What entrepreneurial SMEs need to consider when going for export growth
Exports Established and emerging global markets offer huge potential growth for SMEs in every sector. However, trading internationally can appear complex, and a little daunting for small businesses and many are unaware that export support services are available.
For example, the Institute of Export offers the right help and training – from advice and guidance through to formal qualifications – making exporting overseas a much easier and less frightening proposition.
It was formed in 1935, to help UK companies improve their performance in international markets and share the knowledge they acquire there with others. Focusing on education and training programmes, it is the country’s only professional body providing recognised, formal qualifications in international trade.
Here, director general, Lesley Batchelor OBE, looks at some key areas that new exporters must consider before dipping their toes into ‘international water’.
Look at your company and make sure you’re ready
As an entrepreneur it’s tempting to just have a go at the nearest or the first export market that makes contact. However, this is definitely the time when it is best to take a step back and to look before you leap.
First things first, it is vital that you look at the skills you have already have that will help you to start exporting or to establish a way of filling your skills gap.
Once you’ve established how you’ll cope, it’s time to look at where there might be demand for your product or a potential untapped market. Using your website analytics and where interest is coming from can be valuable - as can looking at where, and what, your competition is doing. Finding the right market will help you to grow and sustain your exporting activity. A wrong choice now could put you off and stop you from growing your business.
Be aware of culture - both in business and social etiquette
Investigating new markets and the way in which they do business will help your company to communicate better and to develop new products in line with the new knowledge that working in different cultures brings. Trading in another culture also results in issues around trademark and copyright for most businesses - and possibly design rights and patents if you work in a design led industry. Remember that even if you have decided not to protect your trademark your competitors might - which means you must check that you’re not going infringe someone else’s intellectual property rights in your chosen markets.
Talk to the Intellectual Property Office (IPO) about how best to approach a new market. Make sure you understand how your new market does business - are they polychromic, doing multiple things at the same time, or are they monochromic, doing one thing at a time? It is also important to find out if they are punctual, if they like to negotiate – and if they would they feel cheated if you didn’t haggle? Do they expect a discount for prompt payment - and do you know how they approach a sale? Ensure there is enough flexibility in your pricing to allow for surprises such as quoting in local currency or an expected bond or guarantee. The adage ‘forewarned is forearmed’ is particularly applicable in this situation.
Taking time to understand the market that you are trading in will pay dividends in the long term. Exporting should be a long term project - a quick sale is good to keep cash flow going but trading internationally is a commitment to growth and should be treated as an investment. On the Open to Export website www.opentoexport.com there are a few articles explaining how this can be done - and how much money you’re going to need to launch your product. The website also offers advice on setting a budget to control the spend and ensure you make a profit in the long term.
Finally, setting a price and making sure you get paid!
This is an area that many businesses fail to approach and manage correctly. I cannot over-emphasise how checking and doubling checking will help you to be confident that you have all the costs covered. Ensuring you understand the cost of getting paid will help you to make a profit and enjoy your international sales rather than rueing the day you started. Unfortunately, recent research has shown us that although many small businesses start to export, few continue – and when visited 6 years later, over 50 per cent have ceased to trade internationally. We believe it’s because they are badly prepared. With so much help and support out there you have no excuse and to paraphrase an excellent new cabinet office campaign ‘Exporting is great’ – the demand is out there – so why aren’t you?