Specac has doubled its revenues in the past six years by ambitiously targeting overseas sales markets for its high-value products
Queen’s Award for International Trade
By Graham Lironi
David Smith, the self-described ‘recovering accountant’ and managing director of Specac, appears to have taken inspiration from Captain Kirk of the starship Enterprise in his mission ‘to boldly go’; an appropriately enterprising management philosophy that has done Specac no harm whatsoever.
Indeed, over the last six years, the firm has doubled its turnover from £4.6 million to £9.5 million, while export sales soared 150%, from £3.3 million to £8.4 million, and, over the last three years, has increased its gross margin from 35 to 47% through a mixture of selling to high-value customers and developing high-margin products. Specac is currently firmly on track to achieve its stated ambition to grow to 100 staff with a £20 million turnover by 2021.
According to its Queen’s Award citation, “with growth in overseas sales, total sales and percentage overseas sales, Specac wins the Queen’s Award for International Trade for Outstanding Continuous Growth in overseas sales over the last six years.”
One of the world’s leading suppliers of infrared spectroscopic accessories to the forensic, life science, pharma, research and quality control application industries, Specac (the name originates from a shipping agent deciding that ‘Spectroscopic Accessories Company’ was just too cumbersome) is headquartered in Orpington, Kent and operates in over 75 countries through its extensive distribution network.
Its products are used by scientists in laboratories; whether that be in academia, government institutions or in industry, enabling users to determine the chemical make-up of liquid, solid and gas samples. The application areas are vast, from pharmaceuticals and forensics to food and beverage, oils and lubricants and quality control.
Now a management buyout supported by investment from venture capital specialists, The Foresight Group, from 1997 to 2015 Specac was owned by the FTSE 100 company, The Smiths Group PLC, when the growth in its revenues made a sale a more attractive proposition for disposal. The change of ownership has since enabled the firm to be more flexible, agile and responsive to the needs of the market.
We have doubled revenues in the past six years by following a strategy of going boldly in search of new export markets,” said Mr Smith. “The company now exports over 90% of what it sells and sold to 75 countries in 2016. Our particularly strong markets are China and Asia Pacific, North America and Europe.”
Export has always been the heart of the business, but, over the course of the last decade, more focus has been put into it.
Before 2008 we rarely travelled, but now we constantly have people on the road, either visiting trade shows or visiting customers,” he said.
In 2012, 42% of Specac’s export sales went to Europe, 30% to the Americas and 23% to Asia. In contrast, by last year, Europe made up only 19%of its export sales (although it continued to sell as much in Europe as before), while 54% went to the Americas and 26% to Asia. This shift has followed a strategic decision to focus on expanding markets.
We are still in the throes of the Brexit process and we wait to see whether the world has lost confidence in UK as a supplier nation,” said Mr Smith.
In any case, our strategy sought to diversify our markets, which has given us some form of insurance against any such loss in confidence. We will continue our drive to grow, finding new parts of the world to visit, providing even more solutions for the science community.”
The company’s growth strategy is three pronged: a focus on relationships with OEMs; global travel; and innovation and new product development.
We put these three strategies in place to drive our business forward: find new customers and keep them by having something new to offer them,” he said. “The key is that we go out and find them, rather than waiting for them to come and find us.
From 2008 we set a target of three new products every year, then, from 2011, developed blockbusters that each took a year to complete.
These have transformed our business and 57% of our sales now come from products that did not exist in 2011.
“Our motto is, Enabling Great Science, and we take pride in increasing awareness throughout the world of how our products can help scientists find solutions to their applications. I take the view that for every 10 people that have heard of Specac, there are another 100 that I wish had heard of us.
Mr Smith is convinced that the secret of Specac’s success is its willingness to be bold.
That’s our maxim,” he said. “I constantly say to all our staff that the bold choice is always the one that gives you the greatest success earlier – and I hope and believe that boldness is what has stood us in good stead over the last six years.”
Indeed, and there seems little prospect of Specac altering the course it has set itself over the years ahead as it continues to boldly go global to enable great science.
Specac’s 10-point plan for success
- Be bold: find that difficult market to crack. Go to places that don’t get a great write-up in the media. Find out where the customers are and go there.
- Be confident: don’t believe the naysayers when they tell you it is too difficult to trade in a country.
- Make it an adventure and have fun: almost a third of our staff have travelled abroad on behalf of the company. We encourage them to stay there a bit longer and see the sights.
- Learn some of the culture: you don’t have to learn the language but learn some little facets of the culture you are visiting; your hosts will respect you enormously for it.
- Embrace these different cultures: don’t complain about them, go with the flow.
- Stay ethical: don’t accept the need to pay backhanders for someone to help you, walk away.
- Work hard: to achieve a broad regional spread of your export growth.
- Stay high on quality and price: don’t compromise on either. Don’t break the market. Most countries have the money to spend, let them spend it.
- Invoicing: let the customer pay in whatever currency they choose.
- Ensure the customer pays before you ship the goods: try to avoid letters of credit, long payment terms and export finance.