More startups than ever are exporting from the get-go as a core businesses strategy.
In fact, data from the Office for National Statistics show the number of exporting UK SMEs grew by nearly 7% in 2017 compared to the year previously, meaning 10% of all SME’s now export.
Whereas it can be commonly thought to cement a standing in the local market before increasing operations to a global scale, hungry new SMEs are becoming more confident that they can incorporate international trade as part of their first years in business.
Naturally, as a consultancy that helps firms of all sizes profitably expand abroad, we love seeing ambitious new companies looking at opportunities wherever they may lie, and not just planning to slug away at what could be a saturated local territory.
The abundance of free trade deals, enhanced business-to-business technologies and also consumer shopping portals that transcend country borders makes exporting more accessible for new firms (and with some expert guidance along the way to identify markets, research potential markets and map out entry strategies from Go Exporting!).
So, if you have a great business idea, you’ve just opened your doors to customers or your products are already en route to your warehouse, here are three pieces of advice for getting started.
Ask yourself why a certain market
If you already have a certain export market in mind, ask yourself why you’re considering that market. Partly, make sure it’s not a vanity project. For example, you could have visited a certain country and now dream about seeing your product or brand in that territory the next time you visit, and the idea has stuck in your mind.
But great business decisions, especially at such a tender stage in a businesses lifecycle, require more strategic thinking. Yes, it might sound impressive to be able to say to your investors, customers and peers that your product is sold in the likes of the USA and Australia. But your biggest potential customer base and profit potential could be within an emerging market instead.
So, make sure you do your research…
Market research
It cannot be underestimated how important market research is. And that doesn’t mean a quick Google to see if there are any direct competitors already in that market.
How certain are you that your initial ideas for target markets are looking for a product or service just like yours? How open are consumers in that territory to buying international products or adopting a service that could be new to them? How much sales and educational marketing budget may be required? What are the barriers to entry for that market, including any potential tariffs, border checks, a risk of stock theft, financial transaction barriers?
Thorough and detailed market research will help identify potential markets, earmark those to avoid and even give you a list of potential targets for phase 2 or 3 of business growth where additional funding or operational resource may be required.
Map a route to market
In both a literal and business sense, key to a successful export plan is to map out the route to penetrating that market.
Many exporting businesses benefit from forging initial partnerships in export countries to help spearhead initial growth in that territory, including local distributors, trade stockists, local outsourced sales teams and so on.
Read more: 10% of SMEs now exporting
If you’re shipping and selling your own products, remember that space + time = money away from your potential profit margins if you plan to sit your goods in the export territory, so sending a large chunk of your stock to sit in a warehouse for a few months whilst your work out the business and sales technicalities and finding those first customers will likely be a short-term waste of financial resource.
So have a clear pathway, including a list of things that have to be done before any product is shipped or sales push begins in the target country.
Find out how Go Exporting can open a world of opportunities for your business here.
UK exports have risen for a 32nd consecutive month on a 12-month rolling basis, worth £630 billion in the year to November 2018 according to data released this month from the Office for National Statistics.
The continued growth has seen an additional £13.9 billion in value added to UK goods and services exports.
There was marked export growth to territories where the UK has the potential to negotiate free trade agreements in the future too, including the USA, New Zealand, Australia and the Trans-Pacific Partnership zone.
Exports from November 2017 to November 2018 grew by 6.9% o £54.9 billion with the USA, up 2.9% to £5.1 billion in Australia, 3.8% to £869 million with New Zealand and up 4.22% to £28 billion within the CPTPP. Export sales to other markets including Nigeria, India and Thailand also grew by 29%, 27% and 19% respectively.
International Trade Secretary, Liam Fox, said of the latest set of export figures that: “Today’s statistics once again show UK businesses are exporting with more confidence than ever before, as total exports rise to a record high of £630 billion.
“As my colleagues and I have witnessed on ministerial visits up and down the country, businesses are simply keen to continue meeting demand for their produce from all corners of the world.
“As we start the new year, I encourage all businesses to mark 2019 as a year for overseas expansion.”
If your business is looking to start exploring export opportunities or enhance current international trade operations, Go Exporting can help. Find out more about our export consultancy.
UK businesses exporting or importing with the EU have been urged by HMRC to apply for an Economic Operator Registration and Identification number so they can continue trading in the event of a No Deal Brexit.
With Theresa May’s deal set to be voted on by Parliament tomorrow and the rhetoric having advanced to a ‘my deal or no deal’ stage, many large exporting firms have already started enacting their own no deal preparations in advance of the Brexit outcome.
This latest advice, published early December, aims to help ensure businesses are ready to continue operating across borders should the UK exit the EU without a deal.
In such a scenario, it’s more than likely that the same processes that apply to international trade will then apply to any and all trade with the EU as well. However, the requirement for an EORI isn’t required for exporting goods to and from Ireland or across the Northen Ireland – Ireland land border.
Learn more about and find out how to apply for an EORI number here.
British businesses will also require an EORI number in order to apply for customs simplifications and to submit import and export declarations.
Whilst large, global exporting firms will already have an EORI number as a requirement for trading in territories outside the EU, smaller or more specified operations that have only ever traded within the EU block will likely need to apply.
Businesses urging last-minute deal agreement
It will have been nearly three years since the EU referendum that the UK leaves the EU on 29th March, with or without a deal. And for businesses, in particular, as the deadline loomed ever closer, it’s been an uncertain time with millions being spent in Brexit readiness.
And as Theresa May’s deal finally goes to the vote in Parliament tomorrow, bosses at some of the UK’s biggest manufacturers and employers have voiced once again their desire to see a deal agreed in the interest of business certainty and limiting disruption.
Read more: Do businesses really back the current Brexit agreement?
Today, Toyota Europe’s Dr Johan van Zyl reiterated his support for the Prime Minister’s deal, just days after Jaguar Land Rover and Ford announced thousands of redundancies across UK sites.
He said that: “We’ve said since the start of the Brexit discussions that we would like to see trade without any duties or tariffs, and of course we would like to see a regime where the regulatory framework is the same between the EU and the UK.
“That for us is what is really required to make sure that our operations can continue as they are at the moment.
“The big thing about [the] deal that is on the table is that it really allows us to keep our competitiveness. But if we put any friction or tariffs into the system, that will impact our costs and that will affect our competitiveness.”
Is your business Brexit-ready? If not, there is no time to lose to ensure your firm is prepared for any and all eventualities.
Find out more about Go Exporting’s Brexit Consultancy.
The Department for International Trade’s Export Strategy is to be reviewed by the International Trade Committee as part of an inquiry into the department’s support for exports.
Chair of the Committee, Angus Brendan MacNeil, said the inquiry will look to review the strategy and ascertain whether or not it offers ‘sufficient levels of support to UK businesses wishing to export’.
A number of questions have been submitted to the DiT, including whether or not the Government is effectively identifying and resolving market access barriers faced by UK exporters and how effective the GREAT campaign has been at promoting UK products and services overseas.
There are also requests for written submissions regarding the DiT’s view on the effectiveness of UK Export Finance to support companies looking to export and also whether the DiT’s export service in its entirety is fit for purpose and sufficiently resourced.
Of the inquiry, Mr MacNeil said that: “Exports are the lifeblood of the UK economy, and in August, the Department published its new export strategy. Regardless of whether the UK has the ability to strike new trade deals around the world after Brexit, promoting and supporting UK exports remains a core task.
“In this inquiry, my Committee will examine whether the plans that have been set out in the Government’s strategy provide for sufficient levels of support to UK businesses wishing to export.
“We will also be looking at the effectiveness of the ‘Exporting is GREAT’ campaign, and whether the Government has set itself realistic targets, especially given the uncertainty around how the economy will fare after Brexit.”
What is the Export Strategy?
The Government’s Export Strategy was launched in August last year and set to lay the ambitious, visions and way forward to further improve the UK’s export prowess around the world.
In the Strategy, it noted that the UK is punching above its’ weight but below potential and the ambition to raise exports as a percentage of GDP from 30% to 35%.
On Brexit, the Strategy noted that: “Leaving the European Union means we can pursue an independent trade policy for the first time in four decades, which we will use to maximise our trade opportunities across the world and deliver benefits for business, workers and consumers around the whole of the UK.”
However, the level of Brexit advice in the exporting strategy is also set to be analysed, with one of the quests from the International Trade Committee quizzing whether the strategy is sufficiently tailored to markets with particular potential in the post-Brexit trading environment and if it’s fit and ready to resolve the challenges that exporters will likely face due to the new relationship with the EU.
When Theresa May met Chinese Premier Li Keqiang back in January this year, all reports suggest that the meeting was a glowing success. Some £9 billion in deals are expected to have been signed between the two nations as they discussed future trade and investment opportunities between China and the UK.
Indeed, a new ‘golden era’ of trade relationships was entered, as coined and branded by former PM David Cameron.
Later in the year at an Asia-Europe summit in Brussels, Mr Li went as far as to remark in reference to May that ‘your visit to China in January was a big success. We enjoy this golden era and usher in a diamond era’.
So all the platitudes and warm words aside, just how important is the Chinese market to the UK? And vice versa?
Well, China is the UK’s fifth largest export market (by country) with the Asian powerhouse spending over £22 billion last year on British goods and services. Imports, meanwhile, from China were worth over £45 billion according to Office for National Statistics data.
A huge trade deficit for sure, but a vitally important market for the UK establishment and businesses moving forward as a post-Brexit business world takes shape.
And things are headed in the right direction. British exports to China have grown nearly 65% since 2010, despite some stagnation in the last two years.
If China is on the export hitlist for your company, there are some things to consider before entering the market. China may indeed be the largest e-commerce market on the planet, but that doesn’t mean just moving some product into the country will see your firm earn its fortune.
Here are five considerations.
China isn’t just one market
There are often huge regional differences in both business and local government priorities in China, as well as with consumer trends, habits and traditions. So a ‘one size WILL fit all’ approach is more likely to end up costing you money than earning a profit.
A more tailored and staggered approach can, therefore, provide better results by getting to grips with one city or region first before expanding outwards from a successful base.
There are two versions of the Chinese currency
Crucial for exports, China has two versions of its currency with split usage between domestic transactions and international trade. CNY is used locally and is managed by the People’s Bank of China, whilst CNH, used for international trade, is freely tradeable and the two can diverge in value.
Exporters can lose as much as two or three per cent in sales value in some cases, so figuring out whether to use the ban instead of a currency broker to handle exchange rates is well worth considering before beginning export operations in the country.
Appreciating cultural sensitivity will go a long way
Alongside differences in the general populous’ culture, traditions and religions, there are also strong business cultural traditions that go with doing business in China.
This is especially prevalent in business meetings when meeting potential partners, distributors or wholesalers. You can expect to be wined and dined, but understanding the decorum will go a long way to forging long-lasting inter-business relationships. For example, its traditional for the host to offer three toasts before the guest can then offer one of their own.
Getting an introduction will go a long way too
Naturally true of any export venture, but especially due to the distance and cultural differences between Europe and Asia, getting an introduction really can go a long way in helping gain access to desired markets, meetings with critical buyers and gaining trust in the country as a trusted supplier, seller or manufacturer.
CEO of Brandauer, Rowan Crozier advised that: “Our approach has been to develop relationships with UK and European customers that have a footprint in the Far East. As they get to know you and, more importantly, trust you as a technology partner, the opportunities will come.”
British products are in high demand
The ‘Made in Britain’ tag really does carry gravitas in China with both consumers and businesses. It inspires trust in business and is indicative of quality and reliability with consumers, especially in designer goods, fragrances and clothing – even baby formula.
Only Germany and Netherlands export more to China in the EU than the UK, so demand is high but there’s certainly scope to grow.
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If your business has set its sights on China as part of its export strategy in the future, or you’ve already begun operations in the country and require additional specialist support, find out how our export consultancy can help spearhead your export growth today.
A new survey has found that UK SMEs are still hungry for international trade success in the face Brexit uncertainty.
The research, called the UK SME Confidence Survey, commissioned by OFX and conducted by OnePoll, quizzed 500 UK SMEs owners and senior managers with employee counts ranging from 10 to 249.
It found that 46% of those asked said Brexit had had no effect on their hunger for international trade.
Interestingly, there was a switch in primary market focus too. In 2017, the USA was cited as the most attractive market for exports at 62%, but this year’s confidence survey saw the USA stand at just 36%.
Europe, conversely, fell back into favour with 45% of those quizzed this year suggesting Western Europe was their favoured growth market, compared to just 20% last year.
The OFX report summarised that: ”Again, it seems that Brexit-related uncertainty is no longer holding small businesses back from their EU trade ambitions.
“Despite the uncertainty surrounding the terms of Brexit, small British businesses are increasingly optimistic about international trade.
“In fact, the majority expect to increase overseas sales in the next year. And it’s not all talk. Since 2017, 47% increased overseas sales, growing international revenues by an average of £50,000.
“It’s good to know that political uncertainty hasn’t dampened the spirits of UK businesses.”
Perhaps not surprisingly, business owners in regions favoured leaving the European Union during the referendum in 2016 were most confident and optimistic about international sales now. This manifested itself in the survey results where England-based responders, where the Leave vote was highest in the United Kingdom, were the most confident, with 72% saying they were optimistic about future international trade compared to just 40% of responders from Scotland-based firms, for where the referendum result was firmly in favour with Remain.
Read more: 10% of UK SMEs now exporting
Despite the divisions in future export and international trade confidence though, one thing that united all four nations’ small businesses was the confidence in the ‘made in Britain’ brand. Over half (53%) of those asked said that the ‘Britishness’ of their brand and products was an invaluable asset when selling services and goods internationally.
Eight of the UK’s 10 industry groups saw export growth between 2015 and 2017 according to the latest data released by HMRC.
The data, compiled from the Overseas Trade Statistics and Office for National Statistics, found that 151,000 UK firms exported goods and employing some 9.7m staff.
Of the 10 industry groups, just two saw negative growth in export value; electronic and electrical equipment and chemicals.
The largest growth between 2016 and 2017 was seen in the pharmaceuticals sector, followed by mining, petroleum products & waste and aerospace. The chemical industry also saw a healthy increase between 2016 and 2017, offset by a larger 28% decline between 2015/16.
Industries seeing the largest import growth included pharmaceuticals and mining, as well as electronic goods.
(Source: UK trade goods in statistics by business characteristics 2017)
Each and every industry group saw more short-term growth between 2016 / 17.
Business strength in the face of Brexit
This latest data set from HMRC makes for an interesting read, and a positive one too.
Firstly, whilst some sectors including most notably chemicals and electronics saw marked declines between 2015/16, every sector experienced growth thereafter. That’s despite the EU referendum result in late June of 2016 and ongoing uncertainty and negotiations the year after.
Stalwarts of UK industry including aerospace, pharmaceuticals and vehicles continued to see growth – a positive sign before the UK officially leaves the EU in March next year.
Overall, the total value of exports saw an extremely healthy 13.7% growth, highlighting both the ambition, confidence and success of exporting UK firms throughout the Brexit process.
And despite one in 10 UK SMEs now exporting around the world, 72% of the total value of exported goods is generated by a smaller percentage of more experienced firms over 20-years-old.
Read more: 10% of UK SMEs now exporting
This data, combined with other further data released recently as part of the Annual Business Survey, shed a positive light on the UK’s international trade and the increasingly international outlook for SMEs and start-ups too.
(Image by Pkuczynski)
New figures from the Office for National Statistics has shown the number of exporting UK SMEs increased by 6.6% in 2017 compared to the year before.
Part of the Annual Business Survey, figures showed an increase in total exports to £637bn in September – an increase of 4.4% compared to the year previous, highlighting an increasing demand for British goods and services worldwide.
Just under 10% of all UK SMEs are now exporting (232,000) alongside 41.7% of large businesses (3,500).
But it’s not just hungry, outward-looking start-ups that are breaking into the global market. Established firms over 10-years in trading have also begun exporting more, up over 10% to 115,300.
Of the figures, International Trade Secretary Liam Fox said: “Today’s news is further evidence that the high-quality goods and services produced by British businesses are selling all over the world.
“As an international economic department, when my Ministerial team and I travel abroad, we see first hand the unprecedented demand for British products, and the results of the Annual Business Survey show that we are responding to the demand.
“Our Export Strategy sets out an offer to every business that has the ambition to start exporting or increase their existing operation, as we look to move exports as a percentage of GDP from 30% to 35%.”
The total number of UK businesses exporting stands at 340,500 – 14.3% of all businesses outside of the financial economy – up 14% on 2016 estimates.
Talk on potential free trade agreements with the US and Australia will also give a boost to the 36,000 and 15,000 respectively exporting goods to each country.
Increasingly international outlook for new firms
So much Brexit talk and business reaction to the current happenings in Parliament and deals from Brussels means we haven’t really written too much about the export market in general over the last few weeks, so it’s great to see that even throughout the turbulent Brexit process that businesses have been ever-broadening their horizons.
What appears clear in the data from the ONS is how new businesses, fledgeling start-ups and those with less than two years of trading under their belts, are increasingly global-facing in their initial approach.
A near 20% increase in new firms exporting compared to 2016 is a significant jump and highlights the export opportunities being explored by UK start-ups, as well as how the international marketplace is the target market for businesses from the get-go.
And, Brexit aside, there’s a fair argument to say that exporting has never been more accessible. Ever-improving business management, communications and operations technology and the strength of the ‘Made in Britain’ badge makes it easier than ever to both successfully enter and operate in foreign markets.
Read more: How to make your first £1m in export sales
The increasing amount of information available about exporting products and services abroad will also give confidence to heads of new firms that they can enter the global stage from the off, whilst those looking for experienced, specialist support can seek out the likes of Go Exporting to help with both export strategy, market entry and all the rules, tariffs and regulations.
When Theresa May left the CBI conference last week she would have been forgiven for believing that businesses were on her side when it came to the Brexit deal she’s brought back from Brussels.
Indeed, the CBI’s deputy director general, Josh Hardie, said in a statement that: “It appears that we’re on the cusp of a much-needed agreement. This shows that a deal can be done and businesses across the continent will be watching this weekend’s EU summit closely.”
But all may not have been as it appeared.
Internal emails from the CBI suggests that support for the deal from the organisation that positions itself as the ‘Voice of Business’ is far from unwavering, and certainly not that any deal and some semblance of a clear route forward is always the best option.
Indeed, the CBI’s head of EU negotiations inadvertently included ITV news in an internal email thread to colleagues which suggested as much whilst discussing a draft statement regarding post-Brexit partnerships.
In it, Nicole Sykes said: “no need to give credit to negotiators I think, because it’s not a good deal” and then received a reply from Christopher Grummet, head of news at the CBI, saying “Tweaked. Have left the credit in given we ‘want’ this to go through”.
Naturally, the CBI was not best pleased that such emails had reached the public. In a statement, it said that: “It’s absurd ITN has reproduced a private debate in the full knowledge that it is not the CBI’s position.
“Responding to significant announcements inevitably involves a step-by-step process, testing different viewpoints before arriving at a final, public statement.
“The CBI and our members have been clear. The deal’s not perfect, it involves compromise, hard work lies ahead but right now it is the best chance of protecting jobs and growth.”
So what do business really think about the deal that’s currently on the table? The one which Theresa May is spending her time marketing to the British people and politicians and one that the EU has strongly hinted it is unlikely to now deviate from.
The boss of Rolls-Royce was one of the first to praise the agreement and urged politicians to back the ‘practical’ agreement Theresa May had negotiated.
“We are slightly running out of time and I would, as a business leader, like to see politicians on both sides of the fence get on and negotiate a practical deal that works for business,” Mr East said.
BMW was on the same page as well with the car maker welcoming the deal, saying it was a ‘positive step in the right direction’ to avoid ‘the worst-case scenario which is what a no-deal Brexit would represent.’
Read more: Politicians should get behind ‘practical’ if not Rolls-Royce of Brexit deals
But whilst many firms within the manufacturing sector support the current proposals, others aren’t so keen.
Vocal Brexiteer and boss of Wetherspoon pub chain, Tim Martin, said on LBC radio this week that the UK would be better off with no deal at all.
He said that: “When the dust has settled and we can see what Theresa May’s deal is, we can see that no deal is much better than a deal.
“On day one, on the 29th March if we don’t sign up for a deal, we’re £39bn better off, which is £600 per person in the UK.
“Everyday that goes by if we don’t get out of the EU on 29th March we’ll continue to pay hidden tariffs on rice, oranges, wine, coffee, lots of things, every single day.”
A deal with no backing?
One of the main sticking points for which detractors of the current proposed deal are basing their arguments on is that the numbers in the House of Commons currently don’t add up for the Prime Minister and the deal may fail to pass parliament. Back to square one and, like with the majority of the Brexit journey, entering uncharted territory.
But that could change, especially in the eyes of education secretary Damian Hinds who defended the plan, in particular against an alternative of leaving the EU without a deal at all.
He said that “The deal that we have on the table is a strong deal. It is a good, balanced deal. As people reflect on what the alternatives are, I think people are going to come to see this is a very good deal for Britain.
“If we weren’t to pass this deal, I think it becomes rather unpredictable what happens next. There is a risk on the one hand beyond that of no Brexit at all – and there are people trying to thwart Brexit – and there is also a risk of no deal.
“Neither of those two things are attractive. This is why I believe this deal, which is a strong deal, will gain more and more traction.”
Read more: Brexit consultancy
What are your views on the deal? Will it help or hinder your business? Or are you simply pleased that there is a workable deal on the table and, should it receive a positive vote in parliament, the likelihood of a no-deal Brexit is starting to dim?
Share your thoughts in the comments below.
The boss of Rolls-Royce has urged politicians to back Theresa May’s draft Brexit agreement with time running out to agree any alternative.
Joined by many other business leaders who came out publicly to back May’s Brexit plan, Mr East mirrored the sentiment of thousands of company leaders up and down the country in calling for a practical approach to ensure a no-deal scenario is avoided.
In an interview with the BBC, Mr East said of this week’s events that: “The time since the referendum seems to have gone remarkably quickly and we’re essentially [still] having a discussion we could have had the morning after the referendum.
“We are slightly running out of time and I would, as a business leader, like to see politicians on both sides of the fence get on and negotiate a practical deal that works for business.”
Rolls-Royce, who employ over 22,000 people in the UK across aerospace, submarine and marine sectors alone, is just one of thousands of manufacturing firms concerned that just-in-time supply chains may break under a hard exit from the European Union, calling for ‘as little change as possible’ from the current close export and trade ties with the block.
Elsewhere, BMW welcomed the draft exit agreement brought back from Brussels, stating it was a ‘positive step in the right direction’ to avoid ‘the worst-case scenario, which is what a no-deal Brexit would represent’.
May out to sell her deal
It’s been a busy week for the Prime Minister with a five-hour Cabinet meeting and three-hour session in the Commons followed by a raft of ministerial resignations, a further statement outside Number 10 and even a birthday bash for Prince Charles.
Since Wednesday, May has been in campaign mode to drum up public support and understanding for the deal she’s managed to agree, whilst also thwarting questions about votes of no confidence and leadership contests.
Indeed, political support whilst invisible during the hours immediately following the announcement of the agreement has started to emerge, including MP Therese Coffey stating that May’s draft agreement is ‘what businesses are looking for’ and is ‘confident that when people get into the full detail and what that actually means, many more will endorse it’.
But the main sticking point for Brexiteers and the public right now is the customs arrangement as part of the Northern Ireland backstop for which there’s a seeming lack of clarity on how, if triggered, this can be exited in the years ahead.
Read more: As Brexit text is agreed, business warn they cannot afford a no-deal
A full Brexit agreement could be close, but it could equally be an impossible goal should political motions within the Conservative Party itself look to oust the PM with the view to negotiating the deal, something which the EU has said it’s not at this stage inclined to do.
And Bruno Le Maire, France’s economy minister, had little sympathy for the UK’s position, stating: “The British politicians, who have argued for Brexit, now have a choice between reneging on their absurd political promise or an economic disaster of which the British people will be the first victim.”
Until next week…
