The UK has now officially left the EU, which means attention has quickly swung toward British exporters – a camp for which Brexit signals both uncertainty and opportunity.
The good news is that there is now the potential for businesses in that category to reach out to new markets beyond the EU.
It’s a huge market, too. Last year, the Office for National Statistics (ONS) revealed that UK companies had exported roughly £689 billion in goods and services during 2019. That’s an increase year-on-year of 5%.
There are, of course, new rules and procedures to take into account when trading in new regions, but the government is keen to encourage more businesses to do just that.
Has COVID changed things?
Undoubtedly. Many businesses who export their goods and services are still recovering from the impacts of the pandemic, but there is some light at the end of the tunnel, thanks to the vaccine.
The additional time afforded for planning has also resulted in a renewed desire for many firms to look ahead. A recently UK Finance survey discovered that 42% of SMEs are now focusing their plans on the future, rather than the immediate impact of COVID.
So, regardless of what’s happening in the world right now, if you’re preparing for your business to go global in a post-Brexit world, there are some steps you’ll need to take to prepare.
Step 1: Conduct thorough market research
To which countries are you planning on exporting your goods and services? Do you have a solid idea, or is some research required to ascertain where the demand is most likely to be?
According to research from the Federation of Small Businesses (FSB), the United States is now the number one country for UK businesses to conduct trade with. It’s closely followed by Germany and France.
It’s also important to remember that around 20 of the trade deals the UK had as a member of the European Union have been carried over to 2021, and the government signed a new free-trade agreement with Japan in October.
So, the opportunities for foreign trade reach far and wide, but whichever destination you choose, make sure you spend plenty of time researching their customs, idiosyncrasies (we all have them), and red tape.
Cultural differences, political sensitivities, and potential misunderstandings over your branding should all be taken into account now while you still have time to make changes.
Step 2: Get ready to export!
If you want to move your goods between the UK and foreign countries, you’ll need an economic operator registration and identification (EORI) number. If you were previously trading without one under EU rules, that has all changed, and you’ll need an EORI number which starts with ‘GB’ to continue trading.
You can apply for an EORI number on the government’s website. Just bear in mind that it can take up to five working days to receive your EORI.
It’s also important to plan for how you’ll deal with customs declarations. They’re made whenever you export or import goods with another country, and you’ll usually be expected to make a full declaration before they arrive at the port of export (when exporting), or the time they enter the UK (when importing).
You’ve got two options here – either learn how to manage it yourself or hire someone to handle it for you. The latter certainly makes sense if you’re importing or exporting particularly large volumes of goods.
If that sounds tempting, you can:
- use the services of freight forwarders who arrange everything for you;
- employ a customs agent or broker to represent you; or
- use a parcel operator who deals with customs as part of their delivery service.
It’s important to get these crucial elements planned now to avoid penalties or delays in shipping later on.
Step 3: Refine all of the small details
There’s no ignoring the fact there are plenty of small details to get your teeth into when exporting.
For instance, how and where will you be selling your product, and how will it be transported?
One obvious option is to sell the product directly by working with overseas customers and managing the entire process yourself, but you may prefer to work with a distributor, instead.
You may even want to work with an international sales agent who will do the groundwork when it comes to finding customers and selling on your behalf (for a commission).
What if there’s a potential business partner already in the region? If they’re established out there, it’ll save you a heap of work and you can share the risk and cost of the venture instead of taking on the entire burden yourself.
Whatever you decide, think carefully about the costs of travel, your time, and how long processes will take. It will all matter in the long run.
Step 4: Get finance
Unless you already have funds in place, you’ll probably need to finance your exporting venture.
This can be expensive, and you’ll probably encounter long payment terms, which is why additional finance is usually a solid idea, regardless of your bank balance.
There’s some help, too, thanks to a £25 million scheme recently launched by UK Export Finance (UKEF) which offers funds for SMEs to help cover general exporting costs.
It’s known as the General Export Facility, and you’ll need to prove that a small percentage of your annual turnover comes from export sales if you want to apply.
The UKEF can do more to help, though, including:
- offering great financing terms to help you win new contracts;
- providing support for fulfilling orders with working capital loans; and
- offering insurance to protect against buyer default.
There’s always bank finance and peer-to-peer lending to consider, too. If you have any queries on funding your exporting venture or would like to know more about anything covered in this blog, just get in touch with the Chandlers team