Tips for exporters
If you want to break into exporting you will need all the help you can get. Business Link can help you with specialist advice and information. Here are just a few tips to help you get it right.
- Exports are not a quick fix
Don't look on export as a quick fix for all your domestic problems. Setting yourself up as an exporter can be extremely time consuming and frustrating but the rewards of getting it right can be enormous. - Import before you export
You will need to import masses of market research and intelligence on local customers, tastes, laws, quality standards etc. Don't be surprised if the normal way of doing things in your target markets is very different from our way. Some countries have rules and regulations that make no sense at all to us. Careful research is the only way. - Get your own house in order
Export financing and documentation can be an absolute minefield. If you want to be sure of getting your money, you must invest time and effort in training and procedures. Your bank will have specialists who can help you and there are export advisers at your local Business Link. These people will often have real exporting experience. They will be able to guide you through the problems. - Do your planning
Speak to your bank manager about what you are doing. Consider what the cash flow implications might be if you don't get the money on time. - Letters of credit and other financial instruments
If you've never used letters of credit (sometimes referred to as documentary credits) before then you will need specialist help. Don't try to learn by experience. Letters of credit are a great way of guaranteeing that you get paid but you have to follow every instruction to the letter. Carefully check letters of credit and get amendments for any mistakes or terms that you cannot comply with. Remember, if there is a spelling mistake in the letter of credit every other document will need to contain the same spelling before you will get your money. - Bills of exchange
Another great way of getting payment but they have a language all of their own. Get expert help. - Discounting
Getting a bill of exchange avalised (guaranteed by a reputable bank) can be really helpful. You should then be able to discount this and get your money even quicker. Discounting means selling the piece of paper. You get the money less a small commission charge. - Use a middle man
Could you possibly export your goods by using a merchant house or wholesaler? An overseas distributor can be a tremendous advantage. He can help you meet all of the local requirements and is selling your products to his own nationals. He will want a commission for doing this but the cost is likely to be much less than sending out your own person. - A local distributor is also a tremendous advantage if there are problems getting the payment. He will be working in local time, know the people, speak the language and be close to the end customer.
- A word of warning - don't appoint the first agent that approaches you. This person is going to be your business partner. Once you have appointed someone, don't give them sole distribution rights until they have proved their worth. Offer them a 6 month trial. If they don't come up to scratch you can walk away at no cost.
- Look at local costs
In many countries it may be much cheaper to employ your own local agent. Look at the rates of pay and see how they would compare with someone from this country being sent there. - Be careful of financial incentives
Some countries seem to run on a system of bribes and back handers. Be careful! Don't do something that you will regret later. - Beware of the dream order
So often I have seen companies put massive effort into tendering for an order that could be an "order from heaven". My experience is that very few of these orders ever come to fruition. Many overseas buyers are much more used to "haggling" than we are. They will keep coming back to you with small amendments - a slight improvement in the specification, a small reduction in the price. Before you know where you are, the profit margin has been completely eroded. Even if you got the order, if it represents a large part of your normal business, you could be putting your whole business at risk by taking it. Do the numbers. Make allowance for a few problems and see if it still makes sense. - Check your insurance
Letters of credit will often specify insurance cover that's required. Speak to your insurance company. Sometimes I've seen orders accepted which include impossible insurance terms. - How about the other terms
Look at all the terms. Can you meet them? Get an expert to check them. A common mistake is for the order to state FOB. This means Free On Board and only applies if the goods are being sent by boat. If you're sending by air you cannot comply with the terms. You may send the goods but never get paid. - Call SITPRO
This is the Government's Simpler Trade Procedures Board and has designed a range of document systems that can cut the cost of your export paperwork by as much as 75%. SITPRO can be contacted on 0171 215 0825. - Use the DTI
There is a range of free and low cost services available including:- - Providing free advice on planning your market research
- Grants that may be available
- Preparing a detailed report on the size, status, facilities and activities of any overseas business that you are interested in doing business with
- Professionally writing, translating and distributing press releases to suitable magazines and papers in the country of your choice