We are likely to return to recession in 2012 but the weak pound does traditionally open the door to export opportunity. Sure traditional overseas markets are struggling as the bias of economic prosperity shifts around the globe with Brazil from the BRIC economies (Brazil, Russia, India and China) having overtaken Britain to become the 6th largest global economy there will be opportunities.
It has ever been thus but where there is volatility there is also opportunity. We are hearing bleating from business that falling global demand has impacted international orders but the opportunity is still very significant and whoever said running a business was easy.
However, businesses turning to export while times are tough at home should move cautiously and there are many pitfalls for the unwary and naive and if an opportunity seems too good to be true – it probably is – as the Lawyers like to say “caveat emptor.”
Every opportunity must be properly assessed, looking at everything from shipping costs to local regulations, to ensure that a profit can be made and identify any longer term potential. It’s very important to know about the boring bits like export certification, for example. It might seem a formality but getting it done quickly and simply, and getting it right, is vital to delivering orders on time.
- Check out your overseas partner. Spend time on their website, if they haven’t got one be very, very careful. Ask for testimonials? Ask for everything in writing. Use Government trade bodies and Chambers of Commerce to help you authenticate any enquiry or to help you forge an overseas link. Never rush your fences.
What exactly do you intend to export? Product/service/advice? Have you got corporate buy in for the initiative.
- Do your homework: Understand the rules of engagement, particularly issues such as duties and paperwork. Finding out at the outset what is required might save a few headaches later. Your overseas partner might be able to assist but it is your responsibility to get it right not theirs!
- Understand the market: For instance, find out how your product and service might need to be adapted for export and what regulations must be complied with. Watch out for language and labelling differences.
- Research costs: Understand any costs you might incur – shipping for instance. A clear understanding of costs is vital to assessing the profitability of each opportunity. Particularly look at insurance costs. Product liability costs might rule out exporting food products as an example.
- Get exchange rate advice: Particularly in uncertain economic times, a good understanding of how fluctuations in exchange rate will affect profitability and pricing is vital. How will you be invoicing in your currency or the overseas market currency. Do you need a specific bank account to collect proceeds?
- Look to the future: While every profitable sale is welcome, it is always worth looking at long terms market potential, to assess whether initial investment might bear fruit later. Mass, repeat business commodity style products are preferable to one offs.
- Assess the competition: Find out who you are competing with, how their products and pricing differ from yours as well as things like how and where they operate. Do you believe you can compete? Why? Keep asking yourself questions. If approached to supply be careful. Why you? Why did you stand out from the crowd?
- Communicate effectively: Be sensitive to language and cultural differences in your target market. Tailor your communication to suit potential customers. Communicate clearly and promptly and lay out deadlines for information responses. If you don’t get them be cautious. Don’t over chase.
- Streamline the process and second and subsequent exports: Secure export certification and documentation online, to save time and money, but use only trusted suppliers. Get your suppliers onside. They may well have greater practical experience than you – use it
- Don’t over-commit: Focus your efforts on one market at a time and prioritise according to both short term opportunity and long term potential. Look for opportunities to replicate the service in other markets with similar buyers.
- GET HELP: Export support and advice is available through every stage of the export process.In many cases it makes the difference between success and failure.That provided by the Government can be infuriating in that it can be very slow and sometimes it is better to pay for a private sector solution.
- If after analysis you decide that exporting is not for you there is still another route to market and that is to become a supplier to those already exporting or with a more advanced route to market as they may well need additional support.
At the end of the day what you want is additional profitable, cash flow friendly additional business and there are many ways of skinning a cat but remember that not all cats that purr are friendly and you need your wits, your team and Lawyers about you.
Two and half years ago we exported nothing in the last quarter exporting made up 60% of our sales and we export people rather than product from around the globe but all the commissions arrive back in the UK as export earnings.
Can you do something similar?
Author: Chris Slay
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