Top six tips for avoiding the pitfalls of trading abroad
The export market can be highly profitable for manufacturing businesses – but there are pitfalls for first-time exporters. Here are some tips on how they can be avoided.
1. Carry out thorough research to identify prospective markets – but beware of spreading your resources too thinly. Decide on a single country that best suits your business and take one market at a time.
2. Managing cashflow is especially important for exporters. Lengthy transit times and extended credit terms can pressurise your finances. Ask your bank about letters of credit and invoice finance, which generates immediate funding through your sales ledger.
3. Failing to address legal and compliance issues can result in major costs and lost trading opportunities. Speak to a commercial law firm about how best to handle import restrictions, regulatory issues and sales contracts.
4. Find out whether you can sell your product as it is, or if modifications are needed to make it acceptable to different cultures and regulations. This means looking into packaging, labelling, quality and safety standards.
5. Don’t fail because of ignorance. Taking a first-hand look gives you a valuable feel for market conditions on the ground, so factor in a travel budget. You may need to fly out more than once to establish an effective trading presence.
6. Take the time to get your paperwork right. The Export Control Organisation (ECO) has to return half of all export licence applications, either for more information or because the application has been incorrectly completed.
Ginni Cooper is head of the manufacturing team at Chiks and is available to discuss this matter further on 01772 821021.