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Planning for Export Success

Make sure you cover all the bases

Becoming an exporter is a big step and along with the advantages there are potential challenges and risks. 

Some businesses fall into exporting accidentally. But having a clear strategy and a well-thought-out export plan from the outset will go a long way to maximising your chances of success.

Setting your strategy

Before you develop your export plan you’ll need to do your homework to understand the impact on your business. This might include an analysis of different market segments to identify whether selling your products or services overseas is viable.

Performing a SWOT analysis – of your strengths, weaknesses, opportunities and threats – in relation to export markets is a good starting point .

Your plan will need to include clearly defined goals, objectives and benchmarks for the short, medium and long-term and how you’ll measure progress against them. For example, how long will it take you to reach your sales targets? You’ll also need to set and manage a budget for launching your export operation.

It’s a good idea to break down your plan into manageable tasks and projects, with firm delivery dates, to focus the minds of everyone involved.

Selecting your market

Some markets are safer and easier to work in than others, so it makes sense to do some detailed research before going ahead.

Check out the World Bank’s Doing Business Index, which ranks economies on how easy it is to do business in them.

Trading in uncertain markets can be profitable as there may be less competition, but obviously the rewards need to be weighed up against the risks.

Find out how reliable the banking system is in the country you’re interested in, how volatile the local currency is, as well as the availability of skilled staff, local laws and regulations and whether they’re likely to change in the future.

You might want to look at a country’s demographics – the size, age and average income of the population – or levels of internet and mobile phone access, as this will tell you more about the size of the market.

Products and services

You’ll need a good understanding of existing products and services available in potential export markets to identify where demand is not being met locally and you’ll usually need to differentiate what you’re offering as much as possible.

You may need to review testing and quality assurance to make sure your product complies with local regulations or if it needs ‘localising’ in any way.

Check how your company and product names translate to the language of overseas customers – just in case they might be offensive or embarrassing in the local language.

It also pays to evaluate the patent and trademark situation in your intended overseas market because you may find you have less protection in some countries.

Business structure

Consider whether to set up a separate business overseas or to trade from the UK.

If you set up a separate overseas business, you’ll need to set policies and procedures that comply with local requirements, while staying in line with your policies at home.

IT infrastructure and financial systems that are compatible with your existing systems in the UK might also need to be set up – an option is to outsource these services to local companies.

People strategy

Think about who are the best people to help launch your export business. Who will sell your products or services, for example? Will you use people from the UK or sales agents and distributors?

It can sometimes be easier and faster to use interim managers or staff to help you hit the ground running and test your assumptions, while you get on with the process of hiring a permanent team. 

If you’re planning to hire local employees, you’ll need to offer suitable salaries and benefits packages and comply with local employment law.

It’s essential to familiarise yourself or get advice on local tax, payroll regulations and visa arrangements. You can manage this yourself or outsource to local providers if appropriate.

Sales and marketing

Make sure your plan contains a sales and marketing strategy to drive market acceptance and revenue growth.

It should focus on achieving clear product or service differentiation, address sales strategy and delivery, your pricing model, branding and value proposition, and include a marketing proposal with appropriate key performance indicators (KPIs).

For example, you may plan to sell direct to customers, through a local distributor or a combination of the two. You’ll need to decide whether to create a new, local brand or use your existing ‘parent’ brand. And you need to make sure your pricing model works in the local economic environment. 

Suppliers and distribution

Ask yourself who’s going to sell and distribute your product or service and consider using a local logistics and distribution network. Your plan should identify any distributors and suppliers you’ll be working with, once you’ve checked them out.

You need to know you’re dealing with legitimate and reputable companies with the necessary capability, resources, financial strength and track record to deliver on their promises.

It’s worth considering running a credit record search or trade and credit information (TCI) enquiry on them. 

Finance and budgeting

Managing your cash flow should take priority so that you can concentrate on the long-term as well as short-term payments.

You may need to think about how to manage accounting, payroll, and tax reporting and get advice on issues such as cash repatriation and transfer pricing.

Once you have a financial system in place, you could set, say, a three-year budget owned by your local team, keeping tabs on it by setting KPIs based on a 12-month plan. This could be updated half-yearly, with quarterly operating reviews and real-time ‘budget-to-actual’ reporting and variance analysis.

Foreign exchange

Trading internationally gives you the choice of whether to pay and get paid in the local currency or in sterling – so it’s important to keep an eye on exchange rates.

Currency fluctuations can impact the value of your business assets and give a distorted view of your financial performance.

Your export plan should identify potential currency risk in your supply chain. It’s possible to manage or even eliminate foreign exchange risk using forward contracts where you can set a price in advance or by working with multi-currency bank accounts. 

Legal and regulatory issues

Make sure there aren’t any legal obstacles in the country you’re interested in and get the relevant documentation in place before you start trading overseas. This can help you avoid running into unnecessary problems further down the line.

This could include commercial agreements, customs and compliance requirements in the relevant jurisdiction, any industry-specific regulations that apply and understanding what records you need to keep.

However, as with many aspects of exporting, the best approach will depend on individual company circumstances and it’s best to seek professional advice.

Get support

You can get advice from one of our team of experienced International Managers who can help you develop your export strategy – request a call back online.

The DIT’s Exporting Is GREAT site is another good starting point, especially their tool for finding new Export Opportunities and the Institute of Export and International Trade’s Open To Export Plan is a useful free online planning tool.

If you’re thinking of exporting through an e-commerce site you can find out about support for internationalising your website through Barclays Digi Wings.

And check out more tips on exporting from different types of small businesses who have told us their export success stories.

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