Trade within the United Kingdom accounts for 4 per cent of global gross domestic product or GDP, which measures the total value of everything produced by all the people and companies in the country. That leaves a massive 96 per cent opportunity for businesses prepared to get trading abroad.
Benefits of trading abroad include:
The opportunity to reach more customers, leading to greater sales
A chance to showcase your products and service to boost your reputation
Reduced risk from economic factors by trading in more than one market
But overseas trading isn’t a decision that should be taken lightly. It’s important that you do your research and consider all the factors that apply to your business carefully.
Here are some useful resources to help you start trading abroad:
The UK Department for International Trade offers a wide range of support for businesses looking to trade overseas, from market research to details about customs and licensing.
There is also a network of regional experts who help UK businesses to become exporters.
The Institute of Directors offers advice on trading abroad. Even if you’re not a member, you can pick up some useful information from their website.
Many professional associations have a global reach and can offer advice relevant to your market or industry. If your business is supported by one of these professional bodies, such as The Manufacturers Association for example, ask how they can help you with your plans to trade abroad.
Starting out close to home
Many companies choose to start trading with near neighbours, such as Ireland, Belgium, the Netherlands, Sweden and Denmark, where doing business is very similar to the UK. Depending on your products or services, these are all good markets and English is the most commonly used business language.
The USA is the UK’s largest export market and has been for many years. Sharing a common language reinforces strong links between the two countries, but it can be a challenging market for businesses new to exporting. With such a large space to cover, you may have to focus your efforts on one city, state or region to establish a foothold.
These days it’s very convenient to communicate online via email and Skype, and this can be a great way to start establishing relationships with business partners in different countries.
But establishing a good, long lasting business relationship usually means spending some time face to face, on the ground. In Spain and other Southern European countries, it’s expected. So, make sure you factor in the costs and time of travelling for meetings and discussions.
Visiting the country you’re exporting to also allows you to assess the local market and review products and services that are similar to yours. You can see how they are sold and marketed and gain an understanding of their quality, price and how your brand can compete.
Plan your finances
How are you going to fund your export plans? You will need working capital, budgets and cost/opportunity analysis.
Trading and dealing with multiple currencies can mean income and expenditure can vary as exchange rates fluctuate, so you may want to look at protecting your business from this risk.
Choose your trading model
There are lots of different options for your business to start trading in a new market. You may opt to start a subsidiary, develop a franchise, or license your products or services.
These all have advantages and disadvantages which are specific to your business and where you’re trading. Take time and do your research, selecting the best option for you.
Once you’ve decided, you can seek specific advice to help you set up contracts and partnership agreements.
Online trading has made it much easier for business to import and export goods and services, but there are still practical and cultural differences to consider.
For example, although globally Google is the most popular search engine, it’s not always the number one choice in individual countries. In Russia, Yandex is most popular, whereas in Japan, most people use Yahoo.
A global view of your business
It pays to do your research and prepare well for the differences that come with trading around the world. Understanding and addressing each challenge means your business will be well placed to benefit from expanding its reach, customers and market through exporting.
In part one of our guide, we looked at language, culture and expectations when doing business outside of the UK. Read the article here.
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