How to export


Achieving export success can seem an insurmountable hurdle for SMEs. But the potential rewards of global trade make it a challenge worth seizing, says Adrian White of Lloyds Bank

It may be a cliché, but the world is becoming a smaller place. Dynamic centres of global growth are emerging and experience has shown that businesses with a diverse customer base are better placed to weather economic ups and downs.

Developments in technology and travel mean that trading internationally is more and more accessible, and there’s plenty of support for SMEs as they attempt to reach the government’s goal of doubling exports by 2020.

While entering new markets overseas can seem daunting, global expansion opens up opportunities to achieve a level of growth beyond what is possible in the UK. The risks of not trading abroad are equally strong, leaving your business open to the threat of foreign or domestic competition gaining market share at your expense.

Identifying the right market is a crucial starting point. Ask yourself: are UK sales rising and do you have the necessary financial reserves to develop your export potential. Also, are you already receiving a high number of overseas enquiries about your product? This can suggest a potential demand.

After identifying your target market, you need to gather insight into that sector, finding out what drives customer demand in a particular country and what the competitive landscape is like. You must also confirm your preferred payment method, the currency used and how you can improve certainty of payment.

By responding to internet-based enquiries or orders from overseas, you can find yourself in the position of an exporter by default. And without the right structure in place, you face exposing your business to risk. You need to take into account the range of macro and micro risks to your target market, including the state of economic development; whether foreign investment is incentivised or imports restricted; the government’s view of free trade; and the administrative set-up.

Assessing the credit-worthiness of potential customers will be a top priority, alongside analysing the financial and country risk of your target market and examining the taxation and regulatory regimes that apply.

Not only is the time between the start and completion of an overseas transaction often longer than trading within the UK, but production and shipping times can increase too. In addition, the country in which your customers are based, and the terms agreed, can all add pressure to your working capital cycle. Planning for this – not just at the outset but also throughout the export process – will reduce the risk.

It is worth seeking advice from UK Export Finance and UKTI, which have vast amounts of online and offline support, as well as the British Chambers of Commerce and trade missions. The right banking partner will help you navigate the information, analyse the risk and rewards, and create a strategy to help you achieve your global growth ambitions.

Considering how you will fund this growth will give you peace of mind. Short- or long-term loans, and raising finance against documentary letters of credit or supplier finance, can help you trade more easily. Discussing these options with your chosen banking partner will help give you a clear idea of which solution best suits your needs and help you succeed when trading overseas.


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About author

Adrian White

Adrian White

Adrian White is managing director of SME banking at Lloyds Bank. He leads the business in the support of small-to-medium-sized banking clients with a turnover of between £1m and £25m

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