By Stephen Dilley, partner at law firm Bond Dickinson
The value of South West exports grew to £15.7 billion by the summer of 2016. Exporting can be a great way to grow your business. Goods and services from the UK are in strong demand across the globe.
The timing is ideal: there is a renewed sense of encouragement from the Government following last June’s Brexit vote and the depreciation of sterling has made our goods even more attractive overseas.
The most successful exporters develop and execute a plan. As businesses grow in maturity and look towards exporting, there a few key points to remember to ensure you’re ready. Here are our top tips:
1 – Seek advice, especially if exporting for the first time. The Department for International Trade’s Export for Growth programme can pair you up with experts who can help open doors. The Institute of Export also offers training and support.
2 – Do your market research. This should not just be paper based or online. There is little substitute for going to visit the countries where you intend to export as this will offer key insight and inside knowledge as to how the country and businesses over there operate.
3 – Carry out your Risk Assessment. What proportion of your business should export? How politically and economically stable is your chosen market? What do you know about your buyer(s)? How will you manage the risk of currency fluctuation? Answering these key questions is paramount to the success of your exporting strategy.
4 – Factor in any barriers. The obvious ones are any tariffs (for those countries where we do not have a free trade agreement). Non-tariff barriers (e.g. being held up at customs) can affect performance and profitability as well.
5 – For exports to the EU, think about whether your business model for exporting may be affected if the free movement of goods and services changes.
6 – Consider trade finance. Sellers sometimes require buyers to prepay for shipped goods. Buyers may want to reduce their risk by requiring sellers to document the goods that have been shipped. Exporters’ banks may provide a loan for the exporter on the basis of an export contract. Importers’ banks may provide a letter of credit of the exporters (or their bank) which provides for payment upon presentation of a bill of lading. Trade credit insurance may supplement this.
7 – Protect your intellectual property. Make and manage applications for your trade-marks, patents designs or any other registered intellectual property rights in your chosen markets. Ensure those protections are included under your contractual arrangements with third parties.
8 – Know the rules. What forms do you need to complete? With what product safety regulations do your goods need to comply? Are there any export licencing requirements? Are there any trade restrictions? Ensure you adhere to anti-corruption procedures.
9 – Optimise your sales and distribution framework. Should you enter into a straight contract of sale with an overseas business, appoint a local agent or distributor, enter into a joint venture, or set up a franchise model? Each has its pros and cons so make sure you consider your options carefully.