Topic overview

Start exporting

HGV lorries on a road

Exporting can open up new opportunities. Many small businesses look to international trade when they start getting enquiries from overseas customers. Others are looking to replicate their UK success in new markets.

Ecommerce enables many British businesses to reach customers all over the world. As well as boosting revenue and fuelling growth, exporting can reduce the risk of over-reliance on the UK market, expanding your customer base and profits.

Are you ready to export?

Becoming an exporter is exciting and potentially lucrative, but you need to be ready for the numerous challenges you'll face. Successful exporting relies on understanding where sales opportunities lie and how best to take advantage of them.

You must have a good knowledge of the overseas markets in which you plan to become active. That means knowing what customers want and what competition you face. You must also be aware of any relevant cultural, legal , financial or taxation issues.

Consider how you'll move goods overseas and process payment from overseas customers. If you plan to establish an overseas base, how will you find and manage your premises and employees?

Every country has its own rules and regulations on everything from products and packaging to employment and health and safety. It’s important to understand how these local rules will affect your business if you trade with that country. In some places, crime and/or political, social or economic instability pose a threat.

Research overseas markets

With the whole world to choose from, you might find it difficult to pin down the best exporting opportunity . Smaller businesses often operate reactively, by responding to sales enquiries that come their way from overseas customers. But you can actively seek out opportunities. Your trade association, the local Chamber of Commerce and the Department for International Trade can all help you spot promising export markets for your offer. They can also help with export market information and trade missions.

It's vital to do proper research before taking the plunge. This needs to cover more than just understanding local customer requirements and the competitive environment. Different languages, cultures, laws and distribution systems are some of the obstacles you will need to overcome to sell overseas successfully. Visiting new territories on fact-finding missions is advisable. Market research will help you tailor what you offer to suit your export market.

Make sure you understand the financial implications of exporting. Any investment you make to launch your product will reduce your margins, as will paying agents or overseas staff. Tax and currency fluctuations can also have a significant impact on your profitability, while transporting and storing goods can add to your costs. If you grant trade credit , getting paid can take longer and be more complicated.

Bear in mind that local competitors will often have an inbuilt cost advantage; unless you can offer something special, your margins could be under pressure. You'll also need to protect yourself against the risk that customers fail to pay or that exchange rates move against you.

Distributing goods overseas

Consider how you will distribute your products or services. Unless your offer suits ecommerce, you may need to work with a local agent or distributor - you will benefit from their local knowledge while you build your market capability. It can also be more cost-effective to sell through an agent or distributor rather than direct to end users as they already have an established customer base.

By working with a sales agent you can control your pricing and establish a direct relationship with the customer . Avoid working with too many intermediaries in order to keep control of your brand and build stronger relationships with your chosen distributors.

Some goods can only be exported under licence - otherwise Customs could seize them. International trade can also involve negotiating your way through a mountain of paperwork and there could be VAT and duty to pay. Even with a distributor, you may have to deal with customs clearance and local taxes yourself.

Efficient logistics and effective communication are vital - manage your distribution channels by investing in systems and build good working relationships with agents and distributors.

Creating an export marketing strategy

Successful exporting starts with a strategy that spells out how you can use your strengths to give you an edge and how you can overcome your lack of international experience. You'll need to decide how much time and money to invest in getting your overseas sales off the ground and set yourself measurable targets. Exporting typically kicks off with a trial in one market, so you can refine your approach before expanding further afield.

Exporting takes commitment. It means expanding your operation and developing relationships in overseas markets. If your resources are already stretched, you should focus on your UK sales for now. Exporting isn't a quick fix for a shortfall in domestic turnover or a squeeze on profit margins.

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