Expanding your SME to trade abroad can be a highly lucrative move, bringing in new clients, customers, business ventures and, of course, much needed revenue. However, each and every country is different, with its own set of rules, regulations, laws, cultures, languages and business practices. It is important to conduct proper research on any new country that you are planning to do business in. Below, we look at what you need to know about trading abroad as a SME.
Should you trade abroad as a SME?
You may have some questions as to whether your business is large enough or stable enough to be trading abroad. While, of course, no business should ever overreach its aims too quickly, there is never a ‘right’ time to start trading abroad.
Various studies and economists have said that the number of SMEs trading abroad is on the rise, and international trade is great for the home economy. If you have a wish or a desire to trade abroad, then do not let the size of your company limit you.
Support for trading abroad
The UK government recognises the importance of international trade, but also the struggles that SMEs may face as compared to large, corporate organisations. They offer several means of support for helping you to branch out abroad, such as with UK Trade & Investment (UKTI), formally replaced as the Department for International Trade in July 2016.
New documentation and laws
You will be faced with new documentation and red-tape should you choose to trade abroad. For example, if you’re looking to trade in the EU you will need to fill out an EC sales list, which is a list of your European sales (required for VAT reasons). While this is not always difficult or complicated, it represents a shift away from what you are used to, and it can seem daunting. Again, seeking support, such as with the link provided above, can help you in solving these issues.
Also take a look at this link on Import export services: Advice and guidance for further information on rules and regulations, intellectual property issues and how to develop your SME in a foreign market.
Expanding your business to begin trading abroad can be costly, especially for a SME. It can also be expensive and risky, thereby potentially limiting the financial support that you receive for your new venture.
But, there is a flip side to this. Successfully trading abroad can increase your revenues tenfold, and often you must take risks to reap the rewards. British SMEs are in a unique position that helps them to minimise the risks for trading abroad, which we will touch on below.
One of these benefits is that the use of the English language is an important factor. Many businesses and countries around the world use English either as one of their primary languages, or as the main language for conducting business in. This will immediately put you on the front foot.
However, be aware that not all countries and businesses that you try to trade abroad with will use English, creating an immediate language barrier. Consider using a translator to help with business negotiations.
Another benefit of being a British SME is that UK-made goods are considered to be of an extremely high quality, and there is a global fascination with British culture, so this will automatically open up doors for you when looking to trade abroad.
As with the language issues above, there will of course be cultural differences as well, so be sure that you conduct thorough research on this beforehand, and consider employing or hiring locals to educate you and deal with any cultural differences.
Sufficient research within a new market in a new country should help to identify who the key players are for you, and from this you can develop your network and connections in the area.
Going digital is a great way to trade abroad as a SME. With two billion people now online, the internet makes a great place to effectively trade abroad without having to deal with many of the potential issues. There will, of course, still be rules and regulations that you need to follow depending on the country you’re trading in.