Before starting out
To ensure that your objectives are realistic, in-depth market research
is essential. You should consider the following key areas:
y
y
levels of demand in your intended market
y
y
your competitors
y
y
your business’s current performance
y
y
tax and legal obligations.
What are the potential benefits of trading overseas?
y
y
Increased market share
– expanding your customer base
offers the opportunity to improve financial performance and
greater potential for long-term growth
y
y
Lower production costs
– entering into a larger international
market should result in greater economies of scale, which could
also benefit your domestic business
y
y
Spreading the risk
– dispersing business risks across a wider
area could lead to greater resilience in times of difficulty
y
y
Increased product lifespan
– selling items that are near
maturity at home to an international market, which will result in
additional resources for creating new domestic products. Excess
products not selling in the domestic sphere can also be sold
abroad without lowering their cost.
What does it involve?
Understanding your new market
You must ensure that you are aware of the cultural and commercial
differences between the UK and your intended market. This is
important to ensure the best possible marketing success. Think
about employing an interpreter or investing in some language
training, and try to steer clear of idioms that may not be understood
abroad.
Sales
You can take a number of approaches to selling your product or
service abroad, including:
Using a foreign distributor
– who will take title of your goods
once the sale is completed and will then be responsible for any
profit or losses made. This is a popular option with many small
exporters.
A sales agent
will sell the products on your behalf, leaving you
responsible for profits and losses. The sales agent will charge
commission to sell your goods.
A joint venture
with a local business is another option but
these can be both complicated and costly, as can setting up your
own premises in that country.
Logistics
Clarification on issues
such as responsibility of
transportation
of goods,
insurance,
duties and
customs clearances are
essential. Draw up an incoterm, a standard trade contract covering
the purchase and shipping of goods internationally. Most businesses
use a freight forwarder to organise shipments – look for one who
frequents the country you are exporting to. Remember to consider
how you will package and label your goods for transportation.
Pricing and getting paid
If your products or services are pitched at the wrong level, it could
mean losing money unnecessarily, or failing to secure business
contracts.
Many exporters convert the domestic price of their product into the
currency of the foreign country, but it is important to remember the
domestic competition you face there too. The price of your goods
should be based on cost, competition and demand.
When trading in an international market, there is an increased risk
of late or non-payment. Payment terms should always be agreed
and credit checking carried out in advance, to eliminate any issues.
Insurance should also be taken out in case anything goes wrong.
You will need to have a long term plan in place,
as returns will not always be seen
straight away. Financial investment
and an increase in your workforce
may be required. Contact
us for guidance on the
best course of
action for
you.
GOING GLOBAL:
The benefits of international trading
International trading is often perceived to be confined to the realms
of large businesses, but there can be generous benefits for small
and medium sized enterprises too. International business can create
avenues of opportunity previously unattainable in domestic markets.
