International Business Development in a Post-Brexit World

NOTE: An adapted version of this article was published in the October 2018 issue of MARKETER, the Journal of the Society for Marketing Professional Services. Click here to download a PDF copy of the article, or just read on!

When is the best time to expand internationally? 

I have written about this subject before (click here to visit that blog page), but I am contemplating this question again as the UK hurtles toward the abyss of an existence outside the European Union, having been a member for over four decades.

For design and construction firms operating in the UK, with the potential threat of a “no deal” or a “bad deal” Brexit looming—and even the hint of a possible second referendum—many are asking themselves this question right now, as well. 

What does the research tell us? Construction order books in the UK are likely to experience some overall decline in the immediate few years after Brexit Day (29 March 2019), the question is by how much—5%, 10%, I’ve even heard speculation from some colleagues of a 30% drop.

One thing is for sure, that until there is more certainty over financial markets, international trade and movement of labour (a key issue contributing to an acute skills shortage), companies and investors will inevitably decide not to deploy precious capital on new bricks and mortar—it’s happening already, as noted in the recent Q2 2018 Economic and Regional Inflation Report from consultant Gleeds.

Whether this is only due to Brexit is the subject of some debate, as we seem to be nearing, if not already past, a natural peak in the property cycle — certainly in the City of London that seems to be the case. (Source: JLL, UK Corporate Real Estate Conditions Spring 2018).

Thankfully the UK government is pressing on with much-needed infrastructure projects to prime the pumps, but that will only go so far and only reach certain firms’ order books—if they all even happen, which is in doubt due to the major diversion of resources in order to deal with Brexit, based on the recent Annual Report on Major Projects 2017-18 by the Infrastructure and Projects Authority. 

The biggest political issue in two generations takes centre stage as the culprit of the UK’s impending economic woes, and it is making many design and construction firm boards ask the unanswerable question: Where will we be working in five years? 

For many firms the answer lies in revisiting past plans and ambitions to work internationally, exporting that world-beating UK creativity and innovation that has been the envy of much of the globe for many years. (Let’s hope making our borders more hostile to entrepreneurial immigrants doesn’t reverse this trajectory, although I have my reservations. Are my politics visible enough on my sleeve in this article?!) 

There is no right or wrong time to enact your international expansion strategy, but it is wholly dependent on your mindset, vision, ambition and, most importantly, your level of preparedness. 

I offer three pieces of advice as a starting point:

1)    Start simple — Don’t expect to take on the entire world from day one. Focus your energies on just one of the following as an initial objective: 

a)     Client Intimacy Approach: Leverage a relationship with an existingkey client who has business interestsin other countries, thereby traveling with them overseas; 

b)    Expertise Approach: Leverage your firm’s expertise in a particular project type or servicein which you excel and stand out from the crowd, and which your research confirms is in demand overseas; or 

c)     Market Focus Approach: Leverage close business or personal connections inone location in which your services are generally in high demand, and seek to penetrate that market.

2)    Be flexible and opportunistic — Plans are just that—plans. They are not commandments or binding contracts. We all know things change, so you have to allow for flexibility in your endeavours, especially when working internationally. You can’t control when a client will decide tospend their money on a project; after all, they are working to their business plan, not yours. All you can do is focus on executing your plan, position yourselves to win the work, and adjust as things become more real. When working internationally, the time it takes to secure a new project always seems to take twice as long as you expect, so allow for this—and then extend your forecast again, as undoubtedly there will be even further revelations that stretch things out! Also keep your eyes and mind open to something unexpected that might come out of left field. I can’t tell you how many times I’ve been involved in business development campaigns overseas, focusing on a particular group of clients and projects, and then one of the contacts we made along the way comes back with a completely different opportunity that we never knew about, never had any intention of pursuing, but presto, it’s via referral so there’s no competition, only a negotiation, and off we go. Strange things can happen when working internationally, so just be flexible and take advantage of those unforeseen opportunities, as long as they make sense. 

3)    Sense and react — This is similar to the ‘flexible and opportunistic’ advice, although ‘sense and react’ really relates to making more meaningful adjustments to your overall plan. For example, say your plan was to penetrate the Netherlands market for student housing. You start your campaign, making contacts, holding local events and exhibitions, speaking at conferences, doing competitions, and so forth. But you begin to see after six months that the market is slowing down, and you hear from investors that student housing is not very high on their agenda anymore, but hotels will be the new flavour of the month. You must react to this change in the market, otherwise you will simply be pouring money down the drain. Your choices then become either halt your campaign and retreat back home, or, if you happen to have an expertise in hotels, you could leverage the contacts and brand awareness you’ve built in the Netherlands to date to shift gears and pursue the hotel sector. Either way, standing still is not the best option, so you must react to this change that you’ve sensed in the market. 

UK design and construction firms have some serious work to do post-Brexit. Every firm must decide whether they believe the pessimistic or optimistic forecasts and plan accordingly. 

In the UK, I would plan for the pessimistic—or rather realistic—forecast, but I would love to be happily surprised if things actually don’t decline as much as expected. However, that’s a huge risk to take, so I would advise planning for alternate scenarios. My money is on a decline of about 10%. I have no hard data to back that, it’s just my unscientific analysis and gut feeling (I’ve been more right than wrong in over 25 years of practice) based on conversations with colleagues and their view of their new business pipelines for 2019-20. 

Firms must always plan for ‘right-sizing’ their business to reflect external challenges, including figuring out where they can win enough new work to avoid letting people go, or, for the more ambitious, pursuing growth. There is also a flipside if you are working in expanding markets—will you be able to service your growing workload with your existing team, and, if not, where will you find more qualified and competent people? This question becomes even more important given the skills shortage we are expecting in post-Brexit Britain.

Standing still is never an option, or at least not an option for firms who want to continue growing, succeeding or even just remaining relevant players in their markets.

My ultimate piece of advice is that you must have a plan, no matter what—hope is not a strategy.

Plans are not right or wrong in themselves, and yours could be anything from winding up the business to doubling your turnover within two years to seeking a merger or acquisition, but you should still have a plan either way.

Keeping your plan clear and simple, being flexible and opportunistic, and being able to sense and react to changing market dynamics will give you confidence in leading your business into unknown waters and successfully dealing with the challenges you encounter along the way.