Recently I read an article about the demise of the Euro. We were told that the Euro would collapse after the feckless and thieving governments of various Mediterranean member countries needed billions to bail them out of debt. The writer had the style of a UKIP member who was confident Britain still had an empire. He thanked his god that Gordon Brown had kept the UK out of the Eurozone.
Having just spent some time in France I was a little disappointed; I saw no signs of the Euro even devaluing, let alone collapsing.
In 1999 the Euro was created in a hugely complicated and expensive programme to create a single trading currency for EC members with economies that met the criteria. In a time when we can drive from Denmark to Italy crossing six or seven national borders without having to stop at passport control, the Euro makes perfect sense, one currency in every country on the journey.
Before 1999 there was always risk, if you sold goods from France or Germany to a Mediterranean member state, because of the volatile exchange rates. If you have a single market, it makes total sense to have a single currency.
The complicated process of creating the Euro from the 17 different currencies was intended to set the value of the Euro on a par with the currency of the Unites States, €1.00(EUR) = $1.00(USD) This made the Euro worth about £0.60 (GBP). Maybe I have the economics wrong and should consult our learned friends at Orchard Growth but I always understood that when a currency was under pressure or threat; its value declined. If it was under threat of total collapse it would be unwanted and therefore, cheap. This has always happened with the Pound.
In France, this week, a third of a pint of what the Belgians insist is their star beer, in a bar, costs about £3. Can you imagine popping into the Dog and Duck, ordering a pint and being asked for £9.00? I suspect the demise of the licensed trade would be greatly accelerated. So what is happening?
The Euro we are told, albeit only by a journalist, is on the point of disintegration it should be cheap if you are converting USD or GBP. In fact 1 Euro will cost $1.43 or 88p. The value of the Euro has appreciated by more than 40% since 1999 and by more than 25% since 2009. The appreciation is almost exactly the same in USD as GBP because the GBP is linked to the USD. This was probably, despite what Gordon Brown told us about his 5 Rules, the real reason we could not join the Euro in 1999. It was so linked because the UK owed the USA money, in USD, from loans extended 70 years ago to fund saving the World from the NAZI threat.
Great Britain did not, finally, repay the loan and interest, about $10Bn. in total, until 2006.
A large number of familiar British brands, from Boots the Chemist to Hotpoint washing machines, now hand over their profits to owners based in the Eurozone. Other desirable brands and profitable, listed companies may soon find themselves taken over by European competitors. It’s not difficult to see how and why, if you need to buy the shares of a UK business paying GBP, you get a 40% discount if you change your Euros.
A holiday in the Eurozone is now prohibitively expensive for most. We can, however, still reach the sunshine; the USD is relatively cheap if you change GBP. So instead of Benidorm we have the option of a cut price ticket to Florida. We can spend up to nine hours in economy with Nearly a Virgin Airways where we would need to adopt a seated position that is probably banned by the Geneva Convention.
So what has this to do with Enterprise Britain? Whichever way you look at the current situation and despite the assurances of politicians, British business is in a bad way. We have the coalition government applying the Business Consultant Solution, bleed your captive market and spend less. This means that our traditional, local customers have less money to spend with us, as do their own customers. Those who have lost their jobs in the past few years are encouraged to revitalise Britain by starting their own business. Obvious, more customers for the existing businesses, everybody wins.
Sadly this is unlikely to be the case, the new businesses have even less funds to spend and are desperate for business so provide us with competition, often at unsustainable rates.
In Britain small businesses have always been introverted, viewing the World beyond our shores as a dark and risky place, attempting to trade there should be left to the big companies with shareholders’ funds to lose. The fact that countries, even as close as France is, geographically, are so utterly foreign seems to scare us. Foreign cultures, foreign languages, foreign food, foreign banking systems; too risky by half, perhaps?
We have had a ‘Single Market’ between the European Union countries since 1992. A single Market means we can move goods, services and labour throughout the single market area without the import and export regulations that once existed. Look at your V.A.T. return and you can see how easy it is to account for V.A.T. paid or charged to another E.U. country.
Because of the decline of GBP against the Euro, British companies can offer an effective 40% discount to customers in around 20 European countries without reducing the price they would receive if they sold the same goods to a customer in Luton. Put another way, if you are finding it difficult to make good margins on your UK business you could collect a higher margin from the Eurozone.
Effectively your goods and services, even your skills are as cheap as chips in the Eurozone. Most Eurozone countries have a single, common word for chips – Frites (freets) So the British SME, in Eurozone countries, are as cheap as frites.
At a time when we are bemoaning the state of the nation, the state of the economy, the state of the market and the lack of customer confidence at home; there is a healthy market with a healthy regard for Anglo Saxon innovation and drive, a short train journey away.
So why are there not more British SME going for gold in Europe?
Foreign cultures, foreign languages, foreign food, foreign banking systems; too risky by half, perhaps?
Before 1974 and Britain’s entry into the EC forerunner of the EU, it may have been. Before 1992 the additional cost of customs and excise procedures, transport and incidentals like translation and local regulations made selling to Europe difficult and expensive.
Since 1992 these inhibitors or excuses have been largely wiped away.
We do tend to trade within our own country even within our own region because we are confident of our local knowledge or language, customs and business practices. If we don’t have confidence in our familiarity with European customs , practices and language how can we exploit the fact that we are as cheap as frites in the Eurozone?
These are my practical suggestions:
You will want to charge and collect in Euros, you will need to be sure of properly accounting for V.A.T., you will be sure you are getting all the free help available to develop an export market. You may not know enough and you may not employ anyone who does or think you could afford to. An arrangement with Orchard Growth Partners, interim Financial Directors with the knowledge and experience, will ensure you are safe and secure for little comparative cost.
Claire Dibb or Antony Doggwiler, Orchard Growth Partners, 0845 3700 303. www.orchardgrowth.com
Local knowledge is valuable as we all know. Obviously we don’t have any local knowledge of France, Germany or the Netherlands but that is not a prohibition. There are hundreds of very shrewd business people, in every area, with intimate local knowledge who are anxious to work with you for a share of the spoils. Many of these are very, very anxious to become agents, distributors or partners to British businesses. They know our goods and services are as good, or better, than their local providers but in Euros, can be up to 40% cheaper.
Identifying such people, ensuring they are honest, reputable and solvent can seem like another bridge too far, where would you start?
There is an ingenious business based in Leeds created and run by energetic and knowledgeable young graduates, who do nothing else but find, check and market British SME to European partners. In fact they go beyond just Europe but let’s keep to the subject.
Export Connections Ltd, in Leeds, is a great concept and a very successful solution to marketing and distributing outside of this country. Find your local knowledge here.
Jan Thomson, Export Connections Ltd., 08452799829. www.export-connections.co.uk
Language can be a problem. To be fair, anyone in the World who is serious about their business will learn English. Thanks to the British Empire and the dominance of the USA in international business, English is the lingua franca or common language. I have spoken to a Bobby on the Beat in Copenhagen and many hotel receptionists in the Netherlands who spoke better English than I do and without the comic accent.
You are allowed to laugh at my accent because it’s Welsh and therefore not racist. Despite this, it is important not to rely on it, just think about the differences of meaning of expressions and words in and around Britain and you will realise how easy it can be to create a misunderstanding.
Again as the result of technology and the creation of one charismatic businessman in the UK, language is no longer a problem. The Big Voice is an instant translation service created thirty years ago by Larry Gould, again in Leeds. Providing and understanding communications in a foreign language is no longer a problem.
When I met Larry a few months ago one of his assistants was a young lady who appeared, at least to me, to be very knowledgeable about international trade. She told me she spoke just 3 languages fluently, English, Spanish and Mandarin. I must have looked puzzled at the connection so she explained, 99% of all the business in the World is conducted in one of those three languages. I was impressed.
The Big Word, 08707488000, www.thebigword.com
Despite all of this exciting expertise, literally, at your fingertips, at some stage you will need to nail a deal with Johnny Foreigner. In some countries there are traditions that date back thousands of years, that locals expect you to understand and participate in but are, today, illegal under international Law. Baksheesh in the Middle East; something that sounds like Come Shaw in China and the practice of exchanging gifts in many other countries. Many of these practices are now considered to be forms of corruption and have been outlawed.
The one practice that is completely legal and part of every tradition of business is negotiation. A business person who is not educated or practiced in business negotiation will appear lightweight or ignorant to most agents, distributors or end users; in most of the countries you want to sell in.
While negotiation styles vary enormously the process and protocols are the same everywhere. To make profitable deals anywhere a business person needs to know the secret language, how to recognise and evaluate needs and desires and how to create an EPD (Easy Positive Decision) You need an EPD for the buyer or partner that persuades him to say ‘Yes’ to your deal.
Until very recently it was possible to learn what to do but not how to do it and that is why ‘The Yes Project’ was created. ‘The Yes Project’ provides a series of short and memorable workshops, for less than £50 each, that provide knowledge, understanding and a method for creating an IBD (Irresistible Business Deal) that guarantees your sales and your profits and is an EPD for your customer.
The Yes Project. 08455648726. www.the-yes-project.org.uk
The Eurozone has returned to healthy economic growth, up 2.5% in the past 12 months, double that of the UK. The market value is tens of Billions of Pounds. The British and British business are highly regarded everywhere in the Eurozone we have a reputation for integrity and honesty. There are golden opportunities in the Zone for even the smallest provider of goods and services.
Jan Thomson at Export Connections will provide your business with a realistic idea of your market and competition and find your local partners or buyers. Orchard Growth will ensure your legality, profitability and help you plan for a slightly different trading pattern. The Big Voice will remove your concerns about language. You have a price advantage of 40%; you are as cheap as frites.
Even if you are as cheap as frites never go out without an IBD.