Five steps to new export markets
Following prime minster David Cameron’s recent trade visit to India, and with the EU in the process of negotiating a trade deal with USA, it would seem that there has never been a better time to look at exporting, particularly as the domestic market remains stagnant.Yet many SMEs believe that they do not have the requisite skills, time or money to open up export markets. However, with some careful planning and basic steps, you could potentially open up substantial new markets overseas.
David Filmer, associate solicitor at Harrison Drury, outlines five key steps to get you started.1. Identify your route to market
Firstly, how will you generate sales leads abroad? Will you seek to sell directly (online sales can assist here). Or will you seek local knowledge by appointing a regional distributor or agent to generate sales leads on your behalf?2. Identify the origin of the goods you are selling
This is a key step, and is not as obvious as you may think. Where you are able to demonstrate that your goods are from the EU, then this will open up more markets to you, due to the free movement of goods within the EU, and the various trade agreements to which the UK is party.Even where you import raw materials, if you process these materials locally and increase their value by at least 60% (not simply resell at a mark-up) then you can state that the goods originate in the EU.
3. Get your documentation in orderAs ever, documentation is key to avoiding disputes. A robust set of terms and conditions of sale is essential. Also, familiarise yourself with Incoterms 2010 (the international commercial terms of business). These are a recognised international set of terms of trading which allocate ownership and risk in goods which are being sold across borders.
Similarly, check what additional documentation is required in your chosen jurisdiction (EUR1, certificate of origin, certificate of conformity). Having your documentation correct is key to smooth transactions, and to getting paid.Ensure that your invoice is comprehensive, and includes all relevant information, including relevant references, tariff codes, and the weights and quantities of the goods being shipped. Investing in good financial software can assist with this process.
Make sure any contracts with agents and distributers cover the arrangement you think you have with them.4. Consider how you will get paid
Again, this may seem obvious, but chasing debts in other jurisdictions can be daunting. You may wish to consider various options, such as investing in letters of credit, payment on receipt of documentation, or at the very least, staged payments.5. Get good advice
There are many places to get good advice on exporting. Get a solicitor to sort out your documentation to make it watertight. Approach your local chamber of commerce, who can offer lots of advice and training with regards to exporting. Get a good freight forwarder, and develop this relationship.Check which markets they operate in first, and consider whether your product needs any specialist handling. If in doubt, speak to a number of different providers before making a decision.