With just months to go until the UK leaves the European Union, how can exporters plan ahead?
The odds of no Brexit deal being reached before the UK’s scheduled exit at the end of March is now below evens, according to several leading betting agencies.
For UK exporters, such an outcome significantly raises the significance of Brexit, not least because trade between the UK and EU is so significant. For example, 55% of goods imported to the UK in the 12 months to 31 May were from the EU, while 49% of goods exported from the UK went to the EU.1
Of course, the UK government is hoping for the best of both worlds after Brexit: the continuation of existing trade with the EU, and also greater freedom to strike trade deals with other nations, such as the US, China, India, Australia and New Zealand.
“Trade is now getting a lot more attention and the government, as well as the private sector, is giving it sharper focus – it’s a once in a lifetime chance for UK exporters,” says Geoffrey de Mowbray, co-chairman of the British Exporters Association. “There is an appetite for British goods abroad and particularly for our innovative ideas.”
In short, whatever your view of Brexit, it is worth preparing for the new opportunities that Brexit will present. It might be just the chance you need to broaden your customer base.
“The implications of Brexit are still unknown, but I believe now is a very good time to begin preparing for future trade opportunities,” John Rubidge, head of innovation in services at Business West, adds. “If you don’t at least look into the possibilities now, you could be left behind when the negotiations are over.”
Rubidge knows only too well the importance of the continental market for UK plc. In the Southwest, 46% of goods exports in 2017 were destined for the EU, coming to £9.4 billion.2
He believes the EU will remain a vital market for UK exporters, given existing business and cultural ties, as well as the improved economic performance of major trading partners, such as France. Nevertheless, demand in developing markets for consumer goods, cars, and food and drink imports has become increasingly significant too.
Rubidge says that the very idea of exporting can make some UK firms cautious, given the challenges of finding the right market, managing costs and navigating regulations around tariffs and tax. Yet the challenges are far from insurmountable.
Before making the move into any new market, SMEs need to do their own research, and take advice from government agencies. Business West, for example, runs the Export for Growth programme, which helps companies to determine which global markets suit their particular products and services, and to identify whether there are any restrictive trade barriers or regulations.
Doing the groundwork
Whether you are focusing on additional international opportunities post-Brexit or just beginning to export, moving into new export markets requires preparation. Rubidge advises firms to review their unique selling propositions and their capability to cope with export volumes. They should also review their distribution model, scrutinising areas such as direct sales, subsidiary or licensing through a distributor. Investigating logistics, tax implications, payments and financing are also vital.
“First of all, look at your business and assess whether it is more efficient for you to expand domestically,” says Martin Brown, director of Elephants Child, a business advisory group. “It is easy to be seduced by the idea of international trade and not fully consider the level of planning and resource you need.”
“Do you have enough working capital and a strong management team? Do you understand currency exchange fluctuations and the cost of tariffs, shipping and insurance? This will differ with each market, as will considerations such as time differences when doing business in Australia, or language and culture in emerging markets. Ensure you have a sound and fully-resourced business plan before you begin.”
Getting on a plane
But how should more seasoned exporters prepare themselves?
As well as chairing the British Exporters Association, Geoffrey de Mowbray is also founder and chief executive of equipment supplier Dints International, which provides supply chain solutions to mining, construction and quarrying clients in 17 sub-Saharan Africa countries. The company has grown through a combination of distributor partnerships and direct sales.
“It’s about getting on a plane, researching your market and finding partners with the right product and cultural fit,” says de Mowbray. “We are now focusing on further growth in Africa, South America and Central Asia. Exporting helps you become less reliant on fluctuations in your home economy and it can be a fulfilling experience dealing with different cultures. You need to embrace the opportunity.”