Success is not so much a matter of selling abroad as being a business with global connections, according to an international study of fast-growing founder-led companies.
The research, based on interviews with 2,200 entrepreneurs across several countries, found that those that exported grew faster than those that only traded domestically.
However, the best-performing businesses were those that continued to focus mainly on their home market while having some international support, such as outsourcing functions to foreign suppliers or importing materials.
The distinction is an important one given that so much importance has been placed on exports as a source of growth for companies.
The findings show it is important to build export expertise by gaining contacts and experience from doing business abroad first, said Rebecca Harding, chief executive of Delta Economics, the report’s author.
“It is about de-risking the process as much as you can,” she said. “The best way of going global is on the back of a local client with operations abroad that can take you into another market.”
The report, commissioned by the Association of Chartered and Certified Accountants, found that founders in fast-growing emerging economies, such as China, Brazil and India, were often more international in their outlook than counterparts in Europe and the US.
Three-fifths of founders of US-based companies covered by the survey were domestic only, compared with about half of the founders with companies started in Brazil, Russia, India, China and South Africa (Brics).
Three-fifths of UK-based founders covered by the research operated internationally. However, most had little trade outside the EU, Harding noted.
Founders from Brics nations tended to be far more optimistic about their growth prospects than those in Europe or the US, probably because they were already seeing lots of growth in their home markets, Harding added.
What differed little among the founders, wherever they were based, were the motivations for starting businesses. “Following a dream” was the most popular or second most important factor for the vast majority of those interviewed by Delta Economics, followed by “taking advantage of a market opportunity”.
Although “making a lot of money” was cited by many respondents, Harding said it was seldom the main driver and was often one of several reasons for going it alone.
“This mix of motivations does suggest that entrepreneurship is not just about making money and in fact, tells us a lot about why entrepreneurs are such optimists, even in tough times,” Harding said.