From the COO’s office: Kautham’s top tips for exporting!
Delving into a foreign market can open many lucrative pathways for your business but before you dive in head first, there are a few things that you should consider:
Know your potential market
Even though you’ve successfully traded in the UK, take some time to research and make sure there is a serviceable demand for your product abroad before you commit to any major investments. Investigate the competition and their prices, to make sure there is a gap for your business. Cultural differences between regions mean that some products that are big hitters here may not see the same popularity abroad – hopefully nothing a few modifications can’t fix!
There are many ways in which you can sell when entering a foreign market. Opening an office or factory in the new foreign market can grant you full control of the sales process – just make sure you’re clued up on the local customs and regulations. Alternatives include using a distributor, who will sell your goods in that market for a percentage of the total sale value, or a salesperson, who will sell for you on a commission basis. Another option is to enter into a joint venture with a local business. This can provide you with knowledge of the local market very quickly. In the digital era, it’s possible to export by simply using the power of the internet. E-commerce stores can be set up quickly, easily and relatively inexpensively and can give you access to a global market from the comfort of your desk!
Know your customers and their culture
We’re aware of what constitutes good manners when it comes to business here in the UK. However, things can be different abroad. For example, in the United Arab Emirates the left hand is considered unclean. As a result, it’s considered disrespectful to shake hands or handle important documents with your left hand! It’s important to be conscious of the difference in culture and adjust accordingly. Don’t ruin the relationship before it’s even begun! That may mean needing to go further to establish a personal relationship by conducting your business on days and at times you’re not accustomed to.
Connect with the right people/institutions
Knowing the right people can go a long way to establish yourself in a foreign market. This can be because they can point you towards potential buyers or distributors abroad. One place to find such people is at trade expos where you may also meet other fellow exporters! Use these opportunities to advertise your business and increase awareness of your company to supplement your presence both online and in trade magazines.
It’s usually a prerequisite that, before making the leap across borders, exporters ensure that their domestic business is doing well. Take into consideration that costs per unit will likely increase due to tariffs and shipping costs – so having the excess capital either via utilising domestic profits or external borrowing is crucial. Usually, your foreign clients will require 90+ day payment terms which can really leave you out of pocket if you’ve only negotiated 30 day payment terms with your suppliers! Funding Invoice allows you to raise funds instantly against your outstanding invoices by selling them to our pool of professional investors at a small discount. We offer a great tool which really benefits exporters – even if you’re exporting to non-OECD countries!
It’s also important to note that any proceeds made abroad will, at some point, need to be converted into Pound Sterling if you’re based here in the UK. Any profits made can then be greatly affected by currency fluctuations! As such, if you trade a large amount in one foreign nation it may be necessary to open a bank account there. In any case, contact UK Export Finance for advice. They’re a really useful tool for exporters and help loads of businesses every day!