Start-up founders who think global from day one can have an advantage over their competitors. This guide outlines the key areas to bear in mind when launching an international business to win overseas customers.
Succeeding as an international business is no longer just the preserve of large companies. Start-ups can launch internationally from day one thanks to technology that makes cross border selling and marketing easy.
With tens of thousands of new businesses launching every year, the competition to win customers in the UK can be daunting. Entrepreneurs who consider global opportunities at the start of their business journey may put themselves at an advantage, attracting more customers from poorly served markets.
It may be a good time to consider exporting, too.
Britain’s exit from the European Union has led to the UK government negotiating several new trade dealsopens in new window, which open up more opportunities for small businesses to benefit from growing their sales to an overseas audience.
International selling is not without its challenges, though. It’s crucial to be prepared and do extensive research before launching in other countries.
Discover more about sustainability across your supply chain, including financial, social and environmental perspectives, with our free Supply Chain Sustainability courseopens in new window. As part of our Learn with Start Up Loansopens in new window partnership with The Open University, our online course is free to join, delivered by experts and includes a free statement of participation on completion.
Selling globally – what you need to know
Here are the key things to bear in mind when launching a global start-up.
1. Research your market
Exporting can be expensive, and with a limited budget as a start-up, you need to be focused.
Rather than try and sell to the whole world from day one, you should identify the countries that offer the best potential market for your products or services. To do this, research is crucial. Areas to understand include the size of the market, cost efficiency and legal regulations.
There are several resources you can use to conduct your research, including country guides from the Department for International Tradeopens in new window and webinars from Open to Exportopens in new window.
You can also increase your knowledge by attending trade shows and overseas trade missions. TradeFairDatesopens in new window lists fairs and exhibitions around the world, and once your business is turning over £85,000, you can access support through the government’s UK Tradeshow Programmeopens in new window. It provides training on how to exhibit at trade shows and grants towards the costs of show entry, travel or accommodation.
2. Admin and regulations
Exporting can be complicated, with lots of paperwork involved.
This can vary depending on the country you are doing business with. You need to understand the customs and tax regulations associated with the types of products you export and what documentation is required.
One key area is commodity codes which classify goods for import and export. You need to know the right codes for filling in customs declarations and other paperwork. They also identify if you need to pay customs duty or VAT and if you need an export licence. You can look up commodity codes on the government websiteopens in new window.
Failure to submit the required documents can result in delayed shipments, confiscation of goods and fines.
You can deal with customs regulations yourself or employ the services of a customs agent or fast parcel operatoropens in new window.
For more advice, the government has a guide to the rules involved in moving goodsopens in new window from the UK to international destinations, and you can contact the relevant country’s embassy in the UKopens in new window.
If you are a UK business selling goods or services to Europe, you can also call the government’s export support teamopens in new window on 0300 303 8955.
3. Distributors and sales agents
For early-stage businesses, it can be costly to set up direct overseas sales channels, so many start-ups choose to work with a distributor or sales agent. They are helpful for testing a new market before you commit to employing staff or setting up operations in the country.
A distributor buys your goods from you and then sells them at a profit, while a sales agent acts on your behalf and finds customers for you in return for a commission.
There are advantages and disadvantages to both models.
Distributors bring simplicity because you can access overseas markets without dealing with logistics or regulation issues. The downsides are that you might lose control of how your products are marketed or priced, and they often expect considerable discounts.
The advantages of sales agents are that you don’t have to employ your own sales staff, and you generally have more control of pricing and your brand image compared to using a distributor. Potential disadvantages include that you remain responsible for shipping and logistics.
Open to Export has a webinar with more advice on working with distributors and agentsopens in new window.
4. Local culture and business etiquette
Understanding the cultural norms when it comes to doing business in the countries you’re targeting is essential. Getting it wrong could offend and reduce your chances of success with an international trade deal.
Before meeting potential overseas clients, you should research areas such as:
- How people address each other.
- How people dress in business meetings.
- How formal a meeting is likely to be.
- Whether handshaking, bowing or other forms of respectful behaviour is appropriate.
- The language used during meetings.
- The giving and receiving of business cards.
The Covid-19 pandemic also requires an understanding of local customs and social interactions to meet local rules and observe social norms.
Speaking a few words or phrases in a client’s language can be a good way to build rapport, but you may need to use an interpreter for more complicated conversations.
The travel costs of face-to-face meetings in other countries can be expensive, so communicating using video conferencing might suffice. However, if physical meetings are expected, you may have to visit the country yourself or appoint a local agent to act on your behalf.
5. Online marketplaces
Using e-commerce marketplaces can be a great way to launch a global start-up.
List your products and sell to customers worldwide without ever having to leave the UK.
By focusing on the most popular platforms in the countries you’re targeting, you can reach the audience you need. For example, if you want to do business in China, Alibabaopens in new window has 953m customers in the country. If Germany is part of your export strategy, Amazon generated sales of $29.6bnopens in new window there in 2020, more than in the UK.
It’s important to understand which marketplaces are best for your business. They offer various features and there are different levels of subscriptions and commission that you need to pay. The Department for International Trade has a searchable marketplace databaseopens in new window.
Targeted marketing is important for reaching an overseas audience. Just like marketing to customers in the UK, you should first create a marketing planopens in new window.
If you’re selling via your own website or an online marketplace, it is recommended that you create content in the local language. Some online marketplaces have features that automatically translate English text into other languages.
Social media is a good way to reach overseas audiences. Use content that appeals to local customers using relevant phrases and spelling. By paying for advertising on social media platforms like Facebook, Twitter and Instagram, you can target posts to people in specific countries. Bear in mind different time zones when you post your content.
Be aware of how your brand name or slogans translate into other languages. Famous examples of companies getting it wrong are KFC’s “finger-licking good” slogan mistranslated in China as “eat your fingers off”, and Rolls-Royce having to rename its Silver Mist range in Germany where “mist” translates as “excrement”.
7. Be successful at selling overseas
Selling overseas is an attractive option to start-ups and it can bring many advantages if you think global from day one. But building an international business can be complicated.
Starting small and testing the market in one particular territory is a good way to begin your exporting journey. Get it right there and you’ll be better equipped to expand to other locations.
Keeping costs down by using a distributor or sales agent rather than employing your own workforce is beneficial for start-ups too, and online marketplaces mean founders have a multitude of options to start selling abroad without ever leaving the UK.
Make sure you seek advice from experts as you build your overseas customers. There are lots of resources to help including:
- Department for International Tradeopens in new window
- Federation of Small Businesses international trade resourcesopens in new window
- British Chambers of Commerce Trade Hubopens in new window
- Institute of Exportopens in new window
- Open to Exportopens in new window
Thinking of starting a business? Check out our free online courses in partnership with The Open University on business operations and supply chain management.
Our free Learn with Start Up Loans coursesopens in new window include:
- Introduction To Operations Managementopens in new window
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This article and the content provided therein is exclusively for informative purposes. Nothing in this article or in its contents is intended to provide advice of any kind (including legal, financial, tax or other professional advice) and should not be relied on as such. You should get professional or specialist advice before doing anything on the basis of the content contained in this article.