Basics of exporting
Although your business may have an established local market, there's often no reason why it couldn't successfully compete overseas too, growing your revenue and profit.
But before you start exporting, you need to have sound knowledge of your would-be markets. You also need to consider whether your products are right for each target market and whether you have the necessary resources.
Getting ready to export
The key areas to research before you start exporting
Before you commit to exporting you need to honestly assess your export potential - both in terms of the readiness of your business and of your product or service.
Conducting export market research
It's essential to carry out detailed market research to identify and evaluate the target market. You should start by examining:
- the industry structure
- the predicted demand for your product or service
- competition and how you plan to fit into that marketplace
- any modifications required to make your product or service saleable
Read more about researching export markets.
The Department of International Trade Overseas market introduction service (OMIS) can provide support and help in planning your entry into new overseas markets, including market research.
Developing an export marketing plan
After completing your market research, you can draw up an export marketing plan defining how you will enter the new market.
Consider whether you have:
- a marketing strategy that incorporates international trade development
- the necessary financial resources
- the right people to develop the new export markets
- adequate knowledge of the requirements of your chosen market - eg modifying packaging to meet local regulations and standards
- an understanding of export payment mechanisms and export finance
Then assess whether your product is suitable for export. Consider:
- product standards and regulations in the overseas market - the British Standards Institution offers help for exporters
- the costs of adapting your product or service
Selling and distribution in overseas markets
Look at different ways of selling and distributing overseas
There are a number of elements you need to consider to sell successfully overseas. How you organise your sales presence in export markets is one of the key decisions.
Options when selling overseas
Depending on your product, you may be able to sell directly. For example, you might be able to sell over the internet or by exhibiting at local trade shows.
Many businesses look for a partner who already understands the local market. For example:
- You can sell to a distributor who then sells your products locally.
- You can use a sales agent who sells products on your behalf, or puts you into contact with potential customers on a commission basis.
- You can enter into a joint venture with a local business. This gives you a share of the management and profits of the joint venture, but is a more complicated and expensive option.
- If you want complete control over sales, you can set up your own local office. This is the most expensive option.
The choice you make can have important financial and legal consequences.
Read more about the available support for trading outside Northern Ireland.
When arranging a sales contract with an agent or distributor, you need to ensure that responsibility for delivery and payment is clearly defined.
Intellectual property when selling overseas
It's also important to remember that intellectual property (IP) protection becomes more complicated if you sell goods overseas. Patents and trade marks are only recognised and protected in the country of origin, so you will need to secure IP protection in each country you intend to sell into. Read more about intellectual property protection overseas.
Marketing your product or service overseas
Ideas for how to market your product or service overseas
To succeed, your marketing strategy will need to be tailored to each target market.
You'll need to appreciate the traditions, culture and legislation of the countries you are trading with to exploit your exporting efforts. Read more about working effectively with different cultures.
Read more about the Invest NI export support.
Sales promotion overseas
Customisation of your marketing activities is essential if there are cultural differences affecting the consumption of your product.
You should consider:
- Using different media. TV viewers in one country may belong to a particular socio-economic group, while in others TV ownership is far more widespread.
- Changing symbols. For example, you may need to respect different standards of dress in promotional activities in some countries.
- Changing the market proposition. For example, bicycles are presented as a leisure item in one country, but as essential vehicles elsewhere.
Using local agents
Non-specialist research can be conducted in-house but you will need to be clear about the data you require. You will also need to set a realistic budget to cover the necessary costs.
Alternatively you could delegate the research to local agencies to save money. Local market research agencies have direct access to your potential customers. However, you should carefully consider the reputation of the agency.
Invest Northern Ireland can provide support and help in planning your entry into new overseas markets.
Legal responsibilities as an exporter
The HM Revenue & Customs rules that apply to exporters
You'll need to familiarise yourself with the VAT rules administered by HM Revenue & Customs (HMRC).
In most cases, exports will be zero-rated for VAT although there are exceptions. Check with the HMRC VAT Helpline on Tel 0300 200 3700 to find out what applies to you.
Details of any exports you make must be entered on your VAT return. If you have a high level of exports to European Union (EU) member states, you may have to submit more detailed declarations in an Intrastat return. Intrastat thresholds are reviewed annually. The current thresholds are £1.5 million for Arrivals and £250,000 for Dispatches.
Read an introduction to Intrastat.
For exports outside the EU you must report sales to HMRC electronically using the National Export System (NES) or using the single administrative document (SAD).
Read more about VAT rules.
Authorised Economic Operator status is not compulsory although companies that meet the requirements can take advantage of simplified customs procedures.
Security laws mean that you must declare your goods leaving the EU. If you supply normal export declarations such as the SAD, you will be covered, but if you're not declaring them in the usual way, you must complete an Exit Summary Declaration.
Certain goods may only be exported following the issue of an export licence. Examples of goods subject to licensing control include fine art, firearms and chemicals.
Understanding the law
As soon as your goods enter another country they become subject to that country's laws.
Transport considerations when exporting
The transport options that are available to exporters and their insurance requirements
Your responsibility for transport depends on your agreement with your customer or supplier. For example, you might be responsible for delivering the goods to a warehouse in the customer's country. Your obligations should be clearly set out in a written contract using Incoterms. Incoterms are standard trade terms that set out who is responsible for transporting goods, insuring the goods during transportation, paying duties and customs clearance.
Modes of transport when exporting
The best mode of transport for your goods will depend on the type of goods and how quickly they need to be delivered. You may need more than one mode, for example, sending goods by lorry to a port in the UK and then by ship overseas. The goods will need suitable packaging and labelling for transportation. It may be possible for your goods to be sent via post. Read more about international transport and distribution and importing and exporting by post.
Depending on the contract, you may need to arrange insurance. Marine insurance can cover transport by air, road or rail as well as by sea.
Normally, you are responsible for UK customs procedures and your customer looks after customs in their country. In any case, you must ensure that you have the right paperwork.
Freight forwarders when exporting
Most companies use a specialist freight forwarder to handle transport. Confirm exactly what they will do and whether they can handle all documentation and other procedures. Read more about using brokers and forwarders.
Look for a forwarder who exports regularly to that destination. They can 'consolidate' your goods with other consignments in a single container to reduce costs. Reputable freight forwarders are usually members of the British International Freight Association (BIFA).
Getting international transport right can be complicated. You can get advice from a member of Invest NI International Trade team. Find out about the export support available from Invest NI.
Financial considerations when exporting
Understand how exporting could affect your cashflow
The delay between the shipping of goods and your receiving payment for them will affect your cashflow.
It's worth discussing your cash position with your accountant and bank manager before committing to exporting.
It's also important to insure your business against not being paid in case one of your overseas customers goes out of business. UK Export Finance, run by the government, may be able to offer insurance and advice, depending on the type of export. Read more about the financial support for exporting.
Other commercial providers can also give information on credit insurance and offer cover. You can find a listing through British Insurance Brokers Association (BIBA).
There are also currency issues you need to consider. Some of your customers could face problems obtaining foreign currency to pay for your exports. In this case, it's worth insisting on a (confirmed) irrevocable letter of credit that secures payments according to the terms of the credit and often at an agreed rate.
Businesses that sell on credit to foreign customers can use factoring or invoice discounting to free up cashflow. Export factors specialise in the collection of money from overseas. The factoring company pays you a percentage of the invoice value up-front and the balance (less their percentage) once they have collected payment.
Read more about getting paid when selling overseas.
When arranging your sales contract you should ensure that delivery responsibilities are clearly defined using the Incoterms 2020 terminology and contracts.
Working effectively with different cultures
How to approach other cultures respectfully and effectively
You'll need to understand the culture of your target markets to establish a successful relationship with your potential customers.
Being able to speak the language of your potential customers can help to establish mutual confidence. If you don't speak the local language, you could consider investing in foreign language training for your staff. Alternatively you could employ a translator or interpreter.
It can also help to have your promotional material translated. However, it's a good idea to avoid colloquialisms and metaphors in promotional material - they could be embarrassing in the local language.
Find out more about the Invest NI in-market support programme.
For more advice on conducting business with another language, see doing business in another language.
Researching overseas markets
You should conduct research into your target market to establish local considerations. These may include product or packaging modifications to enable your product to conform to local cultural demands. Or it could be that local sales and marketing channels for your particular product are different from those in the UK - mail order in one country, shops in the other, for example.
Read more about researching and entering overseas markets.
You can also find out about the Invest NI export support available.
Ten key steps to successful exporting
Tips for how to improve your chances of exporting successfully
Follow these ten tips to help you export your products or services successfully
1. Research your market
Does your prospective foreign customer need what you are selling at the price that will yield you a profit? What is the competition and how will they react?
2. Implement an export strategy and review your capabilities
Ask yourself: what would my business gain from exporting?
3. Construct an export plan
Define how you will enter the foreign market. Finalise human resources and marketing strategy and allocate an adequate budget to cover export start-up costs.
4. Choose your sales presence
Establish whether you need a direct sales operation. Or is an agent or distributor more effective? How will you manage your overseas sales presence?
5. Promote your product
How are you going to market and sell your product? Customise marketing to the target country.
6. Get the Customs side right
Contact HM Revenue & Customs and the UK embassy of your destination country to clarify requirements. Make sure your reporting practices are watertight.
7. Get paid on time
Ensure your cashflow will remain at a safe level. Guarantee sufficient credit for your future sales. Take out insurance cover if necessary.
8. Choose your distribution methods
Consider the implications of selling over long distances and across national frontiers.
9. Transport goods effectively
Assess and choose the most effective transport method and make sure the goods are insured by you or the importer.
10. After-sales policy
Regularly liaise with customers, export agents and banks. Monitor political unrest or other adverse conditions in the country of destination. Manage regular servicing and warranty claims.