Mark Williams, editor of Start Up Donut, takes us through his top tips for start ups thinking of getting involved in international trade…
Prime Minister David Cameron wants you, the nation’s small businesses, to broaden your outlook.
His aim, as announced during Global Entrepreneurship Week, is to get 100,000 more small UK firms selling overseas. In November, he said: “British small and medium-sized enterprises are already doing incredible things, but we urgently need more of them to follow that boldness. We need this to be a country where more people think – ‘I can start my own business and I can sell to the world’.”
Maybe you’re already thinking about ‘taking the plunge’. Possibly you’re already selling to overseas customers, but plan to widen your net in 2012. With many consumers continuing to feel the pinch in Europe (where most UK exports are bought) and the USA (the UK’s largest single export market), experts are encouraging British exporters to look elsewhere, especially the rapidly growing ‘BRICs’ nations – Brazil, Russia, India and China.
Lessening your dependence on cash-strapped customers living in cash-strapped countries can lessen your exposure, of course. It could also provide you with a profit boost that could really take your business onto new heights. The great news is that modern communications and information technology make selling overseas easier than ever.
Are you ready to export?
Becoming an exporter is exciting and potentially highly rewarding, but you need to be ready. You must have good knowledge of the overseas markets in which you plan to sell. That means knowing what customers want – and what competition you face. You must also be aware of cultural, legal, financial or taxation issues that might limit your ambitions. Crucially, there are tax rules with which international traders must comply.
You must consider how you’ll move goods overseas (it doesn’t pay to take chances) and process payment from overseas customers. If you plan to establish an overseas base, how will you find and then manage your premises and employees? There could well be special health and safety rules, while (depending on the country) language might be an issue.
You don’t have to set up your own overseas operation, of course. Depending on your product, you might be able to work with distributors and agents (which is cheaper and less risky). Maybe you could license your product or service (protecting your intellectual property is a must). You could go for the easiest solution of all – simply make your goods available to buy online to customers around the world and search engine optimise your website so you attract them.
Preparing to become an exporter
You must consider whether your current business can handle becoming an exporter. You might need to enhance your services, perhaps through training or by taking on specialised staff. To help assess your readiness, you can look on the UK Trade & Investment (UKTI) website.
As mentioned previously, you must protect your intellectual property in all territories in which you sell – which is a major challenge in some territories. Read the Business Link guide Intellectual Property Protection Overseas.
Visiting new territories on fact-finding missions is always advised if you plan to sell high volumes, but start by having a look at the UKTI website.
There are several key financial considerations, too. 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. Local tax and currency fluctuations could affect your bottom line, while transporting and storing goods can be expensive. If you grant credit, making sure you get paid can be more difficult when customers are in far foreign lands. The Business Link guides Getting paid when selling overseas and Insurance for international trade are well worth a read.
Exporting is a complex subject and there really is no substitute for tailored expert advice. Find your Local Trade Team by entering your postcode into the UKTI website. UKTI can help you in many ways – so what are you waiting for?
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