Where to start? That’s simple
Does your product or service lend itself to the export market? If so make a list of what differentiates you from the crowd
What are your unique selling propositions? Are they truly unique or can they be replicated easily and quickly by competitors? Will they stand the test of time?
OK, so you think you have something that other people will want. Why? Yes, get those lists out again. In business circles this is often called a SWOT analysis and it is a simple way of capturing your strengths and weaknesses but the opportunities and the threats to your business in Export markets and these threats will be wider, as you venture out of your own back yard.
You will make mistakes, it is inevitable, so try to test the waters rather than diving in headlong up front but do learn from your errors. There will be greater costs in exporting of goods, may be less so for services but ask yourself the questions all the time.
So do you remain convinced that exporting should be part of your business strategy? Are you really, really sure – are you carrying your colleagues with you on this journey or setting yourself up for a fall – be aware – it could end in tears.
Taking a structured approach is essential on exporting. Here is a very simple 4 step plan you can use as a template.
Step 1: The first step when planning an export strategy is to understand what customers in the target marketplace want and how it operates. Organisations like the UKTI can offer advice in this area but on the ground experience is helpful so joining a trade delegation is one way of making the necessary contacts.The most invaluable is to speak to exporters that have already pioneered in the area of the world you have identified. If it is in complimentary products so much the better but not essential.
Step 2: There are obvious barriers to consider when selecting an export market. For example, when bidding for local work, differences affecting contracts, language, finance/currency exposures and ways of working all need to be considered. These differences could have a significant impact on the price that you might be prepared to sell your product for in a new market. There is very often a hidden cost to exporting called bureaucracy – do not underestimate it. We can tell you some hair raising stories.
Step 3: Businesses with an export strategy need comprehensive legal advice to ensure they are compliant with local requirements and standards. It is important to have a contract that is both relevant to the sector and uses internationally-recognised terms and conditions and is clear on the responsibilities of different parties. Even when signed it is a brave person who relies on it and enforcement is rarely worth the costs involved and hence the advice earlier to start off small.
Step 4: If the business is VAT registered, it is necessary to provide evidence of export and comply with regulations in the UK and overseas. For example, some goods that are allowed to be sold in the UK might not satisfy another country’s standards. This is pretty straight forward
OK , now for the big one – getting paid. You agree terms. They will probably be abused unless you go the confirmed letter of credit route. Sometimes this will be seen as non-commercial or even insulting in certain parts of the world like the Middle East. This is where you need to take advice and make judgements and where quite frankly the Government needs to do more, as making these judgements is impractical for most exporting businesses as they do not have access to the required information and the international banks are about as much use as an ashtray on a motorcycle.
Exporting should certainly be a key consideration for any business but it is not one on which to punt the family silver. Be cautious, be considered, be careful and consider the cash flow consequences of payment delays and bad debts. These are all things you face at home in doing business in your own market but is an area where you have years of experience.
In business you very much make your own luck -so be lucky and good luck with your exports.
Author: Chris Slay
