The Federation of Small Businesses (FSB) has launched a factsheet for businesses looking to export for the first time, to help more small businesses get a foot into overseas markets.
Today’s trade figures with the EU highlight the importance of raising exports to the UK economy. Currently, the UK has a trade deficit with the EU in goods and services of £3.3 billion. That longstanding gap needs to be narrowed as part of rebalancing the UK economy and putting it on firmer footing.
Recent FSB research showed that £792 million could be added to the economy annually, if its members who say they want to export for the first time took the plunge and did so.
Gordon Millward, regional chairman, Federation of Small Businesses, said:
“This week is Export Week and it gives us the perfect opportunity to help businesses understand what they need to do to take advantage of overseas opportunities.
“Given the export growth potential among the smallest businesses they just need a helping hand to get on the way.
“Small firms remain a key part of the drive to increase the number of exporters. Our members alone that want to export could make a huge economic contribution. However they do face barriers to taking that first step.”
The top tips are:
1. Know the country you are exporting to: Knowing where you want to do business is just as important and setting out a business plan.
A business needs to be confident of demand for the goods and services as well as what the competition is and how much they charge.
Different countries will also have different rules concerning marketing and advertising too, so what works in the UK may not work in overseas markets.
UK Trade and Investment offer help through the Passport to Export scheme which helps first time exporters.
2. Consider how you want to sell abroad: Businesses need to consider if they will sell through a distributor, an agent, through a joint venture or open an office.
Ultimately most businesses will benefit from some local help, either in the country or through other businesses that have sold products there.
3. Understand one country before moving to another: While each country will have different documentation to fill in on tax for example, all countries will have different customs as part of their culture.
Firms should get to know these before moving on to sell in another country. HMRC provides good documentation to help first time exporters.
4. Know your customers: Knowing the customs and commercial deadlines potential customers work to is important, for example, Saturday and Sunday are not weekends everywhere.
A business should also check that new customers can pay for the goods. If a business has concerns about payment, they can ask for pre-payment or an Export Letter of Credit through their bank.
Businesses may also need to use finance to produce goods or other aspects of the sale. UK Export Finance and each of the high street banks can provide assistance to first time exporters, or those looking to grow export operations. Before approaching a finance provider businesses should consider:
1. The cost of borrowing including interest rates and fees and how this will affect the price charged and the profit made.
2. Whether the finance is needed for short, medium or long-term as there are different products available which will offer more favourable terms.
3. The greater the risk associated with the transaction the greater the cost will be. This can include the political and economic stability of the country as well as the creditworthiness of the buyer. A firm will need to prove to the finance provider that they can deliver a product that will be accepted on time and that the buyer is reliable and can pay.