Last updated on January 23rd, 2012 at 11:23 am

Although not many small businesses think about expanding your business overseas here at Forest Software we have two clients who have done just that.  Having spoken to them about this we have listed below a few things that you need to think about if you want to expand your business internationally.

1. Market insights
Expanding into any new market requires research, this doesn’t matter if you are expanding into a new product range or into an overseas market, you still need to find out how the market operates and, more importantly, what the market wants. Researching an overseas market is often a greater challenge than the domestic market, but there are many places you can go to for help (listed below).

2. Use the ‘been there, done that’ factor
If possible, use your existing contacts.  You are looking for people that have been there and done it so that you can learn from their mistakes and profit from what they have learnt.

3. Make use of government resources
UK Trade & Investment (UKTI) works with UK-based businesses to ensure their success in international markets, and encourage the best overseas companies to look to the UK as their global partner of choice.

When you are overseas on a visit (you are going to visit the new location aren’t you?)  try talking to the British embassy or consulate in the area you are in, they can be an invaluable sources of information and contacts and may be able to give you advice on customs and local laws.

4. Find relevant support organisations
Many other business organisations have units dedicated to helping you export or invest overseas: the Chambers of Commerce, and the Confederation of British Industry (CBI) are two that spring to mind and there are many others that are worth approaching for advice.

5. Seek professional advice
Don’t forget to talk to your own professional advisers, who should be able to either introduce you to their overseas affiliates or to specialists in expanding your business overseas (such as Fitzgerald and Law).

6. Set up good business systems
Think carefully about how you will manage the business after any agreements are signed. Will you have your own staff in the business or will be be a joint venture? How often will you or your senior management visit? Who will be authorised to sign cheques and make any payments or money transfers?  Are the reporting lines, performance requirements and responsibilities clear (see our making your business aims clear posting for more details)?

7. Stick to what you’re good at
Assuming that you are not a foreign exchange dealer you should talk to your bank and your professional adviser about your overseas investment or trading plans. Foreign exchange volatility is a fact of business life, and is a risk that needs very careful managing or you could find that any profit is wiped out by exchange rate fluctuations.  Don’t get involved in exchange rates, but leave this to the experts.

8. Check your tax position
Depending on the countries involved, you may find you can’t get tax relief for losses on foreign exchange, or you may even be taxed on gains which you haven’t made. There may also be restrictions on how much you can finance by way of loans rather than investing your own capital into the project.

9. Banking
If you are trading overseas, talk to your bank about what facilities might be available. Apart from the exposure to exchange rate risk mentioned above,  you might not want to provide open account facilities to new customers in the overseas market, especially where there are difficulties in getting reliable credit risk information, or where the local legal environment does not seem to support contractual rights as strongly as you might wish. In this case “letters of credit”  or other kinds of trade financing instruments may provide a solution.

10. And finally…
Much of the tips above can be summed up as, take advice (from your bank, accountant, professional adviser, the UK Government, colleagues that have already done this and any other source you trust). Doing so could save you writing off a bad debt on your first shipment, abandoning your joint venture investment or making big losses.