The Australian businesses that seem to be able to generate the biggest growth over the long-term are the ones that can expand overseas.
The problem for domestic-focused businesses is that Australia has a small population compared to Europe and North America. Australian businesses can quickly reach a growth ceiling. However, business that can expand well internationally are worth owning for longer-term growth potential.
However, expanding in the UK isn't easy. Just ask Wesfarmers Ltd (ASX: WES) and Slater & Gordon Limited (ASX: SGH)!
Andrew Mitchell from Ophir Asset Management recently wrote an article for Livewire of three ASX shares that are expanding well in the UK:
Xero Limited (ASX: XRO)
Xero is one of the world's leading cloud accounting providers. It dominates in New Zealand, is winning in Australia and now it's rapidly expanding in the UK. In FY18 Xero reported UK subscriber growth of 47% to 312,000 subscribers. UK revenue growth was 60%.
UK-registered businesses with revenue of more than £85,000 must maintain digital tax records from 1 April 2019. Cloud accounting in the UK is a much smaller percentage of accounting software compared to Australia and New Zealand. Xero has an attractive growth runway here.
Xero was forward-thinking to set up its business as online-only from the start, whereas competitors have to make clunky upgrades to turn the software online.
Breville Group Ltd (ASX: BRG)
The appliance business delivered 9.9% growth delivered in the 'Rest of World', including the UK, in FY18 which is solid considering how slow appliance growth is year to year.
It's winning market share as a premium brand and Breville is now seeking to expand its European operations into other mainland countries. It could keep growing into a sizeable global retailer business.
Competition is fierce, but Mr Mitchell thinks the brand name and continued investment by Breville should see it do reasonably well.
Premier Investments Limited (ASX: PMV)
Children's stationery supplier Smiggle is growing exceptionally well under retail business Premier Investments' guidance.
More than two thirds of Smiggle's sales are outside of Australia and it now has 134 stores in the UK, with 34 opened in the last year. Smiggle UK online sales represent 15% of total UK revenue, showing it can become a major competitor in e-commerce.
Each dollar earned online is far more profitable for Smiggle, but the business continues to press ahead with a large store roll-out too. Management may soon use large retailer websites like Amazon.com and Alibaba to grow internationally in China and the US.
Foolish takeaway
Premier Investments would be the most attractive to me at today's price at 22x FY19's estimated earnings. However, if this tech crash keeps going then the best choice could swiftly turn to Xero – it's on course to become an important global accounting software player.