Expanding Your Business Overseas: What to Start With?
The UK punches well about its weight as a global trade power — the world’s sixth-largest exporter of goods and services.
Dig a little deeper, and the story changes. SMEs account for only 1 in 10 exporters in the UK, arguably a sign of economic malaise. After all, we’re living through precarious times. First Brexit. Then the pandemic. Now the Russian invasion of Ukraine.
There are structural problems too. 8 in 10 SMEs looking to export get rejected by traditional banks. With the very structures of traditional finance set against them, it’s not surprising that SMEs are hesitant to export overseas.
The political classes are slowly waking up to this dire situation. The British government aims to increase the exports of SMEs, recently unveiling a new strategy to boost exports to £1 trillion.
However, the extent to which this will help remains to be seen. Throwing money at a problem in the hope of it going away is never enough.
The global economy has changed but the big banks haven’t caught up with it. SMEs looking to expand their business overseas must think differently.
This article will show you how.
This article at a glance
If you’re looking to export overseas, first determine whether you’re ready to export and talk to trade experts — from shipping companies to trade civil servants to regional SMEs. You must execute a solid data-driven marketing plan. Establish a solid local network of distributors and suppliers. And make sure to tap available government resources.
Step 1: Determine if you are ready to export
Before you take the plunge, ensure you know the risks of running an export business. Ask yourself these questions:
a. Is my business doing well in my home country?
Exporting overseas is risky. Be sure to only do so if your business is reaping significant revenue in your home country. This includes whether your business is witnessing a healthy increase in sales, or if it’s hitting a plateau in your home country.
b. Will there be a demand overseas for my products?
However, success at home doesn’t necessarily mean success abroad. So, do your research.
Do your overseas customers need your product? Can you sell food or any product to them at profit? Do you have competitors? Lastly, look up your chosen market’s demographics, cultural, and religious practices. Selling shrimp in Israel might not go down well.
c. Do you have enough bandwidth?
Globalisation is the mother of complexity.
From product development to packaging, your business operations will become more complex. Do you have the bandwidth? Maybe you’ll need to hire a few extra hands or invest in additional equipment and software.
Step 2: Talk to the experts
Experts will be integral to your exporting strategy. They know the paperwork requirements. The cultural landscape of the country in question. The bureaucratic hurdles.
Where do you find them?
a. Network with SMEs at trade shows
Trade shows and events are a great opportunity for you to talk to an expert from UK Trade & Investment (UKTI).
Additionally, you can participate in practical workshops and seminars to talk to prospective customers.
Tip: Eligible SMEs who attend UKTI’s overseas trade shows receive grant support. attend overseas trade shows with grant support.
The Chamber Network also holds hundreds of international trade events annually — keep up with the latest trade shows here.
b. Speak to a shipping company
Shipping companies with a history of carrying products to and from your country of choice are a great way to receive documentation support, advice, and quotes for exporting goods. Picking the right one is complex. Consider customer service, capabilities, company reputation, safety records, and cost. Picking the right mode of transport for the right product is critical. Aeroplanes are faster but are more expensive than sea freight. How quickly do you need the products from your suppliers?
Larger shipping businesses offer all-in-one solutions- from handling, customs and excise documentation, to shipping calculators. Some of the reputable shipping companies include:
- FedEx International shipping
- UPS International Shipping
- DHL International Shipping
c. Assistance with trade documentation
The British Chambers of Commerce provides training courses and helpful guidance on the paperwork required for exporting.
Step 3: Execute an export plan
Look at your existing customer base — will you find similar demographics in your chosen market?
Is your packaging attractive enough? Will you need to translate the label on your packaging, or are there any legal requirements to adhere to?
Your distribution channels
You can choose one of the four options:
1. Sell directly
2. Engage a sales agent
3. Engage a distributor
4. Establish a joint venture
Your intellectual property
Safeguarding your intellectual property is important. Draft contracts with your business partners and adhere to the contract terms for product exclusivity. Find out what protections can be implemented, and be well acquainted with your target market’s export laws.
Your marketing promotion
1. Offline marketing
Offline marketing is expensive, but it can help your business gain exposure. Consider your target audience, and calculate the required advertising expenses to figure out if it is worth the return on investment.
2. Online marketing
If offline marketing is too pricey, consider online marketing — a cheaper and often more effective marketing tool. Online marketing comes in the form of:
- Website creation
- Make sure your content is localised to appeal to your target audience. Your products should also be listed in the local currency, with clear details on shipping and other costs.
- Social media platforms
- Use platforms such as Facebook, Twitter, Instagram, and LinkedIn to create awareness of your products quickly.
Step 4: Form close relationships with local businesses
Become part of a local self-supporting ecosystem if you want to establish a long-standing presence in your target market. These business relationships can help you gain a competitive edge and minimise financial risk and can be formed through:
- Building an internal alliance team to foster and manage relationships
- Developing an ecosystem business model and strategy
- Negotiating partner/alliance/distributorship programs
Step 5: Use government resources
Government resources are there to be tapped. Don’t miss out. Here are some resources you can use:
- The British Business Bank (BBB) offers expert advisory services for small and medium-sized enterprises (SMEs). They also provide SMEs with financial support by providing guarantees to lenders.
- UK Export Finance (UKEF) supports exporters in the UK by working with banks to provide exporters with trade finance solutions to aid them in winning export contracts.
- UK Trade and Investment (UKTI) offers practical support and expert trade advice. The following are some of the useful services you can check out:
- Export Marketing Research Scheme (EMRS) helps businesses export to new foreign markets.
- Gateway to Global Growth (GGG)helps SMEs diversify into foreign markets.
- Passport to Export assesses your capacity to export overseas Export Communications Review (ECR)helps you to find guidance on cultural issues that may affect your international operations
Step 6: Be aware of legal processes
Some overseas markets are notorious for being litigious, so it’s important to have a strong legal process to reduce unnecessary commercial risks. Furthermore, government agencies have stringent requirements for legal documentation to be completed before you can operate in the country. Complete the following steps:
- Establish localised commercial agreements
- Upkeep corporate records and government
- Execute general corporate services, including immigration, shipping, customs, and dispute resolution
- Analyse industry-specific regulations to make sure necessary certifications and compliance are obtained
Get more detailed legal advice here.
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