Go global to grow
Top tips to take your business international
With industry gurus stating that exporting goods abroad makes small businesses more competitive, innovative and raises productivity by up to a third in the first year alone, winning trade overseas can be a key way for Weald based companies to kick start growth and prosper.
We have already examined how local businesses can compete more effectively when they harness the power of the internet, but how can they crack international markets? Given the various demands companies need to satisfy to ship their products abroad, expanding can often be a complex and time-consuming process, but if you get it right there can be great rewards.
For business owners in pursuit of global opportunities, research into the key principles and legislation of exporting is vital in getting a firm grasp of the current marketplace and the scope for expansion. This guide looks at the dos and don’ts of exporting overseas and offers practical insight for small businesses preparing to ship their products abroad.
Before you decide to export, make sure you’ve considered the following
Companies that have a good track record for exporting are already successful at home. Think carefully about exporting unless your company is enjoying increasing sales in the UK.
Are the decision makers in your business committed to investing in international growth, because to succeed you must put funds behind marketing and advertising to benefit from a flow of new income from abroad.
Conduct research into whether your competitors in the UK are already exporting, as well as who your local competitors would be in new markets.
Investigate whether the demand for your product exists overseas and how you would pitch your unique selling points in foreign markets.
Evaluate if your company has the financial resources for additional market development and additional human resource to satisfy an increase in product demand.
Consider the standard practices, culture, language, trading hours and conditions in the countries you are exporting to and the current marketplace – getting local knowledge will be invaluable when you come to launching your products internationally.
The risks involved in exporting
Exporting products abroad also poses financial, product and operational risks. Doing some simple research into the standard practices of the countries you are exporting to and making necessary precautions will ensure you can export your goods safely and hassle free.
Here are the key issues to consider:
Payment terms. If you are trading on-line where payment is required at the time of order, protecting your business from late (or no) payment isn’t an issue. If not, take out credit insurance against non-payment of export invoices. Alternatively, if you are concerned about your customers’ ability to pay, insist on stage payments at the very least.
Fluctuating exchange rates. Your company’s profit margins can be impacted by dips in currency rates. Avoid this by matching the income you receive in a currency by your expenditure in that currency. It’s also common amongst UK exporters to borrow money in the country to which you are exporting, especially in countries that the UK holds free trade agreements with.
Make sure your product is compliant. Check your product specifications against the regulations and standards of the country you are exporting to.
Be vigilant about product quality. Some companies have to transfer manufacturing process overseas to meet a country’s regulations and standards. If you do this, stay close to the production process to ensure the standards don’t suffer.
Check if you need a licence. If you are exporting machine tools, electronic equipment, computers, telecommunication equipment and related components you’ll need a licence. For more information go to www.gov.uk/government/organisations/export-control-organisation
Make sure you’re covered. Although there is no legal obligation to do so, it’s best to insure your goods. Marine insurance is the general term used for cover against damage and loss for goods while in transit – whether by road, rail or air freight. To protect yourself against credit risk, you should also insure your company against the commercial and political risks of not being paid under an export contract. Find out more at www.gov.uk/guidance/export-insurance-policy
Shipping and logistics. Setting up an efficient and cost-effective process for moving your goods is essential for successful international growth. Go out to tender on this process and conduct due diligence on the reputation and performance of logistics companies; and don’t just examining the costs.
For further information visit www.great.gov.uk or call Emma Wood for bespoke advice.