Political and fiscal turbulence has created record-breaking falls in the value of the Pound. This causes problems for any business reliant on overseas imports but could be a boost for UK exporters.
In the midst of all the political and market turbulence of the past few months, the value of the Pound (GBP) has fluctuated significantly. Liz Truss’ short-lived and ill-fated Premiership will now be remembered for a mini-budget – delivered by Kwasi Kwarteng – that sent the markets into freefall and sent the value of the Pound to historic low levels against the US Dollar.
The Pound (GBP) has benefitted from some relative political stability and the appointment of Rishi Sunak as the UK’s new Prime Minister restored some confidence in the beleaguered currency.
The delay of the UK Treasury’s autumn statement put a halt to Sterling’s rally, however. The move prompted concerns in the markets about further uncertainty in UK fiscal policy.
“The UK is now in the midst of a currency crisis,” says Vasileios Gkionakis, Citigroup’s EMEA head of foreign exchange strategy, which could be hugely problematic for many UK businesses. The weakening pound will make imports more expensive, impacting British manufacturing.
Boost for exporters
However, the flip side of this currency crisis is the opportunity it might present for those who serve international buyers, the director general of the Institute of Export & International Trade (IOE&IT), Marco Forgione, has said that the weakening of the pound could make UK products more competitive and be a “huge opportunity for businesses to exploit and trade, particularly with the US but with other nations.”
According to the Department for International Trade, only one in ten SMEs currently exports their goods and services. But the benefits for those who do are manifold. Tapping into an international buyer base increases your revenue potential, increases your resilience and spreads your risk from localised market fluctuations.
But international expansion can be a daunting prospect for smaller businesses. On top of any language and cultural differences, understanding local tariffs, currency planning and freighting options can feel like significant barriers to entry.
Ready to start exporting
The good news is that there is plenty of help and support for any SMEs who feel their products could work in international markets. Our six key tips will help owners feel informed about the help at hand and the steps they need to consider when planning to sell overseas.
1. Research, research, research
According to HSBC, almost two thirds of all potential exporters cited regulation in the destination market as a worry. So, an important decision you’ll need to make is how you will sell and distribute your products. Do as much research on any potential markets as you possibly can. See what other similar products are in the target market and how they are priced and promoted.
You will also need to research at an early stage the best legal set-up for your company in a new market, be that representative office, subsidiary or joint venture.
2. Get advice
There are a multitude of Governmental bodies and trade organisations that can help you make your first steps on the exporting journey. Below are a selection who have dedicated resources and advisors to help:
The Department for International Trade (DIT) is the government department that works with UK businesses to help them export.
The DIT and its sister organisation, Exporting is Great, provide support on the whole process, from advice on creating export plans and finding export markets, to preparing to finding opportunities and preparing to do business overseas.
The British Chambers of Commerce (BCC) provides advice and support to businesses covering all areas of international trade.
The Enterprise Europe Network (EEN) advises small businesses on how to capitalise from opportunities available in the EU.
3. Make a splash
A well-planned international marketing strategy will help you target the right groups with the right messages, particularly online. You will need to have a strong website tailored to the target market, so invest in the best campaigns you can afford and look at how your brand will translate in the local culture. Don’t forget Search Engine Optimisation (SEO), Pay-Per-Click (PPC) advertising and social media which can promote your products and services around the world.
4. Explore partners and agents
Whilst it may be possible to sell and fulfil orders direct from the UK, it may be worth exploring pairing up with a local agent, distributor, franchisee or license holder to make entry into a new market easier. Each option will require its own careful planning and the tactics may vary in each market you wish to target.
5. Invest in your technology
Technology has made exporting easier than ever. Advancements in cloud technologies have reduced the cost and improved the integration of platforms that can remove international barriers and help give a consistent customer experience to all. Integrating e-commerce platforms into your web offering (or using third parties like eBay or Etsy) and using tools like Google Market Finder, can help reach customers overseas without any physical footprint. You should also make sure your accounting software is set-up and prepared to process international sales orders.
6. Develop the financing case
When it comes to exporting, having a great product or service is only half the story.
Putting the right finance and insurance in place can make the difference, helping you to win contracts, fulfil orders and get paid.
You may also need to secure some external finance to fund the initial investment in marketing and technology to facilitate your entrance into new markets.
Going international can be a hugely exciting time for owners. At Capify we offer a range of business loans to help support your business through its exporting journey.
Check to see if you’re eligible for one of our loans with our online eligibility checker. Or, if you’d prefer to talk to a member of our team, we’d be happy to guide you through the process. Give us a call today on 0800 151 0980.
