But, if you’re thinking about trading overseas, where should you start? While this is a complex issue, there are some clear points to consider before you embark.

 

1. Do your research

How well do you know your target market? What makes you believe there is demand for your product or services there? How do your target consumers measure up against your UK ones? Are there cultural differences you need to take into account? Do your UK competitors have a presence there? What’s the local competition like? You should do at least as much research as you would to launch a new business from scratch at home, if not more, as the risks are much greater.

 

2. Can you test the water?

Wherever possible, start off slow. Consider setting up an overseas website and promoting it locally as this is a good way to test demand. Depending on your local knowledge, consider working with local agents or distributors initially. While they will take a cut for their services, this can be one of the quickest routes to market and will help to prove your business model. Depending on your product, licensing could also be worth considering as it usually requires a smaller cash investment and you can significantly reduce your risk.

 

3. Adapting your product or service

Whatever you sell, you’ll need to modify this for an international market. Packaging will need to be translated and your product will need to comply with local safety standards and other local laws. You’ll also need to consider pricing. If you’ll be despatching goods from the UK, don’t under-estimate the costs of shipping, taxes, duties and additional warehousing. Once you’ve costed these out, can you still sell your product at a competitive price locally, while delivering your required profit margin? If not, you’ll need a rethink.

 

4. Marketing your product

The internet is awash with examples of products, such as ‘Barf’ washing powder, that have failed spectacularly in foreign markets and go to show that you can’t just take your UK product and marketing materials and get them translated. You’ll need to employ someone who knows the local market, attitudes and culture and can help tailor your marketing to appeal to them.

You’ll also need to consider customer service. Are you going to have people on the ground? If not, you’ll need to employ people who not only can speak the language but who are able to work the hours your customers do.

 

5. Legal considerations

As this is the most complex area to research, local technical advice will be invaluable. Consider:

  • Do you need to incorporate an overseas entity or can you operate as a branch of your UK business?
  • What are the local laws, restrictions and licenses you’ll need to adhere to?
  • How are you going to vet new customers and suppliers and how easy is it going to be to pursue customers for non-payment?
  • Is your product, business and intellectual property sufficiently protected? If not, what can you do to mitigate this?

 

6. Financial considerations

You also need to think through some financial considerations. Here’s some to get you started:

  • What currencies will you trade in and how stable are they? To reduce exposure to exchange fluctuations, you’ll need a bank account in that currency and possibly with a local bank. Where possible make all local transactions through this account, only transferring back profits when needed. If your cash investment is significant, it’s also worth talking to your bank about currency hedging.
  • What local taxes will you need to pay and how will this affect your UK tax position? From a legal perspective, where is your place of supply? However you set up your operations, it’s vital that you can clearly identify not just your sales but also your profits per market to avoid costly disputes with each tax authority.
  • Check your insurance situation and make sure you are adequately covered for the additional risks and costs associated with overseas trading.

 

For further advice check out the UK Trade & Investment's website as well as the British Chamber of Commerce. However, before embarking on any overseas expansion it’s worth asking yourself whether you have the time, money, expertise and energy to make it work. Think, too, about whether you’re already doing everything possible to make a success of your UK business? If not, you might find yourself in stormy waters, not just abroad but also in your own backyard.