Is your startup ready to export?
Exporting can have many benefits for your small business – but only if you’re ready for it. Selling to another market is a big commitment, and if you jump into it without fully considering the implications you could find yourself in hot water. Here are some questions to ask yourself before taking the plunge.
Do you have UK success?
No matter what your product or service entails, success for exporting starts at your doorstep. You don't need to be making mega-bucks, but are you successfully trading in the UK already, with an established customer base? The UK is the market you know best, with familiar regulations, rules and attitudes. If your business isn’t thriving here, what makes you think it would do better in an unfamiliar market with all that that involves?
If you’re struggling in the UK, it can be easy to think that things would be different in another country or market; but without proof that your business is doing well you’ll find it harder to gain the trust of buyers or agents in other countries, and you have less margin for error should the exporting not work out.
Is there demand?
If there’s no demand there’s literally no point in exporting – you need to know that there are customers out there ready to snap up your offering. Look to see what any competitors are doing in the space. Are there only a few in a potentially huge untapped market – or are things already quite squeezed? What sets you apart from these competitors, and do you have a firm idea of how you’ll communicate this?
Don’t just assume people will want your product. Make an informed decision based on as much market research as you can do, including going out to potential customers and asking them about their needs, and getting to grips with the new market – remember, even the smallest (and most unexpected) things could be wildly different. Assume nothing!
Be prepared for potential barriers
Think about potential barriers and areas of difficulty when exporting – different government policies, culture and customs, even behaviour. The better you know the region you’re expanding into, the easier it will be. If possible, find yourself a local with insider knowledge who can advise you on the best ways to approach things. Organisations such as UKTI can help put you in touch with relevant people too.
Can you afford it?
Exporting can help your startup increase profits, but that’s not to say you should disregard the costs that are associated with expanding into different markets, particularly at the beginning. You’ll have to content with different and potentially unstable exchange rates, taxes, insurance, shipping costs, selling costs, additional fees if you go with an export agent… it adds up. You’ll need capital to cover your launch and allow for time for trading to get going, as well as costs for visiting the country you’ll be selling in, as suppliers and buyers are likely to want to meet face-to-face.
You also need to think about the pricing for your product in the new market, and how the costs of exporting (and potentially VAT, if outside the EU) will impact upon this pricing. What’s right for the UK market might seem outrageously expensive to a customer in another country (or, in a more positive scenario, cheap!)
If you’re not sure you can afford this but you’re ready in other ways, look at ways you could cut costs. Do you need a physical office abroad, or would you be okay with a virtual office? Would you be able to temporarily cut costs associated with your home operation in order to give you a bit more capital? If not, maybe it's time to take a step back for now.
Have you got a backup plan?
Nobody likes to think about failure – and exporting can actually help here, by spreading the risk as opposed to putting all your eggs in one basket – but having a contingency plan in place should things not turn out quite the way you expected is vital. This will minimise the impact on your business in your home country if things don’t work out.