Time to scale the Eurozone ambitions of Irish SMEs

Enduring Brexit is one thing, realising that there is an entire Eurozone ripe for scaling Irish firms to target is another, says Enterprise Ireland’s Anne Lanigan.

When you consider for much of the 20th century Ireland’s primary export was its people, the nation has done a phenomenal job making up for lost time since the market and educational reforms ushered by the likes of Sean Lemass and TK Whitaker opened us up to the world.

In 2019 alone indigenous Irish companies exported €25.6bn worth of goods, out of which exports to Eurozone region saw record growth of 15pc to €5.6bn, while exports to North America increased by 16pc to €4.7bn.

“Sales is a process where you’ve got to start at the beginning and decide what the market wants. How do you meet it? How do you develop your leads? And then how do you deliver?”

While the impact of Covid on 2020’s performance, not to mention Brexit, have yet to be accounted for, Irish businesses in industries from food to construction and software continue to export and excel at it.

But for Anne Lanigan, regional director for Eurozone at Enterprise Ireland, the emphasis needs to be on getting more of the country’s SME base to focus on opportunities in the Eurozone.

“The vast majority of work that Enterprise Ireland does is with established companies, not just start-ups. A lot of the income from exports comes from a small cohort of large indigenous companies but we have a plethora of smaller companies that we need to kickstart to the next level of where we want to see our companies.

“I think a lot of it comes down to ambition. So how ambitious are we in Ireland, how ambitious are our companies?”

Get out of your comfort zone, get into the Eurozone

The trauma of Brexit is still being felt in terms of customs and other frictions and Irish and UK companies will find a way to trade and overcome red tape. But if anything, says Lanigan, the experience is a reminder that there is a vast Eurozone market without customs frictions that Irish companies need to focus on too.

“To get them to have the ambition, you have to show them the opportunity and that means showing them the markets. They have to realise that there’s a huge big single market out there that is actually easier to access than the UK right now. The UK will always be important, we cannot afford to lose it, but it shouldn’t be the limit of our ambition.”

Lanigan points out that with a population of 340m, the Eurozone offers significant and untapped opportunities for Irish companies.

So what is stopping Irish SMEs exporting to the Eurozone in greater numbers? “I’ve been pondering this for years and I think it is a mindset,” she says. “For some reason we always think of Europe as a place to go to or get supports from, but not to do business. We need to change that mindset. That was the reason why it made sense to join the EU in the first place, to develop opportunities for business.”

Another mental barrier to be overcome is using languages as a reason for not targeting the Eurozone. “Yes, it can be a barrier if you don’t speak the language of the end-customer, but it’s not insurmountable. Just look at the big US companies that invest in Ireland, the first thing they source is people with language skills so they can sell into Europe.”

Recalling the reforms of Whitaker and Lemass in the late 20th century, Lanigan pointed out that the industrial policy was to bring in inward investment but also boost exports. “We still need to deliver on that in terms of the indigenous sector. We need the ambition for that. What Whitaker talked about was the ambition to export, and that’s what we’ve been working on at Enterprise Ireland. We have made great progress but there’s more opportunities that indigenous firms should and could be exploiting. The indigenous sector hasn’t yet delivered what it could deliver.

“Multinational investment has been good for Ireland and exports, but we need to have more control over our economy. And the way to have control is to own it. You should never put all of your eggs in one basket, we should have a more balanced multinational/indigenous gain. And to do that we need to have more scale-ups and we need more exports out of our indigenous sector.”

Process and capabilities

In recent weeks the Collison brothers’ Stripe announced plans to create 1,000 Irish jobs as its payment technology sells all over the world. The only difference is Stripe was founded in San Francisco, not Ireland.

What Lanigan believes is we need more companies that, like Stripe, think big and think globally. “We have great examples of companies that are doing this. The first piece is creating that ambition, the second thing is building the capability.”

Before setting foot in France or Germany or other target markets, Lanigan emphasises that Irish businesses need to be prepared. “Do you have the products? Have you done all the work you need to do in advance? A lot of the work that we do in Ireland and around R&D is helping these companies and providing funding for them to develop and be integrated with each other and also becoming more competitive. These steps are absolutely crucial before our companies ever take a step outside the country.”

Lanigan explained that even if companies have the right products and the operational excellence, often what can be lacking is sales and marketing capability. “There can be quite a lot of companies that have really strong technical products and really good value propositions, but they just don’t know how to put that across.”

Another area that scaling businesses need to excel at is sales. Culturally, sales or the activity of selling doesn’t appear to be at the top of the professional food chain in Ireland, whereas in American or British businesses selling is everything.

Lanigan agrees: “I think what a lot of people don’t realise is that sales is actually a process. It’s not an art, it’s a process. They say engineers can be very good salespeople because they’re good at following or developing processes.

“Sales is a process where you’ve got to start at the beginning and decide what the market wants. How do you meet it? How do you develop your leads? And then how do you deliver?

“I’m based in Amsterdam and the Dutch are brilliant traders. It’s not an art, this is just business; matter-of-fact stuff. They really believe that when they sell something to someone, they are doing them a favour. Whereas we see sales as the person who is buying is doing us a favour. American salespeople really believe that when they are selling somebody something they are going to make that person’s life better.”

Returning to capabilities, Lanigan said she would urge scaling and export-minded businesses to take a good look at the supports on offer, from the various R&D supports that go into developing a product to supports like the Market Discovery Fund or the Sustaining Enterprise Fund if they have been impacted by Covid.

A vital programme for companies focused on the Eurozone is the Grad Start programme that will see Enterprise Ireland cover 70pc of the salary of a graduate with language skills for up to two years.

Lanigan also said that Enterprise Ireland is developing sales and marketing support programmes for companies hoping to break into the Eurozone. So there is really no excuse not to be looking to the Eurozone if you have products that are good enough to export.

The next step is boots on the ground and through its network of overseas offices Enterprise Ireland is ready to help businesses get started.

“Once we feel a client is ready to engage with the overseas office, we work with them on really practical things like advice on entering the market and ultimately getting them in front of the buyers. That’s really the single biggest thing we can do for them.”

Two years ago, Enteprise Ireland launched its Enter the Eurozone programme. Delivered in partnership with the European School of Management and Technology (ESMT), Berlin and Galway-based IMS Marketing. this intensive programme gives each company access to key industry experts who will act as business advisors. Developing a market entry plan and targeting a first significant contract win in a Eurozone market are the key objectives for the businesses taking part in the programme.

In conclusion, Lanigan said that Enterprise Ireland through its Enter the Eurozone programme and its network of advisers and offices is focused on setting export companies up with the best prospects of success.

“The idea is that by the end of four months they will have a market entry plan. The very first thing we do with them on the programme is help them to choose a market and then they need to do their market research and validation to make sure it is the right market. Then they develop their market proposition, followed by the channel strategy and then they develop the sales process. You start with a wide funnel in terms of lead generation and then you work it down to ultimately winning sales.

“Another part that has to be worked on is resourcing. That means working out how much investment they will need, the people and skill sets they will need and that all comes together in a market entry plan in just under four months. The key is to make sure these businesses are ready to launch into the market with the greatest chances of success.”

By John Kennedy (john.kennedy3@boi.com)

Published: 19 March 2021