Martin Hanson, West Midlands’ head of business banking for HSBC outlines how West Midlands’ small businesses can grow overseas.
The UK boasts a strong international brand and local businesses can find solid demand when selling goods and services overseas. According to HSBC’s latest Trade Forecast, more than two-thirds (70%) of UK traders expect trade volumes to increase over the next six months, with falling commodity prices, increased competitiveness and the recovery of key advanced economies boosting confidence.
However, while international trade remains a key driver of growth for many UK businesses, just 6% of West Midlands’ small businesses plan to start exporting their goods over the next 12 months. Those are figures we’re working hard to improve, and with a vast array of opportunities available to traders in the region, it’s imperative that we find new ways to give small businesses the confidence and tools to see exporting as a credible way of finding future business growth.
Small businesses need the right information and insights to make their dreams a reality, ensuring a lack of knowledge is never a barrier for those at the beginning of their trade journey.
This goal has the support of many industry leaders and across a range of government initiatives. In November, Lord Maude, Minister of State for Trade and Investment unveiled the Exporting is GREAT campaign, which aims to inspire and support 100,000 additional UK exporters to sell their goods and services overseas by 2020. This includes providing online help via www.exportingisgreat.gov.uk – where ambitious UK businesses can access live export opportunities, training, events and more.
The campaign recognises that no matter what stage of their trade journey, access to the right information must be easily accessible for future exporters. For those considering an export strategy, here are five key steps all small businesses should consider during the early stages of their planning.
- Do your research
Investing time and effort into research is crucial to identifying the best market to trade in and your overall business strategy. Both desk and field-based research is essential for developing a comprehensive action plan, which should include everything from the details of your target market to your key exporting objectives and planned timescales.
Your research should also identify your competition and what differentiates your product, as well as covering the regulatory framework, legalities and taxes of trading within your chosen market.
Attending overseas trade missions or networking events are a great place to start your research into potential markets and to connect with key contacts. The HSBC Knowledge Centre and UK Trade and Investment (UKTI) websites are also full of good resources with step-by-step guides on how to achieve your ambitions sooner.
- Choose the best route
You could pair up with a local agent, distributor, franchisee or license holder; or sell and fulfil orders direct from the UK. Each requires its own careful checks and planning. If working with agents or distributors, comprehensive agreements should be drawn up early to clearly outline the rights and obligations of each party. As national markets can vary considerably, it’s also essential to consider which country’s laws you will use to resolve any potential disputes, and have this written into any contracts. It is also critical to research at an early stage the best legal setup for your company to operate in a new market, which may be a representative office, subsidiary or joint venture.
- Protect your property
Did you know that intellectual property rights are territorial? This means that, while your long-established trademark may be protected in the UK, it is unlikely to benefit from the same protection overseas.
Intellectual property can include anything from your product’s design to your company brand and website content, so it’s wise to ensure you have the correct protection in place when introducing your products or services to a new market. The Intellectual Property Office website can provide useful information on protecting rights both in the UK and overseas.
- Get your finances in order
If you can’t finance your exports, creating your business could be a huge financial risk. One option to mitigate against this risk is trade finance, which can often give you the financial boost you need to explore overseas opportunities and fulfil those early orders.
Also, decide early which currency you want to trade in and confirm this with your customer. Exchange levels can fluctuate dramatically, which can impact your profit margins, so you should talk to your bank about how to manage this risk.
There are also risks in trading internationally when it comes to getting paid, all of which can be insured against or mitigated through the payment method. Give yourself time to explore all the options, seek advice from experts and decide which would be the best fit for your company.
- Spread the word
A well-planned international marketing strategy will help you target the right groups with the right messages about your product and services, particularly when it comes to online marketing. You may need to have a strong website specifically tailored to the target market, so invest in the best quality campaigns you can afford, making sure you take into account the local language and how the brand will translate in the local culture.
Remember, only 25 per cent of internet searches are done in English, so it’s important to localise your website and any online marketing you undertake to capitalise on potential sales opportunities. Search Engine Optimisation, Pay-Per-Click advertising and social media can also help you promote your products and services around the world, so consider the best ways in which these can be used for your business.
About the author:
Martin Hanson is Head of Business Banking for HSBC in the West Midlands. Martin has worked in the Midlands Region for much of the last 10 years and having worked directly with clients himself and having lead Area, Regional and National teams of Commercial and Corporate managers in the past, he has practical experience of the issues industry faces.