In 2014 the government set a target of £1trn of exports by 2020. But in 2018, the last year for which data are available, exports reached just £535bn. One major problem is that many small and medium-sized enterprises (SMEs), where the potential for export growth is highest, are keen to sell overseas but say they don’t know how to get started.
British businesses can and do succeed in markets all around the world – but the right strategy for your firm will depend on its individual characteristics and ambitions. The key is to make detailed preparations, taking specialist advice wherever it is needed in order to develop a plan. Exporting for the first time then becomes less of a leap into the unknown and more a question of executing a well-researched strategy.
Start by thinking through the business case for exporting. What is your firm’s rationale for expanding into a particular market and why is it attractive? For instance, do you already have clients who are active in those markets, or are you receiving enquiries from clients based there? Have your rivals already made the leap? At this early stage, all sorts of help is available. Bodies such as the Department for International Trade can offer support ranging from market research to places on trade missions. But you should also use your own extended network to build up your research. Everyone from your bank to your clients may have useful insight that can help you identify and analyse the size of a new overseas opportunity.
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Next, think about potential obstacles. Does your management team have the capacity and the skills to pursue an international expansion? Is your core business at home strong enough for you to shoot for ambitious new goals? Do you have the finance in place to underpin expansion?
Testing the water
Then consider the practicalities of market entry. What specific products and services will you offer customers in the new market and how will you service them? There are lots of different options: remote market entry and selling from the UK online or via local partners can be a good way to test demand. Or you could go for a soft launch, putting a limited number of sales staff on the ground. More aggressive options include setting up a new subsidiary, or even making an acquisition.
Finally, look for specialist help on practicalities. Local agents can help you deal with red tape and regulation as well as introduce you to potential distributors for your exports. Consultants in the UK, from accountants to private-equity investors, can help you make sure you have the right foundations on which to build an export strategy.
David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
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