International expansion has been a key driver of growth for the companies in this year’s Sunday Times Top Track 250 list. More than half of these companies trade overseas, and they managed to grow their international sales by an average of 24% in their latest year.
Among the international stars were solid hardwood furniture retailer, Oak Furniture Land, which in its first foray outside of the UK, managed to achieve $4 million of sales in digital-only trading in the US, and plans to open its first store in the US next Spring. While Wagamama, the noodle bar operator, grew its overseas presence to five restaurants in America and 56 franchised restaurants in the EU and Middle East.
In addition to organic growth and franchising – as shown above – the Top Track 250 also made acquisitions of foreign companies and expertise. The commercial printer Walstead Group, for example, announced two large acquisitions this year, lifting its sales beyond €730 million.
The importance of internationalisation as a driver of growth has also been demonstrated in our own research among 1,000 business leaders in the mid market. We found that those companies that had achieved significant growth - the Growth Generators - were substantially more international than other mid market companies.
Brexit is undoubtedly a factor in companies’ attitudes towards internationalisation. Some 40% of respondents said that Brexit had put their leadership teams off the idea of international expansion. But the success of the Top Track 250 and our own Growth Generators demonstrate that Brexit shouldn’t be a roadblock.
So what else is holding companies back? Our research provides further insights from those already operating internationally.
What would enable you to achieve your international growth ambitions faster? (Top 10 ranked factors)
A stronger international network
More powerful/recognisable brand
Better understanding of regulation overseas
Better understanding of the potential market and customer base overseas
External advisors with international offices/footprints
A defined international growth strategy
More advice from government agencies
Establishing a joint venture/partnership
Better understanding of the company’s risk exposure in different markets
More reliable operating systems/networks
Encouragingly, many of these factors are within the control of companies. Building a stronger international network (top ranked factor) may take time and energy, but it can be done, and is an area that the Growth Generators are prioritising as they continue to exploit overseas markets.
A better understanding of regulation, markets and customer bases (3rd and 4th) can be achieved in the short term with the right advisor, particularly one with an international footprint (5th). And this understanding will be a vital ingredient in creating a defined international growth strategy (6th).
The only top ranked factor that presents a meaningful challenge is developing a more powerful or recognisable brand, but even this can be built in the medium term or bought in the shorter term.
While Brexit may bring the perceived risks of internationalisation to the fore, the results of the Top Track 250 are a timely reminder of the rewards.
When it comes to success factors for exporting, it is important to make sure you understand the end customer’s preferences in different markets and then assess the optimum distribution channel for your business and its products or services to address those customer needs.