Whether you have been engaged in overseas business for some time, or you are just considering dipping a toe in the water for the first time, here are some golden rules which should be applied to minimize the risks and maximise profits.
There are numerous schemes run by the DTI (UK Trade Invest), local development agencies and Business Links to give British businesses of any size, access to good quality, highly subsidised market reports at bargain basement prices. There’s even an online library of introductory market reports available free of charge from UK Trade Invest. In addition, for small and medium sized businesses, there are travel grants and overseas trade fair schemes, export explorer schemes and export promoters. There is really no excuse for going in blind. All the information is just there waiting for you to take it. At this point you should consider, if you don’t have time to do the market research thoroughly, you will not have time to make a success of overseas business, so drop the idea now.
Just as important as visiting potential markets, is maintaining a visiting frequency of no less than 4 times per year to markets in which you are already doing business. As an overseas supplier, you have to work twice as hard as local competitors to demonstrate your overwhelming commitment to their market. When you visit the market, make sure you see your own contact (distributor or agent) and also end users, factories and shops.
From time to time (maybe once a year), you should arrange to touch base with a commercial representative from the local British Embassy or Consulate. These people have excellent local knowledge and contacts; a major part of their role is local networking, often at the highest levels. The more they know about your activities, the more likely they are to make a connection which might benefit your business.
Plan how you are going to communicate with overseas contacts once you are home. If your business has several employees, decide who will be responsible for overseas business, give them any required training and explain how you will have to give your overseas customers exceptional service to keep them. Nobody likes hassle and long distance hassle is even worse.
This is a really bad move for a company, because not only are they wasting all the investment which was made in winning the business in the first place, but they are also demonstrating to the market that they have no commitment. Once this has happened they are unlikely to be able to get back into the market at a later date.
Before entering into a deal, consider everything – special packages, translation and reprinting costs of sales materials, cost of overseas trips (including additional costs incurred because you are not at your desk), currency exchange and bank charges, cost of chasing bad debts, overseas freight, insurance, customs charges, cost of breakages, wrong delivery, returns……the list is endless. Assume the worst will happen, and if it doesn’t you will make extra profit.
It is not a tenable position to be a long term, long distance exporter. Either the local competitors will at some point oust you from the market by fixing whatever problem allowed you into their back yard in the first place, or if there is no local competitive product, somebody will start making it or sourcing it from somewhere nearer than you.
So if this is you, make a plan at the outset to get involved in local manufacturing, when a set of market and sales criteria have been fulfilled. And then work towards it, not underestimating the length of time and bureaucracy which can be involved in investing in some markets.
As a long term short distance supplier, especially in the EU, you will experience a different problem. You are very likely to suffer from increasing competition from cheaper sources, especially the Far East. Plan at the outset how you are going to deal with that without letting your customers down.
Many people shy away from exporting or doing business overseas. It can seem fraught with risk, dangerous, difficult to control. In the extreme it really can be all of these things. But it can also be exciting, a huge opportunity and very profitable. And for many businesses, especially those involving manufacturing, you simply cannot ignore the opportunity or the threat of overseas markets and suppliers.
So here they are, in summary, the Five Golden Rules of Successful