What to consider with international sales and exporting
Having written your business plan, identified your existing and potential market and your target clients, and decided how best to market and sell your product, you should now of course actually be making sales. But how open has you mind been whilst undergoing this process, and how limited are your ambitions? Many smaller companies, whether startups or more mature, have a tendency to only look at selling to the home market of the UK rather than broadening their horizons and selling internationally.
The population of the UK is only about 67 million so why restrict your sales to a market that size when there are some 7.7 billion people globally? Admittedly, whatever your product, the vast majority of the world’s population will not be the correct demographic or socio-economic group to be potential clients but I can guarantee that selling beyond the shores of the UK will massively increase your potential clients one way or another.
Pre-internet, selling internationally was much more difficult to achieve, more expensive, and more time consuming. But in the age of the internet, websites, and instant international payments, making sales globally is as easy as selling to your home town. The only real difference is the cost of shipping. At this level the buyer would typically pay any import duties or other costs associated with a personal import. As an example of how easy this approach can be, I have recently spoken with a startup that has already sold to 18 countries within just a few months of starting the business and inevitably one sale in a region can often lead to others.
By starting at this level any startup can sell almost anywhere in the world relatively easily and often at no additional cost if the buyer pays for shipping as well as import duties. If seriously targeting a particular market it is of course easy and inexpensive to mirror the company’s website in one or more additional languages.
One word of warning though, depending upon the exact product or service being sold you should take care to consider any potential legal aspects and product liability issues. Some markets, with the USA in the forefront, can carry exceptional legal and regulatory risks and many companies avoid the country for that reason alone. However, the USA is also a large, affluent market that speaks English so it can also be worth the extra effort and costs involved.
Other aspects that should be considered relate to intellectual property rights (IP) such as trademarks and patents. Despite what many think, there is no such thing as a ‘worldwide’ trademark or patent but rather the applicant must make many, many applications in many different markets and this can prove to be extremely expensive, especially with patents. However, to register a single trademark in a single class throughout the whole of Europe costs a €850 filing fee so that is a good place to start. Even with these areas covered there are some markets, such as China, where local competitors will disregard the IP and produce locally manufactured, cheaper, and often inferior copies. Defending IP can prove to be much more expensive than registering it in the first place.
The traditional way of exporting or opening up an international market was to find a local representative or partner that knew the local market and would act as the ‘person on the ground’, dealing with all the import documents and other logistics. This can still be a very valid way of market entry but it is of course much more expensive and so lends itself to larger or better established companies. But for an early stage business, making sales over the internet is a very good way to start selling internationally and find which markets work best, whilst at the same time keeping costs and risks to an absolute minimum. Should one market prove to be a great success then all the more traditional ways of expanding internationally can be used as the company grows.
What product or service your company provides will of course greatly influence your target clients and what international markets are best suited for your business. But whether you provide software as a service, high fashion, consultancy, gin, or household goods, I can guarantee that there are many people living outside the UK that also want to buy what your company produces.
So, why restrict your potential market to a population of just 67 million people, or less than 0.9% of the global population, when it can be very easy and cost effective to reach a much larger audience that will potentially help your business scale much more quickly.
Next time I will look at the much wider issue of scaling your business, how and why you should be doing this and, just as importantly, some of the challenges and considerations along the way.