Almost every business will be impacted by Brexit – positively or negatively. We can only make educated assumptions about what Brexit will look like and indeed when any transition arrangements may end. With a potential 2-year transition agreement, Brexit would happen in March 2021.
Fortune favours the bold and businesses that can benefit from exporting should review their business strategy to achieve their maximum potential. If you don’t your competitors probably will.
The good news is that there is a huge range of support available for businesses who want to start exporting or want to expand their exporting.
When helping businesses review their strategy, I often ask if they export. The first answer is often no, followed by a, well we have sold this to here and that to there. They have become accidental exporters. If your business has recognised expertise or a niche specialisation then you will often be found globally via your web site even if you are not actively trying to export.
A typical example of accidental exporting is a client that does specialist machining and repair of engine components. They have a good reputation for quality and historically did business mostly with local trade clients. They evolved to become a UK “go to” place for some specialist repairs to high performance engines that have common failures. Their client base extended from trade clients to include individual enthusiasts who want the best for their cherished motorbikes or cars. This has expanded to accidental exporting where European and global customers send their precious engine components to this UK business for machining and repair. The next step is actively targeting profitable export opportunities.
Exporting is not sensible for every business, but it makes a lot of sense to evaluate the potential for yours, particularly if you are already an accidental exporter.
There are barriers to exporting that can include:
- Finding customers
- Market Research
- Logistics
- Language and communications
- Product and service localisation
- Capacity in the business
- Getting paid, Export credit and dealing with currency risks
- Export paperwork
- VAT reporting
- Tariffs (for outside the EU)
The good news is that there are many organisations including the Department for International Trade (DIT), Exporting is Great, UK Export Finance (UKEF) and Export Britain (British Chamber of Commerce) that can provide useful advice, expertise and support for new and established exporters. Much of the advice is free or subsidised and in some cases, there can be Government or EU funding available to support companies in certain markets or sectors.
DIT statistics show that companies that export are more likely to stay in business and often have significantly higher productivity than non-exporters. Just over 11% of UK business export.
It is important to recognise that it may cost more to support sales in some export markets. A true end to end cost of sale analysis should be done to understand the differences compared to local sales and how that in turn compares to realistic export market pricing. There is little point in growing export sales unless overall profitability is improved. Proper strategic planning will help you make better business decisions on the value or otherwise of exporting and to plan and manage the impact of uncertainties e.g. exchange rates.
Contact Gordon Carmichael to discuss how we can help you develop your business strategy to include exporting.