In a post-Brexit world, diversifying into new markets in Europe and beyond could - and should - be a viable option for Irish companies pursuing growth.
The UK has been and will remain, a very important market for many Irish firms across a range of sectors. However post-Brexit, new markets are going to be essential for export-led firms.
In many cases, expansion beyond the UK may be the key, not just for growth, but for survival.
It may seem daunting upon first glance for firms used to doing domestic business only, or who may have limited their international activities to date to our nearest neighbours.
Expanding into markets further afield always comes with an element of risk.
It is a risk that large firms can take. A move into France, for example, that doesn’t work out for a large firm can be offset by other areas of the business which are over-delivering. Or, due to the scale of the organisation, the negative result can be absorbed without causing any longer-term damage.
For a medium-sized business, a move into a new market European country that does not work out could cause significant damage – financial, reputational, opportunity, cost, etc - and could even be fatal.
That is why thorough analysis of any market into which a business is considering expanding is essential.
Firms can significantly mitigate reduce the risks associated with new market entry by forensically preparing and using what is learned to hone its offering for the new market.
It may have surprised some to recently read that the Netherlands is the country where Irish firms do most of their business in Continental Europe, rather than countries such as France or Germany. It shouldn’t be that surprising when analysed in more depth. Transport links to the Netherlands are excellent, there is a similar geography, a cultural simpatico and a highly engaged workforce.
Yet there are excellent opportunities even further afield for Irish firms post-Brexit. Poland, for instance - a country of circa 38 million people, the vast majority of whom identify more closely with the ‘West’ than the ‘East’ - is a market far more Irish companies should be considering.
Having worked extensively in Poland, we know there is an engaged business community proactively seeking to forge stronger links with Irish industry. When coupled with the strong links forged between the two countries as a result of the sizable Polish community living in Ireland, it is surprising that more Irish companies have not sought to enter this market.
Agriculture, manufacturing, energy, and tourism are major components of the Polish economy, which was an outlier in the EU during 2009 by growing 1.6% compared to a 4.5% drop across the bloc. Globally, its growth over 28 consecutive years is only surpassed by Australia.
However, in carrying out the necessary due diligence, any Irish company would also need to consider geopolitical factors, and get a good understanding of the prevailing political landscape in Poland. The totality of this due diligence can then be used to assess whether the opportunities outweigh the risks.
In other words, is the investment risk mitigated by the opportunities, or are the potential pitfalls too great for your firm? Thorough preparation will provide an informed answer to that question before any risk is taken.
Other markets in Central and Eastern Europe, including Croatia and Serbia, are similarly attractive for Irish firms pursuing growth opportunities beyond their domestic market.
Major industries in Croatia include services, shipbuilding, construction, petrochemicals, and food processing, while the Serbian economy is strong in automotive manufacturing, furniture, food processing, machinery, sugar, tyres, and pharmaceuticals.
The markets mentioned here are not put forward as the panacea for all Brexit-related headaches.
What we advocate is that in the course of planning growth for your organisation, while it is tempting – and entirely understandable – to think only of the well-worn path to certain overseas markets, do not be afraid to expand your thinking somewhat and consider some of the ‘non-traditional’ international markets, where there are hugely exciting growth opportunities, across a range of sectors, for Irish businesses.
Rather than the prevailing narrative that it can only be viewed as a crisis, Brexit also presents an opportunity for Irish companies to look to new markets for growth, but only for those who are willing to consider the road less travelled.
Brian O’Brien is a partner at business consultancy firm 3Sixty.