In this article Liz Ward, Principal at Virtuoso Legal (Leeds), points out the 5 key questions to ask yourself before starting an oversea business.
Considering trading overseas? Avoiding the Elephant Traps
Arguably, there’s never been a better time to look at international trade. The domestic market has been flat lining for some time now – as has trade in Europe. However, some emerging economies are doing very well, and given the current sterling exchange rate, many companies are looking to the export market to kick start their businesses into growth.
So the question is, what should you look at in your business when considering overseas trade? Here are 5 key questions to ask yourself before you start.
1. What is the demand like in overseas businesses? Before looking at distributors, agents or licensees in any particular location it is worthwhile first of all investigating demand and competition in overseas markets. There is little point in exploring markets that are already saturated by your competitors’ products. Alternatively, if your product is going to be new into a market, who would be the best person to sell it overseas?
2. Have you made sure your IP is in order? It is vitally important to make sure your products can be protected overseas. An IP audit is a great way of taking an overview of your situation and focusing on a way forward.
3. Routes to market. Once you have established that demand could exist, have a look at different routes to market. Distribution networks work well with some sectors such as construction. On the other hand, if you are selling high value engineering items, it is probably worthwhile appointing agents overseas to sell your goods. Licensing also works well for some businesses and we’ve acted for a number of companies who are licensing their manufacturing technology and know-how, so that goods can be produced locally at a reduced cost. This works well in markets such as the USA, where Americans like to buy products made in their home markets.
4. Getting the right business associate. If you have decided on a route to market, it is worthwhile investing time in making sure you have the right overseas associates. Ask yourself if they have the same values, products and ethos as you. If they don’t then the all important interpersonal business relationship may well fail.
5. Ensure your contracts are in place. We’ve helped many businesses become very successful in overseas markets, but it pays to get your terms in order, especially payment and delivery. We use checklists to help people negotiate the right terms.
If you want to know more, then do get in touch. If we don’t have the answer, we normally know someone who does!
Liz Ward
