Exporting: your top 10 questions answered
By Jon Card, Guardian Professional
Looking to sell overseas but don’t know where to start? Entrepreneurs reveal the answers to the big questions all small businesses must consider
Successful exporting begins with strong research. The decision to sell overseas is a big step, but one whichcan pay off enormously. Many entrepreneurs have doubts about exporting and seek answers to their questions before embarking on their mission abroad. Here successful exporters help to answer the 10 big questions all businesses must consider.
1. Am I ready?
For young businesses, often the answer is ‘no’, as focusing on domestic markets can be easier, faster and more profitable. However, businesses which already have good market penetration at home might well explore Europe and beyond. For Alan Hawkins, founder of Turbine Efficiency, there was little choice but to sell overseas from the outset. “Most of the owners of gas turbines were located outside of the UK, so we very quickly started exporting,” he says. Hawkins was soon holding meetings in destinations such as the US and Indonesia, building the basis of what would become a 60-strong, £13m business. “When I look back on it now it fills me with fear,” he says. Arguably, no one is ever completely ready.
2 What are the risks?
Exporting can involve a lot of travel, meetings and paperwork, as well as learning new things. As a result, it will take up a lot of your time and can be a drain on financial reserves. Keeping the business running at home while expanding abroad can be a challenge. Entrepreneurs need staff to tend to their domestic affairs while planning and executing their expansion abroad. Ensuring there’s adequate management and well established processes in place to enable smooth running is essential as the business enters this new phase. Vikas Shah, chief executive of the textiles business Swiscot Group, warns fellow entrepreneurs not to think of exporting as an easy option. “Export is often seen as a ‘panacea’ for business growth,” he says, “but the truth is that export strategies must be handled with care and consideration to avoid the frequent expensive mistakes that can otherwise happen.”
3 Will my products be successful in another country?
Market research is essential and should start with desktop research and analysis of market and competitors. But entrepreneurs would be wise to gain more detailed and specific knowledge and government bodies such as UK Trade and Investment (UKTI) is a must for entrepreneurs in need of quality information. “Do your homework,” advises Hawkins. “Use the UKTI Overseas Market Introduction Service (OMIS) to do your upfront research. Each UK embassy often has a specialist in your field. They will point you in the right direction and provide warmed up contacts, but be aware, the service is only ever as good as the questions you ask.”
4 What about getting paid?
You should never bet the business on one big deal and that certainly includes foreign trade. Common sense checks, such as references and trading history, should be made as entrepreneurs must be sure their clients and partners are bona fide. For some deals, receiving payments in advance or fully upfront can be wise, especially until relationships have been cemented. Exporting businesses need to have robust credit control procedures and entrepreneurs should certainly consult their banks and financial advisors. “Make sure your processes are robust, particularly commercial and customer support,” advises Hawkins, “and don’t give credit unless you are 100% certain you are going to get paid and there’s no such thing as a 100% certainty.”
5 What about online payments?
On the face of it, selling online across the globe appears straightforward, but there is great diversity in the way consumers make payments overseas. “As a digital store, we are open 24/7 to a global audience, but we never assume that this will guarantee global sales,” says Paul Sulyok, chief executive of online games company Green Man Gaming. “From Brazilian customers used to paying for products in instalments, to Chinese customers needing to have the reassurance that you are registered with the government, markets are as diverse as the people who inhabit them.”
6 How will I get to market?
There’s no single route, but many entrepreneurs use agents who deal with clients in the territory on their behalf. Entrepreneurs should seek recommendations from those with knowledge and experience in the market. There is a lot of information available and no reason for entrepreneurs not to do plenty of homework in advance. One good place to start is the British Chamber of Commerce (BCC), whose Export Britain site contains a lot of advice and enables connections. UKTI also offers many services for entrepreneurs including trade missions abroad which are designed to help businesses make contacts and deals.
7 Do I need to visit the country?
There’s no better way to learn about a country than going there. It will enable you to speak directly to the people, learn about different customs and trading practices and vastly improve your market awareness. For some industries, trade fairs are a must, as people will expect to see you at a number of them before they take you seriously. “In my opinion, there is no substitute for physically visiting a new territory to understand the market, attending regional or local trade shows and meeting the trade and investment teams for that part of the world,” advises Shah of Swiscot Group.
8 What’s the best way to select partners?
Choosing a partner is a big decision which shouldn’t be rushed. John Styring is chief executive of independent publisher IglooBooks, a £23m turnover business which sells to 55 countries. Since founding the business in 2003, he has selected agents to sell to bookstores across the world. “When finding a partner to work with abroad, it’s all about the research,” he says. “Think about your model – are you looking for one partner or multiple partners? Explore the best potential partners in-depth before making the plunge. It’s all about understanding your potential customer’s market.”
9 Which currency should I use?
Generally, it’s wisest to make quotes in sterling, although some of your customers will want to pay in their home currency. >>>