THESE five tips could help you negotiate new markets, writes Susan Rowand
The UK boasts a strong international brand and local businesses can find solid demand when selling goods and services overseas. According to HSBC’s latest Trade Forecast, more than two-thirds (70 per cent) of UK traders expect trade volumes to increase over the next six months, with falling commodity prices, increased competitiveness and the recovery of key advanced economies boosting confidence. However, while international trade remains a key driver of growth for many UK businesses, only 6 per cent of Scottish small businesses plan to start exporting their goods over the next 12 months. Those are figures we’re working hard to improve. Small businesses need the right information and insights to make their dreams a reality.
This goal has the support of many industry leaders and across a range of government initiatives. In November, Lord Maude, Minister of State for Trade and Investment, unveiled the Exporting is GREAT campaign, which aims to inspire and support 100,000 additional UK exporters to sell their goods and services overseas by 2020. This includes providing online help via www.exportingisgreat.gov.uk – where ambitious UK businesses can access live export opportunities, training, events and more.
For those considering an export strategy, here are five key steps all small businesses should consider.
1 Do your research Investing time is crucial to identifying the best market to trade in and your overall business strategy. Both desk and field-based research is essential for developing a comprehensive action plan, which should include everything from details of your target market to your key exporting objectives and planned timescales. Your research should also identify your competition and what differentiates your product, as well as cover the regulatory framework, legalities and taxes of trading in your chosen market.
2 Choose the best route You could pair up with a local agent, distributor, franchisee or license holder; or sell and fulfil orders direct from Scotland. If working with agents or distributors, comprehensive agreements should be drawn up early to outline the rights and obligations of each party.
3Protect your property Did you know that intellectual property rights are territorial? This means that while your long-established trademark may be protected in the UK, it is unlikely to benefit from the same protection overseas. Intellectual property can include anything from your product’s design to your company brand and website content, so it’s wise to ensure you have the correct protection in place when introducing products or services to a new market. The Intellectual Property Office website has information on protecting rights both in the UK and overseas.
4Get your finances in order If you can’t finance your exports, creating your business could be a huge financial risk. One option to mitigate against this risk is trade finance, which can often give you the financial boost you need to explore overseas opportunities and fulfil those early orders. Also, decide early which currency you want to trade in and confirm this with your customer. Exchange levels can fluctuate hugely, impacting profit margins, so you should talk to your bank about how to manage this risk. There are also risks in trading internationally when it comes to getting paid, all of which can be insured against or mitigated through the payment method.
5 Spread the word A well-planned international marketing strategy will help you target the right groups with the right messages about your product and services, particularly when it comes to online marketing. You may need to have a strong website tailored to the target market, so invest in the highest-quality campaigns you can afford, taking into account the local language and how the brand will translate in the local culture.
• Susan Rowand is a head of business banking for HSBC in Scotland