Although January started with depressing news that a triple-dip recession might soon be staring us in the face, London is relentless – you can’t bog us down.
Testament to that is businesses’ gusto to not waste time brooding on this fact but instead collaborate and discuss with fellow entrepreneurs about how to beat this downturn.
LondonlovesBusiness.com swung by one such business strategy discussion at a breakfast briefing at the Adam Street Club yesterday.
Organised by FedEx Express, the world’s largest express transportation company, this briefing was one of the company’s efforts to drum up support for the UK’s SMEs who, by default, have got the Herculean task of riding us out of the recession.
“SMEs are absolutely pivotal for the economy, there are approximately 4.5 million SMEs in the UK accounting for almost half of private sector turnover,” said Trevor Hoyle, managing director of ground operations UK & Ireland, FedEx Express and FedEx UK.
“If we can do anything to facilitate SMEs to grow their business and diversify into new markets, we’d love to help with the experience we’ve gathered over the decades.”
The topic of discussion? Specialisation versus diversification – what’s best for your business.
Up first was Tyrrells crisps CEO, David Milner who believes in diversifying full throttle with a range of popcorns, nibbles and tortillas, in addition to its crisps offering.
“Diversification has helped our expansion and we’ve gone from being stocked in Waitrose to a product available in almost all supermarkets. Expanding into the wider snack category has helped establish the brand, broaden our audience but we have also made sure we haven’t changed the actual product, so our initial brand remains intact.
“The most important factor for the growth of the business is our international expansion. Twenty one per cent of the business is international and by the end of 2013 we expect it to be 35%,” said Milner.
Next, Simon Duffy, co-founder of Bulldog Natural Skincare took to the stage, mooting why specialisation of your core competency helps give big players in the market a run for their money.
“We’re a masculine brand in the female orientated skincare market. We’re a niche product yet we’ve overtaken Gillette in the skincare business.
“We’re growing 46% year-on-year in the market. The best performing brand other than us is Nivea and they are up about 6% while most others are struggling.
“The main reason I feel we’ve achieved these numbers is because we’re specialised rather than doing too many things at once.
“In terms of targeting customers, we’re going to concentrate just on men. You won’t hear us doing a baby skincare brand or a female product line.”
Questions poured in after the floor was open for discussion with Milner and Duffy advising on whether diversification can only come to the picture when a company has moved up the start-up level.
A guest asked whether its best for start-ups to focus on specialisation as they don’t have the resources to diversify and crack foreign markets like larger players.
To this, Duffy replied, “Globally the male skincare market is worth $2.1bn. Six countries namely the UK, Germany, America, South Korea, Japan and China account for 70% of that market. We’re a start-up and are already in UK, Germany, South Korea and America already. So, I think focusing on our core product range for the next 10 years is good for our business growth.”
Speaking about the best way to crack different markets, Milner said, “Get on the plane and go to the market that you want to break into. You don’t need to buy expensive reports or pay consultants to tell you how big a market is, just go to a supermarket and see how much space your competition takes on shelves. That’s the best way to judge your chances if you were to enter the same market and calculate your retail price and margins.”
These arguments for and against diversification and specialisation are all good but is now the right time to grow a business?
There’s never been a better time agree both Milner and Duffy.
“We launched in Sainsbury’s in June 2007 and in September that year the Lehman Brothers Investment bank collapsed. Then in 2008, the mortgage crisis in the US started to unravel. So, although we’ve never known a favourable or good time that older businesses would know, we’ve still managed to grow the company. It hasn’t held us back,” says Duffy.
“With the value of the pound decreasing, I think it helps everyone to start exporting and help grow their business,” Milner sums up.
Towards the end of the event, we saw a video of how Julie Dean, founder of The Cambridge Satchel Company got her bags from making them at the kitchen table to the Catwalk, with the help of FedEx Express. It just goes to show how FedEx Express is one of the few companies reaching out to the small business community, understanding the support they require to help us beat the recession.
If only more companies would follow suit…
You need to read: