, the mere notion of payment problems can cause sleepless nights. Aside from the sheer problem of distance, there are all the legal issues, exchange rates, bank charges and of course the challenge of getting the goods to the customer in the first place.
An international transaction is problematical for both parties. For the seller, there is the small matter of getting paid. When, how and how much? But for the buyer, there are similar risks. Will the supplier deliver, with the goods arrive on time, will they be damaged in transit, will they meet my needs?
It’s reassuring for both parties to know that there are ways around the issues.
In business to business transactions in the UK, open account terms are widely used, especially with regular customers. It’s not surprising then, that comparable agreements are used in many other countries. So if I want to persuade customers in other countries to choose me as a supplier in preference to local competitors, it’s probable that I will have to be prepared to offer similar trading terms.
When quoting to a new business customer in Europe, my terms of business are pretty similar to the way I deal with a new account in my own country. I tell them that my usual terms of business are payment in advance on the first order, and invite them to apply for a credit account for future business. Only very rarely have I met with any objection to this. This is a good way for a buyer and supplier to check each other out and decide if they are reliable. With electronic payment methods such as SWIFT, the transaction can be made quickly and relatively inexpensively, and need not delay the shipment too much.
After a first order, I send the customer a short application form for a credit account. It’s an effective way of maintaining the contact, and encouraging more orders. We check out the information against a bank reference, and take up trade references, too. We’re lucky in a way, for a smaller business, as our export business is spread around a relatively large number of customers, so we are not exposing ourselves to any really big risks with an individual customer. In the time I’ve been doing this job, I have had to write off non-payments very rarely, and they have never exceeded one percent of sales in any year.
In my business, a typical order is about a thousand pounds or so, and is rarely much more than five. This effectively rules out most of the more secure methods of payment such as letters of credit . Apart from the fact that they are not generally used in our line of business, particularly in Western Europe, they also incur costs that can be a bit excessive on the kind of transactions we do. But that’s just us. For others it’s a different matter, and especially if you are trading with Asia, Africa or the Middle East, and/or you are regularly receiving larger orders than we do, there are other alternatives available. Business Link has a useful online guide that can give you some ideas.
The important thing is to have a carefully worked out procedure, and stick to it. I am never impressed by hard-luck stories about how someone I’ve never sold to before would be only too happy to pay in advance, but has a technical problem with his online banking and really needs the goods immediately. Don’t be afraid to let the customer walk away if they don’t like your initial trading terms. In exporting, probably more than any other aspect of life, there are always more fish in the sea!
Accidental Exporter is taking a short break now. We’ll be back in September. Happy holidays!
I’m sure you know the ones I’m talking about. They are always in the press, and usually for the wrong reasons. Hidden charges, bad customer services, inflexible booking conditions, the charges against these antiheroes of the air seem endless.
Well I say, god bless ‘em! For a small business like ours, they make trading with our nearest neighbours so much more manageable. I’ve taken eight flights in as many days, five of them with the budget carriers, the other three with regular airlines. I find air travel exasperating and stressful at the best of times these days. It isn’t the flying that’s the problem it’s the traffic jams or the unreliable public transport to get to the airport in the first place, the long queues for the security checks, waiting around in uncomfortable chairs and then the whole process in reverse when you get to the other end.
Increasingly, I’m choosing to travel to visit my nearest customers by car, taking a ferry or the channel tunnel depending on the destination. It’s certainly no quicker, but the feeling of at least being somewhat in control of my own destiny, for much of the time, is worth a lot.
When it comes to the more easterly parts of Europe, I just can’t justify the time it would take me to drive to these places, so flying is really the only practical option. And in these circumstances, I’m finding that a lot of the supposed drawbacks of the budget airlines are actually positive benefits for me.
The budget airlines often use the less glamorous, provincial airports. Good! For the ninety percent or so of Brits who don’t live in the immediate vicinity of Heathrow or Gatwick, practically any of the other departure points are far easier to access. As it happens, I’ve used both Bristol and Luton recently. Neither is particularly convenient for me as a northerner, but they are nearer to me than the big airports, cheaper to park, and for only a slightly extortionate fee I can actually park my car sufficiently close to the departure gate that I don’t feel like sending all my friends postcards before I even leave the country.
The budget airlines charge extra for putting baggage in the hold, and sometimes for not printing off your own boarding card. Both of these work for me, as well. Typically, I do need to carry product samples, and can’t limit myself to a little overnight bag. But checking in at the budget airlines is often becoming easier than the process offered by the regular airlines. Travelling with a major European airline last week, I received an email the day before I was due to fly, recommending I check in online and save myself time, as I’d just need to drop my bag off at the airport. I did so, but at departure I was told I’d have to join the queue with everyone else anyway. With the budget airlines, most passengers are not checking any baggage in and have already printed off their boarding cards, so the queues at departure are often relatively small.
Boarding the aircraft can be a bit of a bun fight, but as a solo traveller, I really don’t mind where I sit for a short flight, as long as I actually get a seat, so I can sit back and watch the jostling and then stroll on to take whatever’s left.
The budget carriers don’t provide ‘free’ refreshments. Another plus, I think. In flight catering on short haul flights has generally become pretty appalling anyway. If I want a coffee or a sandwich, I can buy one, but usually I prefer to eat and drink at the airport, or better still miles away from the airport, shortly before or after the journey. When was it decreed that human beings can’t function without a constant supply of drinks and snacks, I wonder?
The budget airlines deliver passengers to the less trendy and more remote airports. Good idea. Queues for passport control are shorter, traffic is lighter. The journey to the centre of town may be longer, but who says that’s where I’m going anyway? Picking up a hire car at the smaller airports is generally less stressful and quicker, too.
These budget airlines do seem to rejoice in their brash image, and decorate the inside of their aircraft with vivid colours. One in particular has recently been named the most punctual airline in Europe, and decided to celebrate this by playing a loud, jolly tune, every time they arrive on time, which, to their great credit, happens on nine flights out of ten.
I don’t get much joy from flying these days, but increasingly I’m finding that at least the low cost carriers do “what they say on the tin” you might say.
So let’s knock off the knocking. The low cost carriers are providing a service that people want; hence the planes are nearly always full. Regular carriers should take a look at themselves and try to understand why the budget operators are taking their business away.
A report in today’s Financial Times underlines warnings that appeared on The Accidental Exporter more than a month ago that promised UK government support for exporters is under threat from planned spending cuts.
UK Trade and Investment (UKTI) is the body that provides government funding support to help British businesses export. On 8th June, The Accidental Exporter published an open letter to Lord Green, the government minister for Trade and Investment, suggesting that UKTI’s published five year plan was unworkable in the face of recent and planned cuts in funding. Lord Green denied these claims in a reply that was published here on June 15th, but now government plans have been slammed by the Commons Business Innovation and Skills Committee, closely echoing the fears that were expressed here more than a month ago.
In a hard-hitting report, the committee expresses fear that UKTI will be incapable of meeting its targets in the face of:
A seventeen percent cut in funding over the next four years.
Plans to SLASH the already depleted team of International Trade Advisers by around 50
Vague plans to ask Local enterprise Partnerships to help, that carry no detail or an explanation as to how such help would be funded.
What the committee described as the ‘surprising’ decision to appoint a Foreign Office Mandarin to lead UKTI, “rather than a business leader with a track record of success in the private sector.”
In fact, the cuts as portrayed by the report are really far worse. The cuts in budget are in cash terms and take no account of inflation. Furthermore, they do not take of account of the recent and ongoing cuts in support and reduction in the head-count of front line staff that are already occurring as a direct result of the government’s decision to abolish the Regional Development Agencies, many of which provided significant support to their regional UKTI teams.
The Accidental Exporter welcomes this report, which vindicates the criticisms made by us, and which were largely denied by Lord Green in his reply. We agree with the committee that the government’s spending plans appear to be in direct contradiction of repeated claims from David Cameron and George Osborne that they are committed to an ‘export-led recovery’. We note the FT’s warning about the UK’s rapidly falling share of international trade and call on exporters to protest to their local MP’s about the planned cuts in the UKTI’s budget.
Will the government reverse its plans and demonstrate its commitment to exporting companies? Or are the words of David Cameron and George Osborne just hot air?
It is my contention that exporters are faced with many challenges, some of which require us to stick rigidly to procedures, and some of which involve judgement and best guesses.
I usually concentrate on the things that need judgement and guesses, as I think these are often neglected in a lot of training and guidance material. But for British exporters there is an important new legal development that is too important to be ignored, and if your company trades internationally, you need to know about it.
From this morning (1st July 2011) new legislation came into force called the UK Bribery Act. It means that if an employee of agent of a company is paying bribes, then the company may be liable, even if the company did not know about it.
The new act has attracted a lot of debate, and has been delayed on a number of occasions, but we cannot avoid its consequences any longer. Until now, it has been quite commonplace for business operating internationally to turn a blind eye to what a local agent may be doing, for example to get a shipment cleared or to acquire official documents to bid for a public contract. Everybody now needs to urgently reassess their activities and policies to avoid falling foul of the law.
The Act specifies four offences:
• The general offence of offering, promising or giving a bribe
• The general offence of requesting or agreeing to receive a bribe
• A separate offence of bribery of a foreign public official
• A new corporate offence of failing to prevent bribery (applies automatically if anyone
associated with the organization has paid a bribe)
Some legal professionals are concerned that the Act could put British exporters at a severe disadvantage in certain parts of the world. The Act is much too important to ignore!
Ernst and Young have provided some guidance to the new act on their website, including a downloadable publication.
The popular BBC TV programme The Apprentice had an international theme in this week’s episode.
For anyone not familiar with the programme, it involves a group of young, aspirational business people performing tasks set by the entrepreneur Lord Alan Sugar, who ‘fires’ one or more candidate in each episode until the last one left standing is offered a job.
This week, the candidates took the train to Paris and sought to sell a selection of consumer products to major and minor retailers. I think the first thing to say that inevitably there was a very severe edit of a huge amount of activity, and the edit tends to favour the most dramatic moments. We were presented with a group of highly motivated and self-assured individuals, with little to no prior experience of selling in another country, and who were of course determined to steal the limelight.
In one respect, the programme works a bit like the TV quiz show The Weakest Link, in that candidates are forced to work as teams, knowing all the while that there can be only one winner. This is what I don’t like about the programme really, along with the fact that it judges people on short-term results. It isn’t a very realistic business scenario.
But rules are rules, and the candidates got stuck in to the challenge with varying degrees of enthusiasm and success. The two teams were given a range of products to select, and were told that they had one pre-arranged meeting with the huge French retailer and mail order company La Redoute. I thought the child-seat/rucksack would be a winner (I was right) and that the teapot/lamp sucked (I was wrong).
Much of the programme focused on a candidate called Melody. Like most candidates, she came across as opinionated, super-confident and a bit intolerant. She was criticised for her input in rejecting the child seat rucksack. This was based on her ‘market research’ of asking people, apparently in a Metro station, about their driving habits. I’m no market researcher, but even I can see that a sample of people selected at a station may not be a representative sample of the population! The edit gave the impression that she had already made her mind up about the product, and was looking for opinions to support her view, while ignoring those who liked it. As she was accompanied by a colleague who spoke no French, nobody was able to spot her apparent ‘sleight of hand’ on this point!
The decision to reject the child seat/rucksack proved critical. The opposing team won a six figure sale from La Redoute for that very product, and hence won the contest. Melody and two others from the losing team were back in the board room to face Lord Sugar’s bitter wrath and to find out who would be ‘fired’.
Melody survived. And for all her mistakes, I thought it was a good decision. She probably put more into this task (from what we saw) than any other contestant. From the back of a car, she arranged six appointments through cold-calling. OK she was a bit precious about sharing them, but her energy was vital in a team where two of the other candidates, including the team leader, seemed apprehensive and shy.
One little tip I’d offer for non-speakers or weak speakers of a foreign language who are obliged to use what little skill they have. Prepare! More than once, a candidate made a call, opened with the phrase “Parlez-vous anglais?” and seemed completely stumped when the answer came in the negative. Even a poor French speaker could have cobbled together a few simple phrases using those dreaded online translators, and at least prepared a simple sentence to explain the reason for the call.
For this viewer at least, Melody was the star, even though she made a crucial mistake. Her two team mates could claim to have made no mistakes, mainly because neither of them really did anything, as far as we could see. Melody for me was the true ‘Accidental Exporter’ because she got stuck in, was not phased by the task, set up the meetings and made sales. Yes there are lots of ways they could all have done the task differently, perhaps listened to advice, prepared better, researched the market and so on. In so many ways, this was not a very realistic task, but I think it showed that exporting is not an impossible dream. God loves a tryer.
Happy Accidents!
Motivational quote for today – (thanks to Gavin Ingham)
“To succeed in sales, simply talk to lots of people every day. And here’s what’s exciting – there are lots of people!” – Jim Rohn.
The number of people viewing this site has been growing every day. It would be good to know your opinions, so I’m delving out into hitherto untried technology (gulp!) and inviting you to take part in our FIRST POLL.
What makes it the right time for a business to start a new venture, such as exporting?
Is he right? Doesn’t the uncertainty of weak credit resources, fluctuating exchange rates and rising costs in raw materials make this a time when we should really be advising potential exporters to proceed with particular caution?
On the other hand, there are many who are complaining about what they see as Britain’s relatively poor market share in key emerging markets such as Brazil and China. Perhaps we have been too careful in the past, and now is the time to throw caution to the wind?
Government ministers are certainly pinning their hopes on an export led economy. But does that make it a good idea to try and push thousands of small businesses into relatively high risk ventures, just at the time when the world economy is perhaps looking more uncertain than it has at any time for a generation?
No, really! It’s so important to know where my customer is coming from. In international business, this is particularly important. A customer who can get angry with me is a customer I’m engaging with. Of course, I’d much prefer it if he was happy, ecstatic or enthusiastic, but when something has gone wrong, I really want to know.
Not so long ago, I went through a period where nothing we did seemed to go right. We were notoriously slow on delivering a whole series of orders, made some mistakes and overlooked things. In our defence, we were victims of our own success. The business was growing so fast, we could barely keep up. But of course, that’s no excuse to the customer.
Rather than hiding away, I confronted customers in the most direct way I could. If I could meet them face to face, that was ideal, otherwise we’d talk on the phone. When things go wrong, only the customer can tell me how to put them right. And most of the time, I have found that resolving the problems was easier than I expected.
When customers are in another country and from a different culture, it’s too easy to kid ourselves that silence represents complete satisfaction. I’ve talked already about export development as developing relationships, and when we start to engage with a customer, I try to get to know the people as individuals. This is easier than it’s ever been in an age of digital communication. Some customers only ever communicate by email. Some prefer the phone, some Skype and one or two like text messages. It doesn’t matter to me, I only want the lines of communication to be open, so that when they have something to say, they can say it.
As a customer and as a sales person, I have learned that things sometimes go wrong. It’s a fact of life. We’re all human and sometimes we make mistakes. What matters to me as a customer is what the supplier does about it.
This is an old piece of text, but it struck me as a powerful message the first time I read it about twenty years ago. I don’t know who wrote it, but if you do, I’d like you to tell me. The writer did me a big favour.
“I’m a polite customer. You all know me. I’m the one who never complains, no matter what kind of service I get.
“I’ll go into a restaurant and sit quietly while the waiters and waitresses gossip and never bother to ask if anyone has taken my order. Sometimes a party that came in after I did get to order first, but I don’t complain. I just wait.
“And when I go into a store to buy something, I don’t throw my weight around. I try to be thoughtful of the other person. If a snooty salesperson gets upset because I want to look at several things before making up my mind, I’m just as polite as can be. I don’t believe that rudeness in return is an answer.
“I never kick. I never nag. I never criticise. And I wouldn’t dream of making a scene, as I’ve seen some people do in public. I think that’s uncalled for. No, I’m the nice customer. And I’ll tell you who else I am…
The Accidental Exporter is written by an Export Manager in a small company in the North of England.
There are a lot of aspects in exporting that require precision and careful following of procedures, but the actual business of winning business carries a considerable amount of guesswork. In exporting, probably more than any other business activity, sales targets and business plans rarely work out in the way they were intended. At any rate, that's MY experience, from twenty five years of exporting.
That's why I call this blog The Accidental Exporter. I've found that I can research, plan and take all the advice I can find, but that developing business in a new market hardly ever works out in the way that I expected. Basically, this is because of that irritating and unpredictable element in business, OTHER PEOPLE! When a business gets involved in exporting, it is interacting with people with different cultures, values and practices, and these differences are very difficult to quantify.
I've found that the answer to this conundrum is simply to keep trying. The potential market for any exporting business is too big to even understand, let alone quantify. It's perspiration more than inspiration that has worked for me.
The business I am working in is exporting successfully and profitably. Business is growing rapidly, and has been for several years. And yet every day is different, with new challenges and puzzles, rewards, frustrations and disappointments. I started this blog to try and share some of my experiences, in the hope thay they might be useful to someone else. But they are only my experiences. Some of the things I have done have worked, others haven't. That doesn't make them right or wrong for somebody else.
If you are seeking to develop successful export business, you will have to find your own solutions, just as I have. The only advice I can give you is to listen to what other people tell you, take advice and guidance and then decide for yourself. And if it doesn't work out first time, keep trying. It's such a big world out there. If your business is already successful in your home market, I believe there's every chance it will succeed in other markets, too, if you want to succeed badly enough.
Finally, I'd love to hear about your thoughts and experiences. If you've got something to say that you think might help other exporters, please contact me and I'll be delighted to share it on the site.
