We think international trade should be simple, so in these short, snappy and informative series of blogs, we aim to help you get past the mystery of trading globally by gaining a better understanding of the exporting process.
Most governments are currently leading a massive drive to recruit more exporters. They know that their country needs to export more, and import less if they are ever going to become prosperous. That’s why we’ll start by explaining the exporting process in international trade. Here’s the export drive from the UK government:
Step 1: What type of Exporter are You?
There are many different types of exporters and they fall into three broad categories: Passive, Adaptive and Strategic.
- Passive: Exporters who export by chance. They really don’t see it as an essential part of their business and aren’t particularly tooled up to do it frequently. They don’t want the hassle of all the documentation and the anomaly it is to their day to day business
- Adaptive: These exporters are more entrepreneurial and grasp the newfound opportunity with a bit more enthusiasm. They invest in this growing business stream and can manage the administrative process and needs of their overseas customer’s demands effectively
- Strategic: This group sees exporting their goods overseas as a key and core function of their business and invest heavily to ensure the best outcomes. They also have a strong overseas orientation with suitable processes and products. These are the companies who are taking the game right to their overseas competitors
Decide on the category you and your business falls into. Then use this category as the base for taking your business’ approach into the international markets.
Step 2: Planning to Going Global
Going global is seen as being: very complicated; needing expertise (that many will not have in their companies); understanding unfamiliar documentation (such as commercial invoices; export cargo shipping instructions; certificates of origin etc.); knowledge of overseas markets and customs; language barriers; currency exchange rates; getting paid in case of any issues; special product consideration etc., can scare off many from trying trading internationally. However, with a little upfront planning, a lot of the obstacles can be easily overcome to successfully mastering the international trading process. Here are your planning points to getting started with exporting:
- Identify Target Market – do market research into a country/market you wish to sell your products and services into. Department of International Trade (DIT) will have in market experts who will advise on the best way to take your product(s) into the country (https://www.great.gov.uk/advice/find-an-export-market/plan-export-market-research/). If necessary, arrange a personal visit into the target market, to learn about the local culture, trends and expectations towards your goods and services
- Seek help + advice – there is a lot of help out there, www.gov.uk/basics-of-exporting or www.opentoexport.com for example, but the best people to guide you are your friends and colleagues, already working in international trade. They will have war stories and learning wounds in abundance and will be only too happy to share these with you so that you to avoid their mistakes. Take their experience on board, take stock then think through what your plan of entering the overseas market place
- Compliance Checks – learn if there would be any restrictions for selling (exporting) or importing your goods into the market i.e. are they any embargos against your goods or the market by looking at the appropriate government web sites (e.g. https://www.gov.uk/guidance/current-arms-embargoes-and-other-restrictions)
- Budgeting + Pricing – calculate the cost of sale when quoting overseas customers, because delivery costs, insurance and in some cases custom charges etc. are going need to be factored in, so you don’t end up making losses if you sell into the market. If your market research can extend a visit to the region (i.e. via government organised Trade Missions), then this travel investment many need to be factored into the price as a return on investment. Hence, you’ll need to check that your goods, services and prices are still competitive in the target market. Additionally, if you’re going to need to pay local distributors; promote via marketing and advertising agencies; assess a need to set up a regional office for support etc., these are all costs that need to be factored in and balanced against the price(s) you will charge
- Sales Order Targeting – test the market by targetting sales of your products and work towards actually secure orders. This is the biggest challenge and where the energy and investment has to go, i.e. marketing + sales campaign + secure orders
- Post-Sales Support – make sure that the after-sales support, such as order-fulfilment; administration of export documentation generation; logistic carrier selection, arranging collection and tracking delivery of goods to the client etc., are all in place. Consider using innovative tools to help you manage this efficiently, i.e. www.edgectp.com is one such a tool
Step 3: Partnerships for Leveraging Experience
Once you have your first sale or few sales in the market place, leveraging the experience of international trading from partnerships is a faster way to going global than trial-n-error learning by yourself. Consider following these points to getting trading more efficiently:
- Creating Reciprocal Business Relationships – many SMEs could overcome their lack of internal knowledge and experience by calling upon the support of their business partners. Bring companies such as freight forwarders and shippers into your supply chain and build reciprocal business relationships with them by sharing information and skills. Freight forwards, export agents and shippers will be all too eager to share their knowledge with you, as a way to win your business, so be inquisitive to learn as much about ‘how’ their service is being performed. Later you can use this knowledge to either go it alone or value the service that the agents are providing and simply stick with them
- International Trade Organisations – there is a myriad of organisations who seek to promote an increase in the Exporter population (national and local Government, Enterprise Agencies, Trade Associations, Chambers of Commerce and others) and they can all play a part in facilitating export. Their motivation ranges for economic self-interest; seeing you become a customer or member; increasing the number of exporters in the business community and in return improve the country’s export economy. Some of these organisations would have you believe it is both very simple and ‘everyone can do it’, yet others would convince you that exporting is a science which ‘can only be done by experts’, and you need to hire their specialist services. Just be clear you understand their motivation, and how much of your precious profit margin you have to share with them
- Experience is the Best Teacher – exporting also requires a bit of luck, and the more you try, the luckier you get! So let exporting teach you, and don’t let scare stories prevent you from growing your business globally
Step 4: Going Global with Government
With nearly 4.8 million businesses in the UK (www.gov.uk/government/statistics/bis-business-population-estimates) from sole traders to 250 employees business, of which 99.89% are Small to Medium size Enterprises (SMEs).
The UK government in 2019 have two departments charged with helping SMEs to export more, and they should be contacted for advice and support:
- Department for Business, Energy & Industrial Strategy: https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy
- Department for International Trade: https://www.gov.uk/government/organisations/department-for-international-trade%20%C2%A0
Step 5: Exporting Support from the Private Sector
Apart from the government agencies, you can also turn to the ‘pay-for-service’ or support from private sector organisations set up to help SMEs in the exporting process, such as: local Chambers of Commerce; Trade Associations; Federation of Small Businesses; Local Enterprise Partnership Schemes (LEPS), and others who have constituencies and memberships across a wide spectrum of business.
Alternatively, Morgan Goodwin who’ve created the EdgeCTP (Combined Trading Platform), a tool that helps SMEs with: the export sales work-flow; documentation generation; stock control; customer management; logistics selection, arranging and tracking, etc., which is all designed to empower SMEs to manage their business and compliance processes themselves. Find out more at www.edgectp.com.