How I started trading overseas

Overview

Trading overseas can be a way to reduce dependency on your home market, and can spread R&D or manufacturing overheads across a wider customer base. But it can also be a nightmare that consumes immense time and money for little reward.

The challenge

How to decide whether to venture overseas and how to go about it? Different businesses have radically different overseas sales potential. Some will have little attraction, but others can surprise on the upside. What should we do?

The solution

We decided which countries to target. The first question to ask was why would anyone want to buy your product or service in another country? Then we looked at language, legal and cultural barriers, the competition, what channels to market might exist that could carry our offering and how easy access was - face to face meetings in Australia are a problem from the UK!

We did lots of research. You can't assume that what works in the UK will work abroad. For instance, we found that the UK had a large range of PC and internet-based magazines, and we got lots of press coverage. In the US, PC Magazine had a circulation of over one million and dominated the landscape. It was horrendously difficult to get PC Magazine's attention. Foreign markets have been the graveyard for too many UK businesses that jump without looking.

I'd say that if a market already exists for your type of product, and you are better or cheaper than the incumbents, then consider a distributor. Alternatively, with ecommerce and international shipping companies, you could try supplying direct from the UK. I'd also recommend that, if you start your own operation, commit few resources and set targets which must be reached before more funds are released. Then once you have some customers, survey and profile them so that you can rapidly understand who they are and why they are buying, and adjust your product and marketing accordingly.

Key lesson

Entering foreign markets can be expensive, time consuming, and will present legal and cultural barriers, not to mention language. Carry out extensive research before you commit significant resources.

Top tip

If you're starting up overseas, send a trusted member of your own staff to the country. They will see what you need to change and make the case to you. An outsider will find this much harder, and you will always wonder if requests for change are just an excuse for failure.

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