By Dave Smith, lead blogger at Davpack
Any new business venture is going to be a risk. That’s part of what makes it exciting and a challenge.
Naturally, however, you want to do all you can to keep that risk to a minimum, to be as prepared as you can be for what’s to come. A successful new business venture is, after all, even more exciting.
If that new business venture involves trading overseas, then there’s even more preparation to be done, because you’ll be dealing with the unknown. So what are the basic things you need to be doing before you start trying to sell your products into a different country?
Understand the local market
Never assume anything. Do all the research you would before launching a new product in a familiar market, and then do a whole lot more. If you’re launching a brand new concept to a country, don’t think that what works in the UK will necessarily be just as popular in a different culture; if you’re going into competition, check what’s worked and what hasn’t in the past for other companies, whether they’re local to the market, or others exporting in.
Needless to add, you’ll have to be ultra aware of pricing, without forgetting to take into account the fact that you’ll have higher than usual transport costs and have to spend more time doing essential paperwork. And, of course, a different currency can mean fluctuating exchange rates — are you allowing enough room for manoeuvre should those rates move in the wrong direction? Once all the added time and cost has been factored in, is your product still going to be economically viable?
You could get someone local to carry out your market research, but there are many cultures where it is more acceptable to tell you what you want to hear than the truth. Unless you have someone in situ you totally trust, it will nearly always be best to visit the territory yourself.
Consider your branding
Branding is an essential part of promoting your business and your product. If you’ve started trading in your own country and are expanding into new territories, it’s worth checking whether your branding is giving the same message it does to your traditional customers at home.
Sometimes this can be as simple as making sure the name of your product or business doesn’t have unfortunate connotations in the local language or culture. Even big companies make these kinds of errors. For example, when Colgate launched its Cue brand of toothpaste in France, none of the locals thought to mention that it shared its name with a widely known and popular pornographic magazine.
The way images are used can also be vital. When Gerber, a subsidiary of Nestlé, launched a baby milk powder in Africa, they used the same packaging as in the US, with a picture of a baby. With low literacy rates in the area at the time, it was common local practice to put a picture of what was inside the package on the wrapping…
Even the colour can make a big difference. Pepsi-Cola changed some of its branding from a deep to a light blue in South East Asia, without realising that that colour was associated with death and mourning in that part of the world. Sales plummeted rapidly.
See if you qualify for government assistance
The British government is keen to encourage its businesses to trade abroad, if for no other reason than it brings in extra revenue and makes them look good. What this means for you in practice is that it will offer financial assistance in the form of underwriting bank loans made to overseas buyers of UK goods and help you access working capital finance and secure confirmations of letters of credit.
There is also plenty of free practical advice and support available, including the excellent Passport to Export service, a 12-month programme designed to make sure you’re on track by providing a detailed assessment of your readiness to export, and helping with market research and visits to your target market, among many other benefits.
Getting your goods from door to door
Once you’ve got everything else into place, you might almost overlook the fact that you still need to ship your goods, and that it’s going to be a lot more complicated than sending the same stuff to somewhere else in the UK.
Shipping to another country within the EU is usually nice and straightforward; it’s an open market, which means that there are no real restrictions or customs issues to take into account. One thing you will have to be on top of is your VAT return.
Elsewhere in the world and there’s a lot more you’ll have to do. You can make it all considerably simpler by employing a commercial freight forward agent, who’ll do a lot of the essential paperwork on your behalf. The downside to that is that they don’t do it out of the goodness of their hearts, so that will eat into your profits (or reduce still further the margins you have to work within when planning your pricing strategy).
Whatever you do, don’t stint on the packaging you use. Your goods have further to travel and will pass through more pairs of hands than usual, which will increase the potential for damages. Depending on where you’re shipping to and how they’re travelling, your parcels may also be subject to greater extremes of cold, heat and humidity. And don’t use untreated wood; chances are, it will get as far as customs and no further — it might even get destroyed. International regulations are in place to prevent the spread of certain tree pests, so only treated wood (such as heat treated pallets and plywood cases) can be counted on to get through unscathed.