Posted on: 28 Feb, 17
Depending on your sector and your export destinations, deciding to sell products and services abroad can increase your expenditure, consume your time, and introduce new regulatory and administrative complexities.
Additionally, the decision taken by the British people to leave the EUhas caused uncertainty for UK businesses trading in EU member states. It is understandable why an aspiring exporter might be slightly hesitant about committing to expand overseas.
Yet the appetite for exporting may not all be negative.Research published by the Federation of Small Businesses in 2016 shows that 21% of small businesses are considering exporting, a proportion of businesses that matches those that are already exporting.
As more details of the government’s Brexit-related plans emerge, such as the prime minister’s recent comments that she does not want the UK to remain part of the Common Commercial Policy, businesses will be better able to judge whether engaging in an exporting strategy is right for them.
Europe is one of many possible markets for British businesses. With careful planning, sensible decision-making and expert assistance, there’s no reason why small businesses can’t succeed in expanding overseas and reach new levels of prosperity.
So what does a business need to consider before taking its first steps into the global marketplace?
“Small businesses that export are more likely to survive, grow and innovate.”
Martin McTague, national policy director, Federation of Small Businesses.
New markets should be approached with the same care and preparation as the one you first entered into with your fledgling business. The regulatory environment and consumer demographics may be similar or they may differ in significant ways.
Choosing an appropriate country to export to should be the first stage in the planning process.
Select a small number of countries you think would be good candidates for your products or services andask the following questions:
Gather as much information as you can about your sector’s performance, your competition and any cultural differences that might impact how you do business.
Conducting a SWOT analysis (strengths, weaknesses, opportunities, threats) is a good way of focusing your research and developing a holistic view of where you stand and what your strategy will be.
After you’ve identified the most appropriate country to export to, you need to think about whatfactors may impact your operations in a foreign country. These may include:
The more knowledge you have about your target country, the easier the first steps will be.
Not only will you understand your new compliance and administrative duties, butsensitivity to cultural differences can help you forge stronger relations with local people and build trust among your customers.
Creating your first export plan is not dissimilar to writing a business plan.
It allows you to clearly understand your objectives, create an effective strategy and highlight the resources (financial or otherwise) you need to realise your ambitions.
Your plan should include:
We can help you plan for the future of your business.
Exporting can be an expensive venture and many small businesses looking to export for the first time will need to raise finance to support the initial costs, extend buyer credit or stabilise cashflow.
Here are some of the options:
Government finance through UK Export Finance (UKEF) is available for both long-term exporters and newcomers. Businesses of all sizes operating in all sectors are eligible.
UKEF assists exporters by:
Some high street banks provide export finance loans that can help you pay for the costs of materials, labour and distribution.These loans can also help to guard against the possibility of late payment, and maintain a stable cashflow.
Always compare terms offered by competing banks before taking out bank finance.
Peer-to-peer (P2P) platforms directly connect businesses that want to expand their operations with investors online.
P2P websites typically charge less for their services than a bank, making this new form of lending cheaper for the borrower.Always seek professional advice before agreeing loan terms.
Doing your research on the country you want to export to is crucial before making any decisions.
The level of consumer demand for your goods and services, your business’s cultural compatibility, the country’s current economic climate, and its tax and regulatory system are all important factors to consider.
Be aware of the differences between trading within the EU and exporting to a non-EU country. Exports outside of the EU typically involve new compliance duties (such as applying for an EORI number from the UK government).
Although globalisation has normalised many aspects of doing business internationally, there remain cultural differences. It is important that you are aware of any differences in business practice or etiquette before engaging with prospective customers overseas.
If you are going to be selling business-to-business services it is important to try and understand business etiquette in your new market. In business meetings in Japan, for example, there are very specific protocols that even foreigners are expected to have some knowledge of.
If your business is customer facing, there may be some ways of interacting with the public which are frowned upon.
Additionally, it’s essential that you’re sure that your customers will pay for your goods and services. If you’re concerned about your overseas customers’ ability to pay you can ask your bank for an Export Letter of Credit or a pre-payment to ensure that you are paid.
Certain goods and services may require that you obtain a license or adhere to certain rules before trading internationally. It’s imperative that you understand the destination country’s import rules before selling.
You have a number of options when it comes to selling your goods/services in overseas markets:
We can help you devise a strategy for expanding overseas.
Copyright © 2013 - Oury Clark.