Exporting overseas can help you grow your revenue and profit. If you’re planning to export, you need to understand the challenges of exporting and have sound knowledge of your potential markets.

Overview

Although your business may have an established UK market, there's often no reason why it couldn't successfully compete overseas too, growing your revenue and profit.

If you're planning to export, you need to understand the challenges of exporting and have sound knowledge of your potential markets. You also need to consider whether your products are right for each target market, whether you have the necessary resources to start exporting and transport considerations.

Understand the challenges of exporting

Exporting isn't simply an add-on to your existing business. It should be part of an overall strategy to develop the business.

Before you start exporting, it's worth making sure you have developed a complete export plan looking at all the costs and risks involved:

• Exporting presents all the normal challenges of marketing in the UK - it's up to you to find customers and convince them to buy from you. Understanding what customers want and how the market operates is vital.
• You need to cope with extra logistical problems, contractual issues and paperwork. You'll probably want a contract drawn up using internationally recognised terms and conditions and standard commercial practices to make it clear what your responsibilities are. There's also a range of paperwork for sorting out transport, customs clearance and payments.
• You need to comply with regulations in both the UK and overseas. For example, some goods that are allowed in the UK might not satisfy another country's standards or even be legal there.
• Exporting demands additional resources, both in terms of financing and skilled personnel.

Assess your skills and resources for exporting

To start exporting successfully, you should plan your export strategy. Spend time and money planning, researching market opportunities and building relationships. You may also need to invest in changing your product and service to suit overseas customers.

Exporting is usually a way of growing a successful business, rather than an easy way out for one that's in trouble. If you're struggling with limited finances or overworked employees, you may not have the resources to take on the extra work. 

Extra resources and special skills

You also need to devote extra resources to handling your exporting business. Marketing to overseas customers tends to be more demanding than selling within the UK. Exporting also needs special skills - such as organising international transport and handling customs clearance.

Many businesses find that the best way to get started is to buy in the services they need, and build in-house skills and resources later.

Additional financing

Exporting can also be financially demanding. Customers often want credit from the time they receive the goods. For a long distance shipment, this could be weeks after you produced and shipped the goods, so you get paid later than you would by a customer in the UK. At the same time, you may have to meet extra costs like transport and insurance.

The more successful you are, the greater the demands placed on your business will be. It's worth planning ahead to be sure you have the capacity to handle the extra production, selling and after-sales support.

Assess your export potential

Before you commit to exporting, you need to honestly assess your export potential - both in terms of the readiness of your business and of your product or service.

It's essential to carry out detailed market research to identify and evaluate the target market. Examine:

• the industry structure
• the predicted demand for your product or service
• competition and how you plan to fit into that marketplace
• any changes needed to make your product or service saleable

Scottish Development International offers exporting support through the Smart Exporter programme.

You can draw up an export plan defining how you will enter the new market. Consider whether you have:

• a marketing strategy that includes international trade development
• the necessary financial resources
• the right people to develop the new export markets
• adequate knowledge of the requirements of your chosen market
• an understanding of export payment mechanisms and export finance

Then assess whether your product is suitable for export. Consider:

• product standards and regulations in the overseas market 
• the costs of adapting your product or service

Marketing your product or service overseas

To succeed, your marketing strategy will need to be tailored to each target market. You'll need to appreciate the traditions, culture and legislation of the countries you are trading with to exploit your exporting efforts.

Sales promotion overseas

You might need to customise your marketing activities if there are cultural differences affecting your product.

You should consider:

• Using different media. TV viewers in one country may belong to a particular socio-economic group, while in others TV ownership is far more widespread.
• Changing symbols. For example, you may need to respect different standards of dress in promotional activities in some countries.
• Changing the market proposition. For example, bicycles are presented as a leisure item in one country, but as essential vehicles elsewhere.

Using local agents

Non-specialist research can be conducted in-house but you will need to be clear about the data you require. You will also need to set a realistic budget to cover the necessary costs.

Alternatively you could delegate the research to local agencies to save money. Local market research agencies have direct access to your potential customers. However, you should carefully consider the reputation of the agency.

Selling and distribution in overseas markets

How you organise your sales presence in export markets is one of the key decisions in selling to overseas markets.

Depending on your product, you may be able to sell directly. For example, you might be able to sell over the internet or by exhibiting at local trade shows.

Many businesses look for a partner who already understands the local market. For example:

• You can sell to a distributor who then sells your products locally.
• You can use a sales agent who sells products on your behalf, or puts you into contact with potential customers on a commission basis.
• You can enter into a joint venture with a local business. This gives you a share of the management and profits of the joint venture, but is a more complicated and expensive option.
• If you want complete control over sales, you can set up your own local office. This is the most expensive option.

Transport consideration when exporting

Getting international transport right can be complicated. Your responsibility for transport depends on your agreement with your customer or supplier. Incoterms are standard trade terms that set out who is responsible for transporting goods, insuring the goods during transportation, paying duties and customs clearance.

The best mode of transport for your goods will depend on the type of goods and how quickly they need to be delivered. You may need more than one mode. The goods will need suitable packaging and labelling for transportation. It may be possible for your goods to be sent via post.

Depending on the contract, you may need to arrange insurance. Marine insurance can cover transport by air, road or rail as well as by sea.

Normally, you are responsible for UK customs procedures and your customer looks after customs in their country. In any case, you must ensure that you have the right paperwork.

Most companies use a specialist freight forwarder to handle transport. Confirm exactly what they will do and whether they can handle all documentation and other procedures.

Look for a forwarder who exports regularly to that destination. They can 'consolidate' your goods with other consignments in a single container to reduce costs. Reputable freight forwarders are usually members of the British International Freight Association (BIFA).

Read our guide Exporting goods outside the EU.