Beating the economic downturn through international trade - Business Works

Beating the economic downturn through international trade

Ganesh Selvarajah, Business Link Adviser
The recent fall of the pound has lifted export interest amongst traders in Britain. Ganesh Selvarajah, Business Link Adviser, explains how BL can help businesses understand the significant opportunities exporting offers and how to work with international regulations and tariffs.

Exporting can bring businesses considerable benefits. Not only can it extend reach and boost turnover, but it can also provide a buffer in times of economic uncertainty Ė having customers abroad means less dependence on UK-based customers who may be struggling. With market conditions tighter at home, now could be the time to grow your business through exploiting overseas markets. If so, how should you start?

First of all, be realistic. Exporting isnít necessarily an easy option: it can pose a whole new set of challenges and take up valuable resources and capacity which may be better used elsewhere. As with any start-up, youíll need to spend time identifying promising markets, targeting customers and making sure you can deliver on your export contracts.

Neither should exporting be viewed as a bolt-on to your existing business. Instead, it needs to become part of an overall strategy to develop the business, one thatís carefully planned. This will help you identify the best opportunities, highlight how much effort will be involved, and outline what resources and skills will be needed. It sounds obvious, but before you start to export, you need to work out the costs and risks involved, and put in place a detailed plan.


Develop your plan

  • Consider your potential. How ready for export is your business? Is there an obvious marketplace, and do you have the resources for expansion? Donít forget that exporting brings all the usual marketing challenges, plus the added complications of working in a different culture and possibly a different language. You still have to find customers and convince them to buy what you are offering, but in addition you will need to be able to cope with extra logistical problems, contractual issues and paperwork. It is critical to take into consideration the financial implications in terms of changes to specifications, translations and cash flow.
  • Whatís your target market? Do you know how the industry sector in your chosen country is structured? Can you predict the demand for your product or service? Whatís the competition like and how will your business stand out in the marketplace?
  • How ready is your product or service? Will your offering be immediately saleable, or will it need modification to comply with local laws or cultural aesthetics? You may need to research changes that will be needed for your product or packaging. The route to market will vary depending on local circumstances and may include direct sales, mail order and multi-level distribution systems.
  • Donít be afraid to say no. Your research may reveal that you canít compete commercially with local suppliers, because of low margins or the increase needed to maintain your current business. Think too about your own aims for the business Ė do you and other interested parties have the energy and ambition to make this new venture a success? You may decide exporting isn't for you, but itís better to realise this early than to spend valuable resources you can not afford.
  • Get practical. If opportunities still look promising, think about the details of exporting. Take a look at businesslink.gov.uk/internationaltrade, which provides comprehensive guidance online. You'll probably want to draw up a contract using internationally recognised terms and conditions, and detailing standard commercial practices, to make it clear where your responsibilities lie. A key component of it is to have a very clear exit capability in case the venture fails.
  • Go for it! If you have a good product or service, a well-run business and a realistic approach, the chances are that you can make a success of exporting. If the rewards you expect justify the investment and the risks, then commit to your plan and make it happen. Donít forget to make the most of the free help and support available through advisory services such as Business Link and UK Trade & Investment (UKTI).


Take Advantage of Free Help

Business Link launched a free online version of the paper UK Trade Tariff last year at www.businesslink.gov.uk/tradetariff. The tool had a record of over 30,000 visits last month, which suggests that the competitive exchange rate has sparked increased interest in exporting.

Export essentials Ė a checklist for success


  • Research: in the country to which you hope to export, does your prospective customer need what you are selling at a price that will yield you adequate profit?
  • Review: what will your business gain from exporting? What are your capabilities, capacity and strategy?
  • Budget: make sure you allow sufficient funds for the initial period of trading and ensure your cashflow will remain at a safe level. Guarantee sufficient credit for your future sales. Take out insurance cover if necessary.
  • Cover your bases: ensure sufficient capacity for delivering the product or service is available, define human resources and have a clear strategy well ahead of time.
  • Promote: establish whether you need a direct sales operation, or whether an agent or distributor would be more effective. How will you manage an overseas presence? Customise marketing to the target country.
  • Investigate legalities: Check the UK Trade Tariff (find this free online at the address below) and clarify any additional requirements with HM Revenue & Customs and the UK embassy of the country to which you want to export. Make sure reporting practices and legal compliances are watertight.
  • Think ahead: consider the implications of how you will transport your goods, cross national frontiers, and distribute them in your chosen country. Make sure the goods are adequately packed and there is insurance cover by you or the importer.
  • Liaise: define your after-sales policy, and aim to liaise regularly with customers, export agents and banks. Monitor political unrest or other adverse conditions, and make sure you know how to manage servicing and warranty claims.
The Tariff makes it much easier for businesses to find information on products and it includes a browse and search facility to allow users to classify their goods and find detailed information quickly, such as commodity descriptions, duty rates, VAT and excise rates, preferential agreements, government controls and explanatory notes for all commodities in the UK Trade Tariff.

Previously, businesses could only access the Tariff information by purchasing it or by using reference libraries that may not always be up to date. It was a costly and time-consuming exercise, especially for smaller businesses. If businesses are to reap the rewards of a competitive exchange rate, they need to be able to carry out the exporting processes easily. The BL tool helps them to do so.

Businesses are also urged to consult their local Business Link service. Advisers can signpost businesses to a wide range of support to help them develop the required knowledge and capabilities. For example, some smaller businesses may be eligible for financial support towards marketing research, the cost of participation in trade fairs and overseas visits. Business Link advisers can also help businesses to access vital services that will help overcome some of the barriers to entry to a new market.

Business Link offers authoritative, impartial advice and help through the national helpline, workshops, and via interactive online resources, downloadable guides and podcasts. Businesses interested in exporting should visit www.businesslink.gov.uk or phone the national helpline number on 0845 600 9 006 to get advice on how to export.

www.businesslink.gov.uk/ internationaltrade includes all the relevant regulatory information from government in one place, in simple easy-to-understand language. The Business Link site also offers a wealth of information on how to target suppliers and markets abroad and, for example, how to deal with the practicalities of trading with China, India, the United States and the European Union.

Daily data updates are available from the EU TARIC database and the HMRC CHIEF system, and businesses can sign up to e-mail alerts so that theyíre notified whenever information relating to their tariff bookmark is updated or changed. As well as the tariff tool, the site contains numerous guides on different subjects relating to international trade, benefiting both experienced traders and those who are new to international trade.


For more information:
t: 0845 600 9 006
w: www.businesslink.gov.uk
Trade Tarriff tool:
w: www.businesslink.gov.uk/tradetariff
Regulatory information:
w: www.businesslink.gov.uk/internationaltrade



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