Lyn Palmer, MBE, International Trade Manager at Business West gives her top tips for how to get started in export and make your overseas trading a success.
1. Before starting to export, do your homework
Given the number of markets worldwide which have export potential, you need to be prepared and do your research so that you select your market wisely. UK Trade & Investment and your local Chamber of Commerce are a good place to start.
2. Know your market, know your competitors
You need to give your overseas ventures the best chance of success by becoming fully informed about routes to market, trading conditions, product or service suitability, competitor activity, pricing, certification requirements and other key issues.
3. Agent or distributor?
Selling directly to your overseas customers may not always be the most effective way to grow your business. Many businesses sell to distributors, or work with agents who market/sell on their behalf.
When dealing with agents or distributors overseas it is essential that you always confirm their specific roles and responsibilities.
4. When selecting an agent or distributor will it be exclusive or non exclusive?
When selecting an exclusive agent it is very important to ensure that you have the right agent for your business as appointing it will make the success of your sales in the given territory totally reliant upon that agent.
Most agents will be looking to have exclusive rights in terms of either product or territory or both but where an agent is willing to accept a non exclusive agreement you must ensure the contract terms are specific and favourable.
A non exclusive distributor agreement is more favourable as it gives you freedom to appoint more than one distributor within the territory or to sell your products directly.
5. Use the right Incoterm® 2010
Incoterms® 2010 are internationally recognised terms that specify where the risk in the goods pass, who contracts and pays for insurance and freight.
You should ensure that any quotes, orders, agreements and contracts refer to Incoterms®2010. You should also be particularly aware of the need to have the appropriate documentary proof of export and that some Incoterms®2010 may not have an obligation to provide you that documentation.
6. Make sure your shipment quote is all encompassing
Your shipment quote should include freight costs, cargo insurance, documentation, bank fees. Other issues such as packaging and Incoterms ®2010 must also be considered. This is an important aspect to consider as mandatory documentation for some countries can cost as much as £800+.Also ensure to get comparative quotes for your freight costs, it’s a competitive market!
7. How are you going to be paid, Cash in Advance?
This is a very secure form of payment as you receive payment before the goods are actually shipped. Although this appears to be ideal it is often not acceptable to the buyer particularly if there is no long standing relationship. You also need to consider what terms your competitors are selling on as this could lose you orders if their terms are better than yours.
8. Want to be sure of getting your money? A Letter of Credit may be the answer
A Letter of Credit guarantees payment for goods exported, provided you meet all of its conditions. This contains details of the strict terms and conditions you need to adhere to for the bank to make payment. If your company meets all of the stated conditions, payment is guaranteed. This means several benefits for you:
- saves you time and money
- secures payments for goods exported
- avoids bad debts
- enhances your reputation for efficiency and reliability
- increases your profitability
9. Don't know how to go about it, we can help
Acorn Interactive is an online export toolkit covering the whole export process, we can provide shipping quotes, export documentation, letters of credit, customs services, translations and much more…Visit Acorn International