Last month the Confederation of British Industry (CBI) revealed that despite Brexit – and the imminent prospect of Article 50 being triggered – demand for UK-manufactured goods rose to a two-year high.
Unfortunately many SMEs continue to be outflanked by larger corporations and are struggling to reap the benefits of inflated demand, with smallbusiness.co.uk this week stating that four in five MPs believe SME owners need more information, advice and guidance when considering expanding into international trade.
With that in mind we’ve put together this handy guide for anyone considering the move into exporting for the first time.
1. Choose your market.
The EU remains the most straightforward (for now) in terms of customs checks, product standards and the like. However, there may be more demand for your product further afield – you should weigh up different factors such as VAT, shipping costs, and risk in case of loss or damage – to name a few – before making a decision that fits your business.
2. Be aware of overseas requirements.
There could be any number of modifications you may have to make depending on the destination of your product – from legal ones like standards, to labelling and packaging. For example, tariff codes vary from country to country (although most are based on the Harmonised System). The tariff code for your product will help you identify what rate of import duty must be paid, as well as whether your goods need an export license.
3. Plan for every eventuality.
Sending goods internationally comes with a certain degree of risk, so you should protect yourself against this as thoroughly as possible. Make sure that you are covered by cargo insurance while in transit, consider letters of credit for large transactions – you can even protect your finance through a credit insurance agency.
4. Don’t be afraid to ask for help.
Freight forwarders offer a wide range of expertise and services such as: consolidating smaller shipments on your behalf, advice on rules and regulations and acting as an intermediary when you’re venturing into a new market. Make sure that whoever you go with is a member of the British International Freight Association (BIFA) for peace of mind.
5. Consider what currency you are going to trade in.
Are you going to sell in one of the ‘majors’ (sterling, dollars, euros) or in the local currency? More ‘exotic’ currencies often incur higher transaction costs due to their low trading volumes – many FX providers often apply wide margins in this instance to protect their own bottom line against risk. As such it’s worth choosing a provider who offers the best value and a fair service should you need to repatriate funds into your own currency (freemarket charge a low fixed fee of 0.2%).
This is by no means an exhaustive list and we would recommend doing as much research as possible given the costs, time and commitment required to be successful internationally. With that said, opening to export can be hugely rewarding and could be a great step in taking your business to the next level.