Technology connects us in new ways almost every day, bringing us closer together and making our world seem ever smaller. However, the distances between us can seem much larger when you are moving physical goods which could be why, for some SMEs, making the move to export can feel like a mountain to climb.
The latest research from the Department for International Trade, exploring the behaviours and attitudes of exporting businesses, found that amongst those who had not previously exported only 9% felt they had a high level of knowledge of how to export, whilst 39% went on to identify lack of knowledge as a barrier.
In our connected world, fortune favours not only the brave but also the well informed. It is this that has prompted us to launch #ExpertsInExport, our campaign to share the knowledge and expertise we have gleaned over years of helping Gloucestershire businesses tap into the potential of overseas markets and to export with confidence.
We have identified five key starting points for a business new to export and gathered some basic tips to start breaking down the ‘lack of knowledge’ barrier that so many face.
1. Do your homework
Before you can start any export journey, you need to understand the needs and cultures of different markets and countries. Start with the basics; how do they do business, is it over a coffee or in board meetings? What does your company name translate to in their language (an easy but costly mistake to make!)? How do they sell products, is it predominantly online or in shops? From this, you can build a picture of whether your product or service is the right fit or what you may need to do to adapt it. Tools such as the Department for International Trade’s export opportunity search can be a great starting point or can even verify existing ideas and research. https://opportunities.export.great.gov.uk/
2. Use your networks
Talk to any contacts you may have locally to where you are looking to export, or even existing customers and suppliers who may have contacts in that area. Often, you will be looking at an entirely new geographical region. Once you have done your homework, the next step is to talk to your professional advisers. Hazlewoods clients have access to the HLB International network of accountants and business advisers, with over 700 offices in 150 countries, enabling them to tap in to a global web of expertise.
3. Widen your horizons
It may feel safer to stay close to home, but there are a multitude of export markets outside Europe and the European Union. By 2020, China, USA, India, Japan and Brazil are expected to have the highest GDP globally. Establishing early links with these countries could pay dividends in the long run. From your initial homework you will be able to see how different countries also present different opportunities by sector, meaning different products and businesses could have successes in unexpected locations.
4. Money matters
Export can present some new financial challenges. You will need to think about possible exchange rate risk, the exposure to currency fluctuations, and the correct processes to follow in order to bring your overseas earnings back to your base of operations, without falling foul of tax or money laundering regulations.
Following your research, you may be keen to start making contacts and operating overseas as soon as possible. However, structuring your business can be a good place to start to ensure that you do not encounter unexpected legal and tax consequences in the future. Do you use a group or subsidiary? Do you form a new entity? Working with a network of advisers may be your best route to understanding which business structure will work best for you.
The set-up of a new overseas business can also affect working capital and cash flow; managing your cash flow effectively is important at any time, but it becomes critical when investing in a business development overseas. It may be worth noting what sources of finance are available in the new territory, for example, local grants, to support the process.
5. Commitment
Export, like any other business venture, requires commitment in the form of both time and money. A new market will need time to develop, it will also need strong direction with experts who know the country. With so much to consider getting the right advice early on is crucial to export success.
There really is a world of export potential available to Gloucestershire businesses as well as partners to help guide and shape a strategy for success, the beginning of any journey is just a matter of taking the first step.
To find out more about the services we offer to exporting businesses click here and keep an eye out for more tips and advice on our social channels as we continue our #ExpertsInExport campaign.