Business development 4 January 2017

Four New Year export funding tips for small business owners

export finance
For small businesses to flourish, owners must continue to explore export opportunities
From a financial perspective, there are a number of things small business owners must keep in mind when exporting. Here, operations manager at Company Check, Katie Deverill, reminds readers why it’s important to continue to look to new markets with four export funding tips.

2016 seemed to have been a year full of surprises, especially in terms of the political landscape of both the UK and the US.

While there is still uncertainty around whether Brexit will even happen, and what Donald Trump’s presidency will mean for America and the world, businesses have continued to thrive, with a million more small firms in the UK at the start of 2017 compared to 2010.

Boosting productivity to continue to power the UK economy was a key focus during the chancellor’s Autumn Statement, with the announcement of a new National Productivity Investment Fund that will provide 23bn of additional spending in areas including transport, digital communications, research and development and housing.

This was bolstered by further announcements of a 3 per cent cut in corporation tax and extra spending to tackle poor broadband connectivity in rural areas of the country.

For small businesses to flourish, they must continue to exploit opportunities both in the UK and abroad which is why it is’surprising thatin 2016 two out of three UK small businesses didn’texport for reasons including perceived cost and complexity of getting through customs, a lack of knowledge of the market and language barriers.

A recent Royal Mail study has also revealed that among the 40 per cent of firms that do sell internationally, just over a quarter of their sales this Christmas are expected to come from international orders.

It can be daunting for startups and small business owners to know where to start when it comes to exporting, but do it right and youll soon begin to reap the rewards.

To help business owners on their way, here are a few financial considerations to bear in mind when trading internationally.

(1) Think about your marketing strategy (and all the costs that go with it)

One of the first things youll need to consider when exporting is how to market your business abroad. Are you going to sell directly (through your own website) or use a distributor or a sales agent?

If the country you’re going to be trading with doesnt speak English then you’re going to need to need a functioning, multi-lingual website, and this can be costly – professional translators generally charge per word, or per thousand words. Other marketing material, and online and offline advertisements may also need to be translated.

Other financial-related considerations include:

  • Which currency you’re going to sell the product in
  • The cost of post and packaging and returns
  • The cost of insurance to protect against loss or damage to goods in transit
(2) Make allowances for exchange rates and currency volatility

it’s important to understand that exchanges rates are sensitive to fluctuation (often on a daily basis), and even small changes can have an impact on your business.

If you sell in local currency, exchange-rate fluctuations between the sale date and the date you are paid can mean that you receive more or less than expected.

Exporters should therefore deliberate which of the various methods of payment they’re going to adopt, i.e. a cash-in-advance approach, or acceptance of payment after goods are shipped and delivered. All of the different methods have their own advantages, disadvantages and level of risk.


 
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