The last 12 months have been challenging for businesses of all shapes and sizes, contending not only with a global pandemic but also the changing landscape caused by Brexit.
Whether it’s selling their own products and services, or partnering with new international suppliers to supplement work lost in the UK, many firms are now looking to do more business abroad as a result of Brexit.
Couple that with the UK’s vaccination programme gathering momentum and optimism around the pound growing, SMEs across the UK will be hoping that international expansion is on the agenda for the second half of 2021 and beyond.
So what factors do they need to bear in mind in order to make it a success?
Get government help
There is significant help on offer from various arms of the Government if you are looking to conduct more business overseas.
For example, The Department for International Trade brings together thousands of different export opportunities on its website through its ‘GREAT’ partners, which you can pitch your company for.
It also has a wide range of guides and resources which SMEs can make use of when putting together an international strategy, as well as events, trade fairs and webinars which can offer a helping hand for businesses to develop plans and make contact with partners that can aid overseas expansion.
Make use of experts
Expert guidance isn’t only on offer from Government departments though ‒ business groups and associations can also play a supportive role.
The Institute of Export and International Trade and its sister website Open To Export, offer a wide range of courses and webinars aimed specifically at equipping SMEs with the knowledge needed to expand into overseas trade.
Finding a local accredited Chamber of Commerce is also recommended. It can assist with everything from forming distribution partnerships to what difference Brexit may make.
These experts can not only help you find the right partners for your plans, but also highlight common mistakes made by businesses branching out into overseas markets and how to avoid them.
Tap into local knowledge
Don Marshall, Head of eCommerce and Marketing at Exporta, argues that looking internationally can make a big difference to your business’s future. It’s particularly important when it comes to growth, as new markets and increased sales can result in attracting the attention of investors and lead to significant expansion.
Marshall suggests establishing a local presence in the new country you plan to operate in, whether that be by going there yourself when safe, or partnering with a local agent. This will not only help you research the individual firms you may be hoping to work with, but a partner can also provide invaluable expertise on the likes of legal requirements, regulations and any particular idiosyncrasies that come from doing business in that nation.
Think about costs
The financial side of any international expansion requires careful planning. It’s important to consider the details and ask yourself questions on things like whether you will be invoiced in sterling or another currency?
If you have to pay in the home currency of your new partners that opens your business up to fluctuations in exchange rates, which could have a significant impact on your bottom line.
Working with companies that offer international business payments can make a huge difference, as they offer a range of foreign exchange tools to help businesses manage currency risk and navigate the volatility of the foreign exchange market.
For example, the likes of forward contracts allow businesses to fix an exchange rate up to 12 months in advance of a payment, protecting them against negative market movements and getting them more for their money.
A different way of working
Operating internationally will bring up all sorts of new challenges and the way business is conducted in other countries is likely to be different to what we are used to in the UK.
Paul Russell, Managing Director of the Luxury Academy ‒ a firm which provides communication and etiquette training for businesses ‒ advises that the way timeframes vary can be particularly jarring.
He explains: “Urgent has different meanings in different countries, as does ‘now’ or ‘in time’. This can be frustrating unless you understand the cultural differences relating to time. You may find, for example, that a potential partnership suddenly comes to fruition after a period of silence. It is simply that your expectations of time are different.”
No two countries are the same
If you make a success of your first international move, you may be tempted to apply the same business practices when moving into another new country.
This can be risky though ‒ the reality is that each country is different, and you will have to start from the beginning in terms of your research, due diligence and financial planning with each new market you want to move into. What works in one country will not necessarily work in another.
The language barrier
If you are to succeed in international markets, finding a way to present your goods or services in an appropriate way to new clients is vital. That means overcoming the almost inevitable language barrier, and putting the time and effort into translating elements like your website and marketing material into something your new customers will understand.
If you’re planning an advertising campaign, then Open to Export emphasises the value of ‘transcreation’, working with advertisers or copywriters who are familiar with that country and who can help you adapt your marketing to best attract custom from those resident there. A simple translation of a snappy slogan may not be enough ‒ you need to have some level of cultural understanding if you are to break through the crowd and win those new customers.
Here to help
Our currency experts are on-hand to help your business with any plans for international expansion and support you with all your payment needs. We have a range of options available as well as access to some of the best rates on the market.