Should I go after export markets?
Q. I have been running my business from a domestic market for the last five years, but have been advised by my advisers to consider looking at exporting. I have met with UK Trade and Investment and they have said they believe my product, a niche electrical device for chiller cabinets, has the potential to export abroad. But, I am not convinced that it is worth the trouble and whether it has any value either financially when taken against the cost of getting started and whether there is any marketable value in it. Can you offer any guidance?
A. Broadening the customer base to include export markets will always have a ‘leap of faith’ element, but risks can be minimised by seeking answers to a few key questions.
Firstly, is there a genuine demand from overseas customers for the product? can help here, but also your established UK trading relationships (with suppliers and customers) might produce useful data on export opportunities. Principally, can you sell your product at a competitive price in foreign markets?
If there is a market, you must consider how you will get your product into it. This will depend in part on where you are in the supply chain, for example, whether there’s a need to source a distributor / agent in country or if you are supplying direct to the end-user.
Another key consideration is whether your product has intellectual property value which needs protecting. The can help you investigate the IPR potential of the product.
As with any new customer, you will need to think carefully about the credit terms you are prepared to offer (if at all) and how you manage foreign exchange risks. Speak to your adviser about how best to manage this risk.
Lastly think about client service and your time commitments. Do you have the infrastructure to take on export customers? It may require significant amounts of your time to travel to meet potential customers and to establish yourself in any given market.