• International expansions need careful thought – from finding the right market, to logistics and distribution.
• Trading abroad can pose financial risks, so it’s vital to prepare for trade barriers, supply chain disruptions, and other issues.
• NatWest offers a range of potential support, including trade finance and trade loans.

Expanding into international markets requires careful research, robust financing, and sound management of the risks involved. But with proper planning, selling goods and services abroad could offer exciting opportunities for your business.

With 279,300 British firms already exporting, developing the right strategies is key to success. Here’s how to build an international trade strategy, step-by-step:

Before committing to a trade strategy, research is essential to determine where demand for your product or service is strongest. 

Things to consider when choosing export markets:

• Market demand: Use government trade data, industry reports and news articles to identify demand in particular markets. Knowing your consumer is critical to success.
• Regulatory environment: Different countries have different trade laws, tariffs, and import and export requirements. Research these thoroughly early on and consider them fully in your strategy.
• Cultural fit: Will your product or service need to be adapted to local tastes, preferences or languages to be successful? If so, consider the cost of making these changes.
• Competitive landscape: Try to identify any local competitors and potential barriers to entry. How might these affect your success in the market?
• Trade agreements:  Britain has numerous trade agreements such as the UK-EU Trade and Cooperation Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and many more. Look for any that could offer tariff benefits and other trade incentives when exporting from the UK.

Philomena Chen, who advises UK businesses on trade for the Department for Business, Innovation, Science, and Trade (BIST), says: “First and foremost, businesses need to understand the target market’s demand, competition and consumer practices. Conducting thorough research at the outset helps identify suitable markets and how to tailor your business approach accordingly.

“It’s also important to visit the market in person to get a better understanding of the business landscape, the people and the culture. This will not only help establish good relationships, but many cultures actually expect in-person meetings between business associates.”

Resources and guides from trusted third-parties like the BIST, The Chartered Institute of Export & International Trade, and British Chambers of Commerce can help businesses identify potential export destinations.

Find out more about exporting

Establishing strong relationships with local partners can provide valuable insights and logistical support, as well as on-the-ground help to quickly resolve urgent issues.

Things to consider when finding suppliers for trading abroad:

• Distributors and agents: Partner with local distributors who understand the nuances of the market you are entering.
• Industry networks and trade associations: Join any trade bodies that connect you with business leaders in your target market.
• Local businesses and suppliers: Building a local supplier network can reduce costs and improve efficiency.
• Government support: The UK government, through the BIST and its foreign embassy network, has trade advisors who can facilitate introductions in new markets.

A structured trade strategy will help you prepare for the complexities of exporting. Firstly, try to define your goals – are you aiming for brand exposure, revenue growth, or market diversification? Establish what success looks like at every stage and incorporate it into your strategy.

Things to consider with a trading abroad strategy:

• Choose a business model: Establish whether you will export directly to customers, use distributors, or partner with a local selling agent.
• Assess capacity: Make sure you have the production, staffing, and resources necessary to meet overseas demand when it comes onstream. Also, check if your supply chain robust enough to meet the increase in output.
• Pricing strategy: Consider how tariffs, market entry, shipping costs, and foreign exchange rates will impact your pricing structure.
• Regulatory compliance: Check that your business is legally compliant with all applicable international trade laws. 

Philomena says: “Try to consider what your unique selling proposition, or USP, is in the market. It may be different to your USP in the UK. I nearly always advise businesses that the best approach is to start small and build your export volume up gradually from there. This will allow you to easily navigate the inevitable challenges in the early stages.” 

Once you've identified a new market, you will need to decide how to offer your products or services efficiently and cost-effectively. This may involve coordinating several external providers.

What do I need to know about export logistics before I start trading abroad?

• Shipping and freight: Research reliable logistics businesses to establish a smooth supply route for your export activities. If you already use a reliable firm in the UK, ask them if they can offer overseas shipping services to your target market.
• Customs clearance: Familiarise yourself with the documentation needed for customs clearance, and train staff to complete customs forms correctly.
• Warehousing and fulfilment:  Consider whether you will need local warehousing services for your exported goods and consider the cost in your calculations.
• E-commerce: If you are selling online, make sure your website is equipped to deal with international orders and shipping.
• Insurance: Protect goods against damage or loss during transit and check that your coverage applies to all stages of the export process.

Philomena says: “Whether you are exporting goods or services, it’s essential that you have adequate liability, personal or indemnity insurance coverage. Double check your policy to ensure that protection is provided in all the geographical locations you are exporting to, and in the case of goods, locations they will be travelling through.”

From tariffs and shipping to overseas distribution contracts, even the most basic export strategies are likely to come at a cost. The good news? A range of government support schemes and financial products could help you take the first step.

What trade and export finance is open to me as a UK business owner?

• Government grants and support: the UK Export Finance (UKEF) scheme supports banks to provide funding and can directly provide insurance for exporters. And the British Business Bank, operated by the BIST, can also support UK businesses looking to set up an export capability.
• Trade finance: Banks and other financial institutions might offer trade finance products such as letters of credit and invoice financing to eligible businesses.
• Trade loans: Financial institutions could also offer loans designed for businesses entering new markets. Learn more about trade loans. Security may be required. Product fees may apply. Over 18s only. Subject to status.
• Investment partnerships: You might also consider working with investors or venture capitalists who could support your expansion into new markets.
• Tax reliefs and incentives: Explore trade tax-credits and reliefs, like the zero-rating of VAT charges, that may apply to your exports. 

"Expanding into new markets often requires investment and can change your funding requirements. There are a variety of financing options available to support your international growth wherever you are on the journey,” says Nick Clark, Head of Sales Channel Management, Working Capital Sales at NatWest Group." It’s important to find the right financing solution for the size and scope of your trade strategy, as well as one that’s suited to your target market and your particular business.”

Exporting from the UK might introduce new risks for your business, but a proactive management approach to these will help you mitigate potential problems.

What risks should I be aware of when exporting goods from the UK?

• Currency fluctuations: Even small swings in exchange rates can affect your cash flow. Investigate whether a hedging strategy could help to minimise any FX impact – and keep up to date with the latest FX market trends.
• Supply chain disruptions: Diversify your suppliers and maintain backup logistics arrangements to ensure uninterrupted trade.
• Trade barriers and tariffs: Stay updated on political and economic changes that might affect the trading landscape, such as trade wars, and adjust your forecasts and strategy if necessary.
• Legal and compliance risks: Consult with international trade lawyers to ensure you comply with local laws.

“By understanding these risks upfront you will be able to adopt an approach to your export strategy that lowers their impact and helps maximise profitability for your business,” Nick says.
 

Learn more about trade risks

What makes an export strategy low-risk for SMEs?

Businesses of all sizes can tap into the opportunities of exporting. But with upfront costs and tight budgets to consider, it can sometimes feel daunting for small and medium-sized enterprises (SMEs).

Here are some low-risk strategies for SMEs that could feed into your exporting plans:

• Invest time in data-backed research: Analyse target markets and customer profiles, rather than jumping in. Work out costs, legal requirements and logistics so you’re fully prepared.
• Start with small steps: Test-run a product in a particular market before fully committing. Starting small could help you understand and get to grips with logistical issues.
• Safeguard your finances: Conduct background and credit checks with potential partners to reduce the risk of late payments. Bonds, guarantees and letters of credit might also help to build trust.
• Enter markets indirectly: E-commerce websites and partnerships with local agents can reduce the need for a physical presence in overseas markets.
• Ask for support: Research schemes like UK Export Finance for tools, training and financial assistance.

A successful trade strategy should evolve over time as you review and refine your approach and adapt to changes in the market.

Things to consider when adapting your trade strategy:

• Monitor performance: Track sales continuously and monitor customer feedback and market trends.
• Stay competitive: React to industry developments and adjust your pricing and marketing strategies accordingly.
• Don’t overextend: Make sure you have stability and the desired outcomes in one new market before entering another.
• Innovate: Keep exploring ways to improve efficiency and enhance your product or service’s attractiveness in the target market.

Philomena adds: “Having an effective and well-researched export plan will be the key to initial success. Then, if you adapt your strategy and continue to build relationships, it ultimately becomes a ‘people’ business.”

If you’re considering exporting your goods or services overseas for the first time or looking to expand into new markets, visit our Trade Hub for more valuable insights.

When planning an international expansion, you may hear of both export strategies and market entry strategies. The main difference comes down to their scope.

An export strategy focuses specifically on selling UK goods or services in an overseas market. 

While a market entry strategy is a much broader plan, with exporting just one of many potential solutions. For example, it may also recommend options like licensing, foreign acquisitions, partnerships, or joint ventures.

From growing SMEs to long-established brands, NatWest offers a variety of trade finance solutions to support your overseas activities. These include:

• Bonds and guarantees
• Letters of credit
• Trade loans
• Documentary collections

Explore all trade finance options

Get to know the ins and outs of exports and international trade with our other useful guides:

• Tariff-proof your supply chain: An in-depth guide
• Managing risk for international trade
• How to market your business overseas

• When creating an exporting or trade strategy, weigh up the potential risks against the rewards.
• Think carefully about how you’ll finance and run overseas ventures day-to-day.
• Compare different trade finance options available from NatWest, the government, and other sources.

Want to talk to us about exporting and trade finance? Get help 24/7 with Cora, our digital assistant, or message us through our mobile app.

You can also contact us on 0345 711 4477. Lines are open 9am - 5pm Monday to Friday (except public holidays).