Three considerations for trading internationally
The thought of trading internationally can be daunting for many SME owners, so start with these three tips to get things underway.
In 2016, a report commissioned by World First of 1,054 small and medium-sized enterprise (SME) decision makers claimed that less than a fifth of UK SMEs export goods internationally, while only 5pc had plans to start exporting in the next five years. It begs the question: what’s stopping these businesses from engaging in international trade?
There are lots of reasons why an SME might be cautious of looking beyond its borders: potential cash flow problems, cost, a lack of legal knowledge, currency fluctuations and so on.
But some companies have met these challenges – and succeeded. Here are some of their considerations for business owners thinking about trading overseas.
Mind the gap: is there demand?
Sue Cooper, co-owner of Little Valley Brewery, which exports to five countries internationally, says that while it’s an obvious first move, SME owners should start by doing some in-depth research.
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“Targeting a market with no demand for your product is obviously inefficient,” she says. “You must ensure that your considered country is ready for your product or service; without a gap in the market, your business won’t perform well.”
Find out whether you have appeal by reaching out and keeping in touch with importers in your target countries, she says. A phone call or email work fine. Ask for updates on their retail landscape.
If possible, physically visit the countries where you wish to trade, suggests Nina Friede, director of luxury perfume company, Friedemodin. “Personally meet the people with whom you will be potentially working with,” she says.
It's important because it brings a personal touch to your relationship with traders and develops trust on both sides, she explains. “Trust means that there’s room for negotiation and compromise on price and quality. It’s also respected in some countries to take the time to get
to know the person and company with whom you're working. It's an investment in itself.”
However, don’t expect things to happen fast; building trust isn’t something that can be achieved overnight. It took the business owner two years conversing with suppliers in India before she was ready to implement any business there. She took the time to understand the country’s work ethic, culture, legal factors and currency.
“If you’re struggling, look for guidance in the country itself,” she adds. “Experts there can act as consultants, coaches and even translators.”
Boots on the ground: local knowledge is key
This immersive approach is echoed by Michelle Pegg, group operations director at textile company, Vision Support Services, who has employed highly-skilled people on the ground with impeccable local knowledge.
Once you’re known for honouring your word, you will be amazed at how much easier new contracts are to win
Simon Anderson, geo
The company’s overseas offices are headed up by regional directors and it employs staff from the countries in which they’re working.
They’re recruited for their skills and experience in textile sourcing and will be familiar with local culture and business practices, says Ms Pegg. It also enables the company to have more control over the quality of its product and service overseas.
Honour your commitments
In the competitive world of business, people often talk about the importance of trust, but knowing how to earn it is a different story.
Simon Anderson, chief strategy officer at energy management company, geo, which works in nine European countries, says that having a good reputation has been helpful.
“Once you’re known for honouring your word, you will be amazed at how much easier new contracts are to win," he says. "They can be shorter, more concise, and you can focus on what needs to be delivered, so it’s faster and easier to negotiate.”
A “can-do” attitude will also help, says Mr Anderson. “If a problem arises, businesses have the tendency to get caught up in the nitty gritty details about with whom responsibility lies. Just get on with it and resolve the issue.”
However, make sure you’re not taken for granted or exploited, he adds. It’s about being assertive and making strong, pragmatic decisions. Showing your dedication will ultimately build trust and confidence with your customers and consolidate the relationship, moving it from one of supply to more of a project member or partnership, he adds.
