Table of contents
Table of contents
There are lots of different ways a UK business can trade abroad, from exporting goods and services, to licensing trademarks or patents in exchange for royalty payments. So where do you start?
In this article we explain what to consider if you’re getting ready to do business in another country, and what steps to take.
The process of running a business in the UK can be complicated enough, and that’s before adding customs and international tax rules into the mix. Moving into international markets can really help a business grow, so it’s well worth doing the groundwork.
The first thing to do before making any business decision is check your financial position. For example:
Moving into a new territory will (hopefully!) mean increased demand. That’s great! Have a think about how you’ll meet that new demand – ideally without keeping customers waiting. This is your chance to set the tone of what it’s like to do business with you by delivering great, efficient service.
Yes, like you’re back in school.
Researching the area you want to expand into will help you take advantage of any marketing points and find new clients.
Every region has its own preferences and economic conditions, so taking a blanket approach isn’t necessarily a safe bet. It may seem obvious, but there are likely to be cultural and consumer differences that you should familiarise yourself with. The last thing you want to do is accidentally offend your new client base! Talk about making a bad first impression…
Any research should also cover the other businesses in your industry. It’s always good idea to keep tabs on your competitors and know what they’re up to.
At the same time, you don’t want to copy anyone else’s approach completely. Afterall, having a unique angle or selling point will only help you stand out!
Trading abroad does add another layer of financial complexity to a business, especially if any hidden costs come along and mess up your plans. We’ll link to places where you can find more information on each point, but consider:
You can use all the intel you gather to start developing a rough pricing strategy – it can always be changed.
There are lots of different models you can use for this, all with their own pros and cons, but to give you an idea this might include:
There are specific import and export regulations to go over, as well as rules relating to intellectual property protection. These rules can include things like licence requirements and product specifications. For example, a licence is required if you’re importing certain types of goods, such as animals or animal products, medicine, or controlled drugs. What might not be a controlled substance in one region might be very controlled in another, so double-check!
You’ll need to come up with a plan for importing and exporting goods, giving thought to such things as distribution and storage.
Also consider whether you’d be better off working with an agent or a distributor. While the terms are often used interchangeably, they are in fact legally distinct, and which you pick affects things like your level of control and the amount of risk you take on.
Your supply chain can have a big impact on your cash flow, especially if you need to spend money serving your customers before they pay you!
It really comes down to establishing a relationship with a foreign market and then working to cultivate that relationship over time.
While technology (and social media in particular) gets a lot of flak these days, there are still plenty of reasons to be grateful for it. It gives you access to a global network of business owners and professionals, which means you can make meaningful connections in another part of the world before you’ve even started doing business there.
These kinds of contacts can prove invaluable, putting you in touch with potential customers or clients and also just giving you advice about the market.
If you feel like you need some assistance (or even if you don’t), be sure to check if there are any grants available to help you start exporting.
These non-repayable grants can help you get up and running in a new territory, providing much-needed financial support. Alternatively, you could choose to go down the trade/export finance route, which generally helps to mitigate the risks regarding cash flow and payment from buyers.
As part of your research, you also need to consider the political and economic risks associated with the country you want to trade in. First and foremost, is it a stable country? This matters in terms of things like credit risk, which is the chance a borrower may default on a loan and leave the lender in the lurch. As a result, there may be lengthy credit checks involved in taking out a loan. Definitely make sure you get appropriate insurance.
More generally, though, is there an election coming up, or are there any planned changes which could affect your ability to trade there?
In short, absolutely.
An accountant will be able to break down the different tax rules for you and ensure you’re being as tax-efficient as possible. They can also help when it comes time to submit your tax returns, whether you’re operating as a sole trader or a limited company.
Even if you decide to go it alone, though, good bookkeeping software (*cough* Pandle *cough*) can simplify the whole process, saving you valuable time.
Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.
AAT Level 3 qualified, I’ve worked in the finance sector since 2017. When I'm not in Pandle HQ, you'll find me hiking and playing the drums.
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