exporting business

The frontiers between success and just staying in business are clearly marked. What's obscure is why so many companies remain on the wrong side of the fence - even when they fall further and further behind the competition with every pasing year.

Take the case of an engineering business which over the last 25 years has seen a once-smaller competitor zoom past its sales. In 1960, it out-sold the competition two-to-one. On the latest results, the one-time follower outsells the former leader by 300% - and is still expanding faster.

Worse still, a third rival, a mere beginner back in 1960, is significantly larger. What goes on in the minds of managements as they are outmanaged and outsold so consistently? Quite apart from the threat to sheer survival, the others' gains in sales and profits are their lost potential income. Strangely, the free market forces don't always seem to work.

The particular business referred to above is actually a whole industry: the industrial gears division of UK, Ltd., a £450 million sector containing many smaller firms. If the entire British contingent doubles its sales in the next two years, it will still be as far behind the Germans as they lagged 35 years ago.

But the Germans won't be waiting around for Britain to catch up. Nor will the second successful rival, Italy. This saga would be dismal enough if it stood alone. But other industries exhibit the same small company disease: fear of exporting. Transcending that debilitating illness is a major step across the frontier of success.

To export effectively, you have to raise your sights on the four key factors of business: investment, innovation, marketing and productivity. The potential is huge. The European market, let alone the world, is far larger than the UK. Cut a small slice from a vast cake, and you eat much more than all of a small bun.

That's so obvious that export paranoia must have some deep and tangled roots. But some ways of building abroad don't involve leaping into the unknown. They may lie in front of the company's nose. For instance, do any of your customers have overseas operations to which you can sell? Big companies like GKN and Pilkington are following their customers round the world. So can anybody.

But that means being totally committed to the exporting life - and that exposes your whole management system. If it can't provide the pertinent information and able managers needed for success, the firm won't succeed abroad. But it won't flourish at home, either: the industrial gear laggards, in fact, are being endangered by imports.

That exposes firms to a double whammy: losing sales at home, and not compensating for the losses by gains overseas. That's far more dangerous than the threats which often intimidate proprietors or senior managers: fear of being unable to cope with big orders from abroad - and not getting paid for the orders they actually manage to deliver.

On the first point, under-investment is another of the basic sins that catches laggards out at home as well as abroad. Michael Opperman, whose firm, Cross & Morse, has grown to medium size, told the Financial Times that 'A modern computer numerical controlled gear-cutting machine costs £300,000, and you need lots of them.' But if you don't have them, what then?

On the second point, the threat of non-payment, there are several ways of protecting the firm, from credit guarantees to factoring. The Department of Trade and Industry, which has been trying hard to lick the gear-makers into shape, is a mine of information on such relatively easy technicalities.

Information about which markets are big enough, safe enough, easy enough to reach, and growing sufficiently fast is also available freely - and free. More specific research may have to be paid for: but much highly relevant information can be found relatively cheaply by attending or exhibiting at all the right trade shows.

In other words, nothing stopped the industrial gear failures from succeeding but themselves. If you want to cross the success frontier, selling across frontiers is as good and rewarding a place to start as you can find.