With the UK’s reputation for quality goods, innovation and being a great place to do business around the world, could your business benefit from overseas trading?
The export market is worth £634bn to the UK economy and the UK government is keen to see that grow, encouraging more businesses to sell their goods and services overseas.
You don’t have to be a big business to export, 10% of the UK’s small and medium-sized businesses already trade abroad and 36% of businesses export within two years of trading.
The ideal is to choose one country, or area, to begin exporting so you can focus your efforts and really make a go of it. But how do you choose where to start?
Research, fact-finding and understanding what’s involved can help you reap the benefits and avoid the pitfalls.
Read this article for some key things to consider when choosing your export market.
What’s the size of the opportunity?
When it comes to thinking about your export market, there a number of questions worth considering around the size of the opportunity:
- What are the levels of income in your chosen country, region or area?
- Can people afford your goods or services and will they pay a premium for them?
- What about your industry sector – is it one that’s booming the country you’re thinking about or one that’s yet to be developed?
- Could you gain a first mover advantage?
- How does the size of your target market compare to that of another country?
- Where is the greatest commercial opportunity?
You can discover live export opportunities for your business area or industry online today.
What about the demographics?
It’s worth checking out a country’s demographics to get an idea of the age, gender and spread of the population.
Products and services aimed at babies and toddlers, for example, are more likely to be successful in a growing population.
In general, countries with a young population are likely to be a good indication of a growing economy.
Most people tend to live around major cities and capitals, so they can be a good place to focus your attention.
If your business is more likely to appeal to customers across a whole country, or in remote areas, then you’ll need to think about how you’ll reach them and the cost per opportunity.
Who are the competition?
Where are your competitors already exporting? How are they doing?
Their websites, press releases and business news should give you some clues. Then you have to decide whether you want to compete with them, or choose to develop your business in another country where they haven’t established a base.
Are there competitors with a foothold in the market who are local to the country? If so, are you offering anything unique or different and how will you compete?
Are there barriers to trading with this country or market?
There may be obvious deal-breakers such as a trade embargo or sanctions but there are other factors to consider too, from political unrest to transport and distribution systems.
Getting your goods to a central trade hub, such as a port or airport may be straightforward, but can you get them where they need to go easily?
The Department for International Trade (DIT) has a series of exporting country guides for UK businesses who are interested in developing their trade overseas. This could be a good place to start your research.
How easy is it to do business there?
This is a wide-ranging question that can cover all sorts of considerations, from language and culture to legal systems and payments.
The World Bank ranks countries according to the ease of doing business every year, meaning “the regulatory environment is more conducive to the starting and operation of a local firm”.
New Zealand currently tops the rankings, with Singapore and Denmark second and third respectively.
What are the costs?
If you’re exporting goods or services within the European Union (EU), then you currently don’t have to pay duty or customs charges. But you may have to pay VAT, depending on who you’re selling to.
To export goods or services to countries outside the EU, customs duties and taxes will depend on the legislation in that country.
And once the UK has left the European Union and Brexit becomes a reality, if you’re exporting to countries within the EU, you may have to pay duty or customs charges.
Again, this will depend on the legislation of your country (or countries) of choice – and whether or not the UK leaves the EU with a Brexit deal or not.
You may also need to apply for an export licence for certain goods including tools and electrical equipment. You can check if this applies to your business on the UK government’s export control website. Make sure you’re well informed before you start shipping.
There’s no substitute for spending time in the country you’re trading in, making connections and marketing your business. So is it somewhere you want to travel to? How easy is it to get there? Will spending time there have an impact on your business in the UK, your family and loved ones?
Do your research and do business
Fact-finding, research, talking to other businesses and building up a network of people you can ask for advice and information before you dive in can help you narrow down your choices.
However, it’s ultimately up to you to choose the right export market for you and your business.
Editor’s note: This article was first published in September 2017 and has been updated for relevance.