Selling into Europe presents an even greater opportunity for those who are well-prepared.
You and your customers may be asking about future processes and costs. Will technical and safety standards remain exactly the same? What will the new duties and tariffs be? Will EORI requirements change? How much will inward and outward processing reliefs compensate for loss of free circulation benefits? What about VAT payment and reporting?
EU companies may want to avoid UK-related risk due to these concerns, but selling to the EU should still have zero tariffs for the next 2 years at least and the weakness in the pound boosts the top line.
Now is the opportunity to gain a competitive advantage by strengthening your export capabilities. Gradually take over responsibility for export processes before changes take effect, rather than laying risk onto the customer. For example, move towards selling on Delivered Duty Paid Incoterms rather retreating to Ex Works.
Two actions that can help you succeed are to measure and manage your profit margin closely and be ready to address customer concerns.
Managing profit margin
Assuming you’ve got a handle on the sales price in the destination market, you still need to be up to speed with costs. Lay out your formula for profitable sales, like
Export profit = export sale price – export costs (transport, duties and taxes, documentation) – financial costs (currency, financing, insurance) – your business’ internal measure of COGS.
Ensure your costing process can quickly get quotes and estimates into your formula and react to changed terms of sale or new rules and regulations, so you always know your position during sales negotiations.
Alleviating customer concerns
Build capability and access to skills to handle new processes. Get more visibility into your export process, so the impacts of a change are easy to see and understand.
Smaller businesses face constraints in hiring in or contracting out key skills to strengthen their export capabilities. Exporting requires not just an understanding of the culture and regulation in the foreign market, but a plethora of technical aspects. You can go to your Chambers for advice on all of these, and reap the rewards to boosting your export capabilities.
First published in the The Chamber Surrey magazine in September-October 2016.
About Parkway Logic
We are building Exabler.com – our secure one-stop-shop that brings visibility to your export process, so you can act and agree orders more quickly, and deliver orders more safely. We take you through from planning to delivery and documentation, so before you sign a new order you’ll know where to go and what to do.