Many small businesses look to international trade when they can’t increase sales in their home markets, while some businesses sell exclusively to customers overseas. The internet has enabled many more British businesses to reach customers all over the world. As well as boosting revenue, exporting can reduce the risk of over-reliance on the UK market.
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.
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.
You must 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 then manage premises and employees?
There might be special product or health and safety rules you need to comply with. In some places, crime and/or political, social or economic instability pose a threat. Language or cultural differences could create a barrier between you, your staff and customers.
Preparing to become an exporter
You must consider whether you could handle being an exporter. You might need to enhance your services, perhaps through training or by taking on specialised staff. To help assess your readiness for international trade, you can look on the GREAT.GOV website or visit the Department for International Trade (DIT) website.
You also need to take steps to protect your intellectual property in all territories in which you sell - which is a major challenge in some territories.
There are various ways to trade overseas. Depending on your product, you might be able to work with distributors and agents, rather than establishing a physical presence, which requires more investment and risk. Maybe you could license your product or service to businesses overseas. Perhaps you should test the market by simply making your goods available to buy online and marketing your website in your territory of choice.
Research overseas markets
Visiting new territories on fact-finding missions is always advised, but you could make a start by having a look at the DIT website.
There are financial considerations. You might not be able to sell at your UK price in some overseas markets (in others you might be able to charge more). Additional investment to launch your product will reduce your margins, as will having to pay agents and staff. Tax and currency fluctuations could have a significant effect, while transporting and storing goods can add to your costs. If you grant credit, making sure you get paid can be more difficult when customers are a long way away.
Some goods can only be exported under licence - otherwise they could be seized by Customs. International trade can also involve negotiating your way through a mountain of paperwork, plus, there could be VAT and duty to pay.
Talk to the export experts
Exporting is a complex subject and there really is no substitute for expert advice. Find your Local Trade Team on the DIT website. If you are still more excited than daunted by the prospect of becoming an exporter, find out more about how DIT can help you.
- Launched in partnership between DIT and hibu, the Open to Export website is a community driven service which aims to help businesses looking for assistance with exporting. It includes information and practical advice, events and opportunities that could enable your business to reach new markets and grow internationally.