export

Top Five Tips for First Time Exporting

Thousands of businesses are avoiding international expansion despite the enticing overseas markets that exist for their products. Take the first step to global success, by following our top tips for first time exporting for small businesses.

The Success of the Small Business on an International Level

An increasing number of start-ups and small businesses are including international sales as part of their business strategy. With the surge in popularity, more and more first-time exporters are entering the markets. Around 10 percent of all UK SMEs are exporters and are currently capitalising on a share of the £287,000 in additional revenue that these orders can deliver. In fact, according to UK Export Finance, firms that traded internationally in the last 2 years have grown at a rate of 15% compared to just 8.4% for those focusing solely on domestic markets.

For those businesses looking to take the plunge, get ahead of your competitors today and read on for our top five tips for first time exporting.

1. Identify Profitable Markets

If your company is yet to receive their first international order, conducting market research is imperative. If done effectively, your research will set you up with a foundation in market demand, growth opportunities and an understanding of your competition which could save you millions in the long run. If companies do not invest the time in market research, important cultural, competitor and pricing factors can be missed and the opportunity for profit can be seriously impacted.

2. Market Regulations

Regulations relating to safety, production and quality control differ within markets, particularly in the pharmaceutical and food production industries. The slightest variation could require large, expensive changes in production. Understanding the regulations from the outset will give businesses a good idea of their target audience without making costly mistakes in the process. This level of detail extends to companies who deal with consumer’s personal data. The introduction of privacy laws in Europe and US states like California hold companies to strict guidelines with hefty fines for non-compliance.

3. The Logistics

Facilitating orders on an international scale is vastly different to operating at a domestic level. Whilst globalisation has made this significantly easier in recent years, small firms are still required to go through certain changes when operating internationally for the first time. Fluctuating shipping costs, delays and lost cargo all need to be taken into consideration. It was only a few months ago that COVID-19 single handedly brought markets to its knees with some not expected to bounce back for years.

Once logistics such as potential warehousing is arranged, there’s the small matter of customs paperwork to complete which, as the Brexit process has shown, can be complex and costly, particularly when dealing with large shipments. With this in mind, it is vital that companies instruct the assistance of reputable shipping comp

4. Navigating the Shift in Currency Value

Managing a vast number of currencies whilst selling internationally can be an issue for first time and novice exporters; however, all is not lost! Unlike multi-national organisations who hire currency traders, small businesses can follow simple steps to stay on top of the shift in currency values and protect price and profit margins.

Trading in your local currency, can prevent big headaches for companies and transfers the risk of shifting currency values over to the buyer. If this is not possible and the buyer insists on their own currency, it may be wise to lock in exchange rates in advance. It is highly unlikely that as a small firm, you are going to have the cash reserves to account for negative movements in foreign exchange but this option can mitigate daily fluctuations in currency values.

For a beginner, it is important not to try and play the market. Focusing on your product, your customers, adhering to international regulations and securing those first international orders are going to put you in a much better position.

5. Understanding Tariffs

Another issue that has been highlighted by the Brexit negotiations is the potential for new tariffs and regulations to be imposed on goods after the new trade deal is agreed. The introduction of these could seriously impact the importation of certain goods in favour of supporting local business as well as decreasing your profit margins and limiting long term sales volumes. Researching where free trade agreements exist can create a competitive edge to your business. If you really want to get ahead, sourcing where new free trade agreements are likely to be introduced and investing in those locations will ensure that you are one of the first to break into new markets when they arise. This requires a certain amount of discretion on the company’s part as potential trade disputes such as the one we are currently seeing between the United States and China can create serious losses if overlooked.

Is your Company Ready to Export?

One of the primary reasons that small businesses do not venture into international markets is down to a lack of resources and expertise. According to the Department of International Trade, companies with a turnover under £500,000 were unlikely to look into exporting globally despite 73% believing that there was a strong demand for British products and services. A quarter of these businesses added that they wouldn’t know who to turn to when looking for advice. As daunting a task as it may be for businesses, the insight and the advice is out there, whether it be sourced through an external agency or researched by the company themselves, now is as good a time as ever to break through into the global markets.

A Beginner’s Guide to Importing

As the eCommerce market grows, buying and selling goods online is fast becoming the norm for consumers. With this increase in popularity, businesses are more committed than ever to keeping their costs to a minimum. A top way to stay cost effective is to import goods from China, India or Taiwan. Importing your goods from as far as Asia can be a daunting prospect to a first timer. If you are a business looking to import from Asia for the first time, remember these 8 easy steps for a smooth process:

1. Follow your Market
2. Find your Product
3. Understand your Shipping Terms
4. Get your Quote
5. Track your Shipment
6. Prepare for Customs
7. Pay your Invoice
8. Plan your Delivery

Let’s take a closer look!

1. Follow your Market

When purchasing goods from abroad it is important to research the market you are looking to buy in. Just like purchasing things at home, it is not wise to invest in something you do not know anything about.

You will need to consider the following:

• Is your product in high demand? If so, you will need to ensure that you order enough to last you until you are able to purchase more. Keep in mind that it can take up to 6 weeks for shipments to arrive.
• Are you buying the right quantity? Shipping costs per unit are low when buying bulk but importing too much at once can be costly. Ensure you are being as cost effective as you can when considering quantity.
• Will you ship your goods via sea or air? Fast moving markets could benefit with the convenience and speed of delivery that air freight offers.

2. Find you Product

When sourcing a product, make sure that you know where it’s coming from. Some of the most common ways of sourcing products are through:

• Alibaba and Made in China. These companies are extremely popular with companies.
• Sourcing and inspection agencies. As a first-time importer, you may find it beneficial to use these.
• Visiting factories and trade fairs. This can be a great option if you are unsure of a particular company and want to see how they operate.

3. Understanding your Shipping Terms

It is important companies know what they’re paying for, what transport costs they are responsible for and when you have to pay. Top tips include:

• Try to negotiate importing your shipment on Free on Board (FOB) terms. This generally works out cheaper for the buyer.
• Try to avoid CIF/CFR shipping terms.
• Ensure you know exactly when and how your supplier wants to be paid for the shipment. This could include pay upfront in full or part payments at various points of the journey.
• Research the price of importing your product so that you know whether you are getting a good deal.

4. Get your Quote

Contact a Supreme Freight for a quote and ensure you familiarise yourself with the following costs:

• Duty and VAT. A lot of shipping companies are happy to advise on the duty and VAT costs.
• Insurance. Supreme Freight will quote you to insure your shipment whilst it is in transit. It may not seem essential at the time but is it worth the risk?

5. Track your Shipment

When we say track, we don’t just mean checking the location of your goods. We mean staying on top of your shipment. Before you start the process with a shipping company, ensure you know how long your shipment is going to take to get to you. Production and transit times are good things to know. If your product is going to take 6 weeks to make and then another 6 weeks to ship to you, you’re going to want to know in advance!

Be sure to ask your shipping company for:

• Estimated departure and arrival date into the UK
• Name of the vessel to enable you to track it yourself
• Estimated delivery date for your address

6. Prepare for Customs

When your goods are in transit, you will need to prepare the following for your shipment to clear customs:

• Commercial Invoice from your supplier to present to customs when your shipment arrives.
• A Bill of Lading – This proves that you are the legal owner of the shipment.
• An EORI number – This will vary depending on whether you are a VAT registered business. Most shipping companies will arrange this for you, the most you will need to do in this case is to send the form to HMRC.
• Commodity codes so that HMRC are aware of what the shipment is.

7. Pay your Invoice

Once your goods have arrived into the UK, we would advise settling your invoice as soon as possible as your shipping company would have paid a significant amount in Duty and VAT on your behalf. You will generally receive your invoice between customs receiving your goods and delivery and it is generally paid via bank transfer.

8. Plan your Delivery

When planning for your delivery, consider the following:

• Delivery address – Does the delivery address of your shipment have sufficient storage solutions for your goods? If not, you may need to consider renting a storage space.
• Size and weight of shipment – If your cargo is bulky or heavy you may need a tail-lift delivery or extra man power to help with unloading.
• Time of delivery – Plan ahead and ensure that your goods are delivered at a time when your storage facility is open.
• If you are delivering directly to an Amazon warehouse, you may need your supplier to label the cartons to ensure it can be identified.