In 2012 Chancellor George Osborne called for UK exports to be doubled by 2020, to reach £1 trillion. Although this was an ambitious target at the time and one that the government seems increasingly unlikely to reach, Osborne was right to recognise one thing however; that trade is key to national prosperity.
For many UK firms looking to expand, exporting overseas may not always be the obvious route. There may be more readily-accessible ventures closer to home, or perhaps more profitable ones. However, for those pondering a move into new markets, the potential costs and risks need to be weighed up thoroughly before they embark on their exporting journey.
There are a number of important considerations for first-time exporters to contemplate in today’s markets, which we will now explore.
Those looking to expand into overseas markets must to consider the importance of their trademarks and apply to the trade mark office in each country they wish their brands to be protected.
In Europe, a Community Trade Mark (CTM) is available from the Office for Harmonization in the Internal Market (OHIM), which will protect your brand across European Union (EU) member states. The UK’s Intellectual Property Office explains that obtaining a CTM is a simpler and cheaper option than applying to each trade mark office, is faster to implement and also involves less paperwork.
If brand protection is potentially contentious, businesses should be prepared to set aside a budget to deal with such an eventuality. Needless to say, the costs of defending a trademark infringement claim can put many small enterprises out of business.
A recent survey revealed that inadequate professional advice caused one in six businesses to lose money last year at a cost of £6.4bn, so it is important for those considering an overseas venture to choose consulting firms carefully.
UK Trade & Investment works with UK-based businesses to ensure their success in international markets through exports and is a useful resource to contact in the first instance.
Your accountant or lawyer may have offices overseas and can be an invaluable resource when exporting, but friendly entrepreneurs with export experience can also offer priceless guidance and support.
Another important thing to consider is whether to go alone or appoint an agent, distributor or franchisee locally.
Each option will carry very different tax implications and regulatory burdens, which inevitably vary from country to the next. Employment regulations for example, are particular important to research, because these inevitably determine whether or not you will be required compensate agents if you dismiss them.
Needless to say, watertight contracts will provide essential protection and peace of mind.
Good international relationships are built on more than well drafted contracts, so meeting with agents and distributors and introducing a human dimension could help to reinforce trust and steer future negotiations.
That said however, entrepreneurs must not be afraid to end dealings with parties are not delivering.
As growing nations become wealthier and the number of potential consumers globally continues to rise, it is not hard to understand why the UK government wants British businesses to open up their offerings to these markets.
But, while the opportunities and benefits of exporting cannot be ignored, neither should a carefully considered exporting plan.
Does your business export to foreign markets? If so, we’d like to hear about your experience.
Is there one piece of advice that you would offer small firms considering exporting, what would it be?
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