Export can be a lucrative business venture, but in the midst of new processes and regulations, it’s easy to fall foul to some of these common mistakes.
Exporting to any new country is like entering unknown territory - there can be a significant danger if you’re unprepared. As an investment of your time, resources, and money, seeing a significant return on investment, business growth and sustainability should all be priorities within your export model.
This post aims to prepare you to mitigate the most common risks and implement preventive measures to ensure your business and your brand are protected.
Not properly identifying your markets
If you are new to export and are presented with an opportunity to sell your product to a new country or continent, it’s tempting to jump straight in and grab it with both hands. But there’s a risk in attempting to sell to markets that aren’t actually there. Assess the situation in detail. Is this a viable business decision? Will the export model be sustainable? Is there indeed a market to sell to?
Without a significant market opportunity, your efforts could fall flat. Knowing your market and researching them in greater depth allows you to tailor your marketing and your product if need be.
Not understanding regulations
The regulations of your selected country will likely differ to those within the UK. Understanding these is incredibly important as the cost of compliance may affect sales and the price of your product to that market. Product regulations may vary depending on the type of goods or the industry too. Consumer goods in particular, come under rigorous scrutiny with strict import regulations. Ensure you have a clear picture of the regulations you’ll be dealing with so you can avoid delays in getting your product to market.
Not tailoring your products for the market
Different countries come with different laws, languages, religious and cultural norms. Translations, for example, can often carry different meanings in different countries, and every country has a different standard for what it deems appropriate to let into its region. Proper planning and research can enable you to identify if there are elements of your product, packaging or marketing that need to be tailored to suit a foreign market.
Fail to insure yourselves against risk
Exposure to risk is inevitable at some level when you want to take your business to the next level, especially if that involves dealing with new buyers and sellers.
A letter of credit is one assurance, but it shouldn’t be mistaken for a valid, enforceable export sales contract. A letter of credit won't adequately protect you against issues with product acceptance and product warranties.
So much can go wrong between the port of origin and the destination of your products and not investing in adequate insurance is a risky move. Invest in the right insurance - ideally, the best you can afford.
Undervalue your products
Undervaluing products as a way of reducing cost is a technique used by seasoned traders. This might seem a clever tactic, but the repercussions could cripple your export trading in a heartbeat. If officials sense or discover something suspicious, your products may be seized and your reputation damaged irrevocably. Always ensure your valuations are accurate.
If something seems to good to be true, it probably is. Always plan in advance, mitigate risks and manage your documentation properly. Building an international business takes patience and perseverance, and success won't happen overnight.
Import and export are both time bound. Currency fluctuations and market volatility can put you at a high risk or shortfall if you don’t react at the right time. Profit margins can be affected greatly by the smallest flux in currency. To avoid this, plan against currency risks and speak with your bank about the best course of action.
Choosing to export can be a huge turning point for your business, but one that requires an investment of time, planning, research and effort. Different currencies, languages, border controls, and cultural normals can dictate how your product is received in another continent, and doing getting something wrong can cause irrevocable damage to your name. Successful export is dependent on diligent research of markets, rigorous procedures, and, attention to detail. When in doubt, always check, as the smallest error on your documentation can prolong the entire process by weeks or even months.
For added peace of mind, the Chamber offers a checking service to ensure error-free documentation.