Glasgow will be the focus of attention on Wednesday when the 20th Commonwealth Games launch in the city, kicking off 12 days of sporting activity – and great business opportunities for firms based in Scotland and the rest of Britain.
The sports and cultural event is being used as an opportunity to showcase the brilliance of Scottish and UK enterprise, and to promote trade within the Commonwealth. A business conference is also taking place on the eve of the games to highlight the importance of building international trading relationships. Trade within Commonwealth countries accounts for £300 billion alone. Another games-inspired initiative is BusinessClub Scotland, a Scottish Government-backed support agency to help SMEs north of the border win contracts both at home and abroad.
Just one in five of the UK’s small and medium firms currently exports, though companies are 11 per cent more likely to survive if they trade overseas, research from the Confederation of British Industry suggests. Exporting enterprises are more productive and achieve a stronger financial performance. And exports are on the up – British businesses sent £72.6 billion worth of goods overseas in the three months to May, according to official data, up £0.1 billion on the previous three months.
But too many small firms are still missing out on opportunities to spread their wings internationally, largely due to an ignorance of the possibilities out there and a lack of confidence about taking the plunge into global trade. Yet, help is available for ambitious small companies, and there are steps that SMEs can take to determine whether they have the qualities necessary to succeed beyond their native borders.
Is your business ready to trade overseas?
You must ask yourself some tough questions, and be honest in your responses if you hope to be an exporting success. Your product or service may be popular in the domestic market, but will it really have appeal abroad, and, if so, where? Why would a customer want to buy from you rather than a local operation, in other words, what makes your business distinctly different? Is the fact that your products are produced in Great Britain a potential selling point? Start by identifying your target market and possible customers in that region. And, of course, don’t forget to find out who your competitors might be, too.
Next, you need to think about how you make your sales. About 90 per cent of UK firms that export sell directly in a country, either via a physical presence or online. The alternative might be to work with a local partner. Calculate the costs of selling overseas, and whether your business can meet these, as well as how you might set your prices. UK Export Finance is a good source of information on some of the financing issues involved in overseas trade.
Research, research, research
Visiting your chosen market is essential, and it’s possible to take part in trips and trade missions through business groups or Government bodies such as UK Trade & Investment (UKTI) to get a better idea of how a country works on the ground. Have you got plans to target more than one market, in which case, which country do you prioritise first? Determine whether there are any export duties or regulatory concerns that may apply to your enterprise when it’s operating in foreign climes. Having this kind of background information is vital, but UKTI has two research arms that could be of help – the Overseas Market Introduction Service and the Export Marketing Research Scheme.
Are your processes and infrastructure up to the job?
Exporting to a new market will involve a lot of extra work, so consider whether your SME can cope with this added capacity. Ask yourself honestly if your current staff have the necessary skills to conquer a foreign marketplace, be they in languages or knowledge of freight and customs issues. Entering new markets may mean hiring new employees.
Increased pressure on your production processes is probable, and you also need to review your technology set-up to see if it’s sufficient to manage any new business generated. Again, UKTI can be a great help here. It has a Passport to Export service that spots the gaps in a company’s structure and knowledge, then gives training and support to SMEs with ambitions to trade internationally.
How will you market your firm in a foreign country? And what is likely to be the most appropriate method of payment to use? Another consideration is how products may be distributed over long distances – the British International Freight Association has detailed information on possible options.
If you’re thinking about moving into new geographies, you need to protect your intellectual property, whether it’s design, digital data, customer information or your business strategies. The Intellectual Property Office has more details on how to avoid vital elements of your enterprise’s formula being copied or outright stolen. Fluctuations in exchange rates are likely to be another concern, so research how you might protect your business against such changes, and also how to avoid the possibility of late payment by foreign customers.
All in all, it’s a lot to take on board, and some businesses may conclude that exporting is more trouble than it’s worth. But several organisations exist to hold SMEs’ hands.
- UKTI is still the best first port of call, with its experienced advisors and guidance on global opportunities via traditional trading routes and e-commerce.
- The British Chambers of Commerce runs Export Britain, a service to help businesses begin working abroad.
- Open to Export is a free, online community backed by the Government that advises small firms on international trade.
The Commonwealth’s athletes will be competing for medals in Glasgow this week, but the real winners in the long-term could be the small firms that are inspired to start trading beyond British shores. There are great rewards for those who are pioneering enough to seek out new horizons, so SMEs that are serious about achieving growth will look to the international stage, and start to think about how they might share in some of the prizes that exporting can provide.