Whenever the value of sterling is low against other currencies, it can make exporting look like a very attractive option. Vicki Arnstein asks whether entering the export market is as advantageous as it seems.
The weak value of the pound against other currencies can make exporting seem attractive. And with some overseas buyers able to import your goods or services at a lower rate than previously, this may well be a good time to take the plunge.
But while there are opportunities abroad, businesses that do not do their research could run into difficulties with local customs, language barriers and high import tariffs. Ensure you assess the risk before deciding if it is the right thing for your firm.
"Businesses trying to export while times are tough at home should tread carefully," warns John Dunsmure, managing director at the British Chambers of Commerce (BCC). "While the opportunity may be ripe, the recession is worldwide so your products or services may not be well received, no matter how cheap they are.
"Careful research is more important right now than ever," he stresses. "Look at everything from shipping costs to local regulations to ensure that a profit can be made and to identify any longer-term potential."
Organisations such as the BCC and UK Trade & Investment (UKTI) can help you research export opportunities. UKTI's Passport to Export scheme offers new and inexperienced exporters a free capability assessment, support in visiting potential markets, subsidised training and a business mentor.
One of the biggest risks, Dunsmure warns, is assuming exporting will be a "quick win". "Be prepared to be in it for the long haul," he cautions. "You won't just roll up in Italy and pick up an order. Some people do but it usually takes a year, sometimes even three, before you make those in-roads. Without adequate research you could be chasing rainbows, end up failing to service your clients in the UK and losing your business."
As a first-time exporter, you will also need to be aware of any rules and regulations that apply to your product. Certain goods may only be exported following the issue of an export license.
Very often, certification documents will also be required. "There can often be complications around import duties and certification documents," Dunsmure explains. "Our Chamber Certification Service offers free advice on what documents are required to export to countries around the world."
Being aware of these things and whether you can pass any related costs on to a buyer is a key consideration. You should also ensure transportation costs are factored into your calculations and consider how a rise or fall in the value of sterling could affect an export market.
Clearly, the decision to export should not be taken lightly. "The reason some businesses fail when trading overseas is because they haven't done that bit of preparation and planning before they started out," concludes Dunsmure.