Grow your export business
Top tips for expanding overseas trade
Some things to think about if you’re considering expanding your export business, and where you can get help and support.
If you’re already exporting successfully to one or two countries, you can apply the lessons you’ve learned to expand your international business and start trading abroad more regularly – but expanding into new markets still takes careful planning.
Identifying new markets
Even if you already have some experience of exporting, all markets are different, so it’s vital to research each one thoroughly to assess demand, competition and trends. You’ll also need to think about any tariffs and duties and how changes to them might affect you in the future.
The World Trade Organisation website is a good starting point for economic research and statistics.
The Department for Business and Trade’s Great.Gov site offers guidance and support services to help you grow your export business, including finding a buyer overseas for your goods and services or new export opportunities.
Other resources include Google’s Market Finder, where you can search for new markets based on your product, and the Institute of Export and International Trade has free Doing Business guides focusing on specific countries and a useful Market Weighting Guide to help your decision-making.
Do your homework
There’s no substitute for on-the-ground research into the countries you’re interested in, so consider joining a trade mission or attending in-country exhibitions and events. It’s worth looking at trade associations, your own industry networks, and in-country Chambers of Commerce.
Of course, it’s always worth reaching out to your existing contacts to see if they have experience of the markets you’re trying to break into.
The government’s Overseas Market Introduction Services (OMIS) offers bespoke market research and market entry strategies, as well as support during overseas visits and help identifying possible business partners and preparing for events and trade fairs. You can apply for support from the service through your local Department for Business and Trade office.
For larger export operations it may be worth using a market research agency for more thorough analysis.
Assess your competitors
Time spent analysing your competitors is invaluable to help you identify gaps in the market and decide how to position your product or service.
You’ll want to know who your competitors are, their pricing structures, how they market their products and services, and why customers buy from them over others.
Review your products or services
Are you planning to expand by selling new products or services in your existing export markets? Or by moving into a brand new one?
Either way, it’s worth reviewing your existing product offering before making your final decision because you may need to make adjustments to make it marketable in certain countries. For example, you might need to change materials to meet local environmental requirements, or to include local content in your products, which could mean you’ll need to refine your manufacturing, distribution or sales model.
Sales and marketing
Your export strategy will need to encompass sales and marketing, pricing and how you’ll differentiate your products or services in a new market to drive revenue growth.
For example, you may plan to sell direct to customers, through a local distributor or a combination of the two, and you need to make sure your pricing model works in the local economic environment.
Foreign exchange risks
Trading in new markets may expose your business to foreign currency risks.
These can be simply transaction-based or relate to balance sheet assets and liabilities denominated in currencies other than sterling. Currency fluctuations can impact the sale, transfer or purchase of assets and also your balance sheet, potentially giving a distorted view of financial performance.
You could choose to keep funds in local currencies and transfer them when exchange rates are favourable.
It’s possible to manage or even eliminate these risks through the use of forward contracts – our international experts can help explain how these may mitigate foreign exchange rate fluctuations.*
Selecting the right business structure
Most export business structures involve a joint venture (JV) or setting up your own overseas business.
In a JV, each business remains a separate entity but shares costs, profits and losses set out in a specific agreement. You’ll want to find a JV partner with a compatible management style and culture, as well as protect your investment through a legal agreement in case you decide to go your separate ways at some point in the future.
JVs or partnerships are the only way to operate in some countries and the Department for International Trade’s exporting country guides provide more information on this.
Alternatively, you might want to set up your own operation in your new export market by opening an office, shop or warehouse space, or setting up a subsidiary or standalone company.
This could lower your costs over time, improve customer service and after-sales support and send a positive message to the local market, although the set-up costs are likely to be higher. Think about who will manage the business and how it will comply with legal, employment and tax requirements.
Finding the right people
Expanding your business into a new territory could involve moving your own people overseas, using specialists in establishing new markets or hiring locally – or a combination of all of these.
Make sure you understand the tax and payroll requirements if you’re hiring staff locally or relocating expats.
Other issues to think about include the tax implications of having a permanent establishment, visa regulations, local employment law and employee welfare.
Protecting your intellectual property (IP)
With each country having different IP rules, you’ll need to check how to apply for copyright or trademark protection in a new territory. You can get guidance from the Intellectual Property Office or use an IP lawyer.
You can apply to the World Intellectual Property Organization for protection in countries that have signed up to the ‘Madrid Protocol’ – otherwise you may need to apply to each non-EU country separately.
Financing your expansion plans
There are many ways to finance a growing export business, but most companies use either a bank loan or outside investment if they can’t fund expansion through their own cashflow.
If you’re a business-to-business exporter, you may be eligible for invoice finance, which can unlock cash tied up in outstanding invoices, in either sterling or foreign currencies, to improve your cashflow.
You may also qualify for government-backed finance or export insurance from UK Export Finance (UKEF).
If you borrow money you should always factor in the repayments to your cash flow forecasts and make sure they’re affordable.
Potential equity finance sources include venture capital firms or business angels who invest in start-ups or smaller businesses in return for a share of the business and some influence or control.
Put a plan together
Your business plan for any new overseas market should detail the decisions you’ve made about the benefits and costs based on your research, your objectives and how you’ll achieve them.
This can be a vital tool to share with your bank, investors or partners to show you’ve thought through the issues and have realistic and achievable goals.
Your export plan should include your chosen markets and customers, pricing strategy, anticipated revenues, costs and financing, legal, regulatory and licensing requirements, your sales model and potential partners.
You can create a plan with the help of interactive step-by-step guides on Export Savvy or Open to Export.
You can get expert advice and support from our team of experienced International Managers to help you develop your export strategy.
We support the ‘Exporting is Great’ campaign and its website provides another huge pool of resources and ideas that you can draw from.
Check out these tips from successful exporters about how they expanded overseas.
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