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Despite the UK’s impending exit from the EU, overseas markets will still represent an attractive option for many small firms, including emerging economies such as India, China and the Middle East. But while trading internationally has the potential to significantly expand the available market for entrepreneurs, it can also bring with it a number of challenges.
The following tips should help stand anyone thinking of exporting or trading overseas in good stead:
No one is going to develop an international business overnight. It’s a good idea to target one or two countries initially, where you think your products or services will be well received, and where there is a genuine need for them. Factor in issues such as geography and language when deciding which countries to target; often English-speaking nations such as Ireland or the US are a good place to start.
Just as you should have done before starting up in the first place, you’ll need to research the market you’re hoping to enter thoroughly. Trade fairs are a good way to test the water; see what other businesses are offering and try and speak to potential customers about whether they would welcome another supplier in that market. Looking online can also help you identify what the competition would be like, and can even give you an indication of pricing. You’ll need to factor in higher distribution costs, so if it’s a saturated market it may not be the right time or place.
Exporting to another country can bring with it a number of issues you may not have had to consider in the UK, and this will be even more so in the post-Brexit age. Shipping goods internationally is one, so think about how you are going to do this, and what documentation and taxes you will need to meet. Language is another; think about how you can converse with people, and consider the use of interpreters if required.
You’ll also need to make sure you have the employees to cope with an increase in trade, and in time it may make sense to have a local presence on the ground in the new country.
Often the currency exchange rate can make or break a small firm’s attempts to move into new markets. Factor this into your business plan, and make sure you have the flexibility to adapt pricing should the pound strengthen, as this could make you less attractive compared to local competitors. If you choose to accept money in local currency, think about how you will cope should the value of the pound fall. It’s worth speaking to your bank or an international money transfer business to see how they can help provide you with greater security.
Do not underestimate the importance of getting to grips with local cultures. In most cases, you’ll need to visit the country concerned and meet potential customers, so find out ahead of any trip just what local culture demands and any faux-pas to avoid. In China, for instance, giving a gift is seen as important, and it’s usual not to speak about business at all on the first couple of meetings. A good rule of thumb is to follow what the hosts do, and to show respect to everyone.
Assuming the reason for targeting overseas markets is because the model has already worked in the UK, it’s vital that you don’t put so much effort into the foreign venture that the main business suffers. It could be that you devote a proportion of your time to the new initiative and no more, or perhaps you need to divest more responsibility for the UK to a trusted partner or employee.
Nick Martindale is a business journalist and editor of FSB’s First Voice magazine
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