Take the plunge for export success

Exporting has its challenges but also massive growth potential. Chris Walklett, Tax Partner at accountancy experts Bishop Fleming, says now’s the time to start your overseas journey.

Businesses that export are more profitable, grow quicker, have more resilience, and their people and intellectual property develop faster.

Successful exporters are also statistically far more likely to have a business plan, says Chris. “You might know the challenges, but how do you make the next effective move with no strategy?

“Company mindset is also important. Are your people entrepreneurial or do they look for reasons not to do the groundwork? This applies to all kinds of businesses and at all levels.

“You have to be willing to put in the research on marketing, people, infrastructure, external support, finance etc, to draw up an informed plan backed by credible data.”

Brexit also presents well-documented challenges, but opportunity for growth remains.

Chris says, “For many the logistical starting point has been setting up a subsidiary in Europe, with the Netherlands a popular choice.

“Demand has ramped up infrastructure costs etc., but it’s well-connected, and English is widely spoken. Once set up you regain a foot hold in the EU that you might have lost due to Brexit. He adds, “Our Dutch office is currently helping a client set up a subsidiary. It’s a fairly straightforward process, and the initial set up cost is relatively inconsequential.”

A wide mix of businesses, big and small, may be considering exports, but in Chris’s experience, there’s a common perception that it’s too much hassle.

While Brexit has had an undoubted impact on paperwork, he believes that once again it’s all about the right mindset. “Don’t try ‘world domination’. Identify the key markets you might sell into – the low hanging fruit - and research the support you need locally. Make mistakes and learn lessons in one or two different markets, and then take that learning forward – to either penetrate these new markets further or build into new ones.”

He adds, “It’s also important to remember the EU isn’t our only export market. We are negotiating trade deals with non-EU countries, mirroring in part the EU agreed international trade deals. On 1 February 2021, the United Kingdom (UK) formally requested accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a free trade area made up of 11 Pacific Rim countries, and accounts for 8.4 of UK exports.

“Of course, there are logistical challenges, but the world is a big place, and you don’t have to dominate every market.”

Bishop Fleming has member firms in over 100 countries, so is well placed to identify potential growth areas. “For example, if a client is looking at the US market, we can guide them through practicalities like local state taxes. Also, each state has subtly different rules, so we would look at the best areas to start selling into first.

“Likewise, you may need to identify a distributor or agent to help you sell into your chosen market. A local business advisor will be invaluable in helping you stay compliant in tax and legal issues.

“Remember there are certain costs for selling into markets before you’ve even sold anything. The more countries you sell into, the more your costs are duplicated. Your business plan should ensure your working capital cycle is properly funded with support from the bank or other backers.”

And finally, we are all well aware of the media negativity swirling around the economy, but Chris points out that trading conditions are difficult globally.

“You’ve got two choices: roll over and surrender or say we’re going to work up a business plan, identify the actions that we know are within our control and go for it. There’s massive opportunity to grow your business profitably by embracing the challenges. Don’t let someone else beat you to it!

“Building out your support network is a key action. Government agencies can provide support; accountants like Bishop Fleming with global connections can manage expectations and set realistic goals. Partnering with the right bank is crucial, and some are developing research tools for overseas markets. The Chamber of Commerce also has groups and forums that are great at exploring solutions to common challenges.

“It won’t be easy, but business success rarely comes easy. The worst case is that you end up learning a lot of lessons and have evolved (hopefully) a written business plan. The best case – the growth mentioned at the start of this article. You will also benefit the UK economy –from a country perspective, export is the loan that doesn’t need to be paid back.”

Visit bishopfleming.co.uk/internationaladvisory-hub for more information.

Bishop Fleming LLP is a member firm of Kreston Global, an international accounting and advisory network. They offer free initial international advice both in the UK and in country. Email cwalklett@bishopfleming. co.uk for details.