As an international business owner, it’s important that you have your finger on the pulse of international trade. That’s because the slightest change to the value of the pound could hugely impact on your business, including the value that your goods are selling at and the value that you’re buying stock at. Hence, it is essential to keep an eye on currency value. Recently Brexit proved this need, plunging the future of some businesses into doubt.
Price of imports could rise
If the value of the pound falls against the euro, then the price of all of the products you are buying in is effectively rising. For example, if the price of the euro against the pound rises from €1.00 to €1.25, then it has effectively risen by a quarter. This means that it could seriously eat into your margin.
However, if you’re aware of currency value fluctuations well in advance, and if you can predict price rises, then you can factor this into the selling price of your own product, boosting it to keep your current margin.
The price of your goods could fall
Likewise, if the price of the pound falls, then the amount of money you’re selling your goods for is effectively lessened. If you enter a long-term trade deal at a fixed rate, this could potentially be catastrophic for your profit margins, so be incredibly wary of tying yourself into long-term deals.
By monitoring forex at FXPro, you can keep an eye on these developments, which will allow you to take action before it is too late. By actively trading, you can even educate yourself further, passing this insight into your business in turn.
Remember events also affect currency
Finally, remember that events such as Brexit also impact on market events, so stay informed about what’s happening globally. For example, if there’s a shortage of oil, imports are likely to cost more. Or, if there’s a war in a country, you may not be able to access things you need for your product. News sites like BBC News are vital, so keep up with them daily.
To conclude, a change in the price of the pound can hugely affect your business. As a result, you have to keep on top of the markets and currency value. You can do this regularly with ease, but you must ensure you keep on top of the markets to help keep your international business afloat.