With industry experts claiming 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 is a key way for companies to kickstart growth and prosper in the marketplace.
But how can small businesses 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.
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 for trading overseas and offers practical insight for small businesses preparing to ship their products abroad.
Small businesses that export successfully can expect to increase their revenue and profitability by expanding into new markets.
Before you decide to export, make sure you’ve considered the following:
- Companies that have a good track record for exporting are already successful in the UK. Think carefully about exporting unless you company is enjoying increasing sales at home.
- 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 abroad.
- 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 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:
Protect your business from late (or no) payment. Insure against non-payment of export invoices. Alternatively, if you are concerned about whether your customers’ ability to pay, try and negotiate payment up-front or setup payment in stages.
- 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 the Eurozone where interest rates are lower.
- 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. Contact the Export Control Organisation for more information
- 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. You can read more about export insurance policies here.
Shipping and logistics
Setting up an efficient and cost-effective process for moving your goods is essential for successful international growth. For more information on how FedEx Express could help your business gain customers in new markets, please visit www.fedex.com/gb.
Your company’s strategy for exporting goods abroad should include adapting your UK-based marketing strategy to make it more robust and effective internationally:
- Re-design relevant packaging, product literature, advertising and point-of-sale material.
- Translate your product literature into different languages.
- Review your tone of voice and communications to fit the country you are exporting to.
Good news for companies expanding abroad – the UK government is urging businesses to pursue overseas trade opportunities and the Department of Trade and Investment has a number of programmes to help with exporting goods:
- UKTI’s Passport to Export Service assesses a company’s readiness for international business, and helps it build international trade capacity.
- Gateway to Global Growth is a UKTI service which helps exporters diversify into new markets.
- The Export Marketing Research Scheme (EMRS) helps you reach sound decisions when approaching a new overseas market.
- The Export Communications Review (ECR) provides companies with impartial and objective advice on language and cultural issues to help them improve their competitiveness in existing and future export markets.
- Speak to SMEs at a trade show. there are regular trade shows and events which give you the opportunity to speak to a UK Trade & Investment expert, join seminars and practical workshops and speak attract prospective customers. UKTI’s Tradeshow Access Programme (TAP) provides grant support for eligible SME firms to attend trade shows overseas. The Chamber Network runs hundreds of international trade events throughout the year. For full listings, you should check your local Chamber’s website.
- Help with trade documentation. The British Chambers of Commerce offers helpful guidance and training courses on paperwork for the movement of goods.
Further reading on exporting