By John Styring, CEO, IglooBooks
Expanding abroad sounds like the next logical step. Your product sells great at home, who wouldn’t want to buy it? Ever tried exporting tea to China? Selling chocolate to Belgium? Thankfully, we haven’t but examples like these highlight the barriers that can arise when selling your product overseas.
The truth is that even when exporting good quality products or services, you’ve got to know your customer. When you’ve spent all your time getting your customers in the UK on board, you’d be forgiven for not thinking about overseas expansion. The export market has its challenges, especially for SMEs. Here are five of the biggest and how to deal with them:
1. Make sure you have an audience
Proven success with your current target audience doesn't automatically mean new customers will connect with your products or services in the same way. First and most important, you need to be sure a market exists for your goods. Then, make sure demand isn't already being met by competitors and, if so, whether you have a product that makes you noticeably different from the competition. Where there is no competition, check that there are no good reasons why not - for example, any laws restricting the sale of your product.
2. Which market to choose?
When going international, your choice of market will play a key role in your success. The many options can make this choice daunting. Begin by researching the markets where you think there are most opportunities for growth. In the early days, it’s sensible to start close to home so you can benefit from easier access to the market and lower travel costs. But don’t forget to consider the country’s political stability, culture and currency strength. Work out where current relationships are strongest and where your products will have the highest demand.
3. Born global?
The challenge for SMEs going global is to find that balance in your business plan between your core values and what needs to be refreshed. Consider your market and ask the questions you used to build your initial business plan. Build a complete picture of your current expenditure and any upcoming contracts so you can plan for the costs of trading in a new region. A good start if you’re looking to export is to get in touch with UK Trade and Investment who will be able to give you some helpful advice on preparing for your new market.
4. Do I need to retrain my staff?
Identify which employees need to familiarise themselves with foreign business practices. In SMEs, owners are likely to be involved in initial meetings so think about language requirements and whether you may be helped by hiring a translator. There are also the marketing needs of targeting new consumers and the legal challenges of dealing with foreign regulations. If you're trading within Europe, legal and tax issues need special attention. One way to overcome this is to get support from an accountancy firm. Government programs and trade commissioners can also be a useful source of business intelligence.
5. Sometimes it’s who you know
When you have developed social capital and a good set of contacts, it’s easy to be held back by worries that you lack the same connections overseas. Get to know the people you’re considering working with as overseas partners. Business is done between people so choose wisely. Find out which networking events are most suitable for your business and ensure your key staff and business development team attend. By talking to associates in one region, you may find they have useful contacts in nearby markets.