High Risk, High Reward: How to Export Successfully
I started Ella's Kitchen in 2006 with the mission of improving children's lives by giving them a healthier relationship with food. Nearly ten years on, the business is now the UK's number one baby food brand and sold in over 40 territories worldwide.
I have always believed that business is the most important force for positive social change, and it became my ambition to create a company which could address the growing obesity epidemic among young people.
Keeping our values and mission at the heart of the business has been the key to building a strong brand, but our rapid expansion is down to the understanding that people want the same level of health for their babies across the world.
Ella's based its export strategy on the simple belief that people around the world are more similar than they are different. And yet we also had to ensure we were recognising and thoroughly understanding market differences before we started to approach new territories.
Our products now retail in 40 countries, from the Nordics to North America, and turnover last year topped $100m. Ella's Kitchen launched in the USA in 2009 and is available in Target, Walmart, Kroger and Whole Foods.
Why? And how?
At Ella's, we have had an outward looking, but very focused, growth strategy from the beginning. We have been very disciplined in picking which markets to enter, concentrating on actively investing in only a handful, aiming to secure double-digit market share in each. We prefer to have good market share in a few markets than low impact in many.
Here are some things we've learned along the way:
1. Do your research. It's never been easier: Online resources are easily accessible and free of charge.
Seek support from organisations such as UKTI to help you. We found that the UKTI Passport to Export programme was a fantastic source of support, teaching us about distribution options and cultural differences.
We researched everything from the local economy and class demographics to regional diets and red tape.
We learned, for example, that Norwegian children start school the year they turn seven. We realised that the idea of a "lunch box" doesn't exist (schools meals are hot). And we found out that both Norway and Sweden add VAT to baby food.
That deep level of research worked - my advice, learn as much as you can about other markets.
2. Don't cut corners. While a lot of research and support is free, there are some paid services you shouldn't go without. Get professional legal and tax advice, and partner with people you can verify, audit and trust. The investment will be worth it.
3. Don't pick a model for your company, pick one for each market. Recognise how your business needs to adapt to each market.
Do you want to use partnerships, distribution or even online retail? You need to decide that on a market-by-market basis. It's not about using distributors everywhere. In one territory we went direct to retail, in others we've established subsidiaries.
4. The UK is a great place to have a business. Make the most of it: Remember and have confidence in all the positives we have here in the Britain. We are in the middle of the most traded time zone, we speak the international language of business, and the EU has no discriminatory barriers to entry. 'Brand Britain' means something abroad - don't be afraid to exploit each of these to your advantage!
5. Consider currency. If some of your costs of sales are paid for in foreign currency, seriously think about exporting. This will give you a natural buffer against fluctuations and reduce risk in your company.
6. Walk before you try to run. A lot of growing businesses fail because they run out of cash - not because they run out of profit. You have to ensure your cash flow is secure before you try and enter new markets.
It might sound like a good position to be in but if people want your products, you have to make sure you can support the demand.
With over 60 million people in the UK and over seven billion beyond these shores, international markets are true lands of opportunity for British businesses. It's a high risk, high reward strategy - but one which can pay great dividends if you are properly prepared.
As a start-up entrepreneur, international expansion can seem a million miles away, but be confident. Now is the time to think big - to turn those baby steps into giant leaps and fly the flag of Brand Britain across the globe!
Keep smiling,
Paul
