International trade offers businesses across the world a wide range of benefits.
However, year after year, small businesses regularly resist trading in foreign markets. One major reason is that they simply don’t know where to start.
If you’ve had similar concerns, check out the 11 quick tips provided below to help you trade internationally.
Whilst this list is not exhaustive, it should guide you in the right direction.
What is International Trade?
Put simply, international trade is the exchange of goods and services between different countries.
Various forms of international trade started as early as 6000 BC. However, ever since nation-states were officially established in 1648, it has become a central pillar of the global economy.
Why Your Small Business Should Consider Trading Internationally
The advantages of international trade for small businesses are countless, including greater access to new markets, diversification of revenue streams, and gaining a competitive advantage over other businesses.
With the right direction, your business could reap the rewards of going global.
11 Quick Tips for International Trade
- Understand the Basics
- Offer Something Unique
- Do Your Research
- Build Bridges Abroad
- Get to Grips With the Legal & Regulatory Requirements
- Explore Financial Options
- Sort Your Supply Chain & Logistics
- Consider Cultural Differences
- Start Marketing
- Manage Potential Risks
- Learn & Adapt
1. Understand the Basics:
The long list of international trading terminology can scare the bravest of business owners.
However, as long you know the basics, you’ll have a firm footing to start thinking about trading internationally.
Here are some terms you should familiarise yourself with:
- Export: a product that is sold to a foreign country.
- Import: a product that is bought from a foreign country.
- Tariff: a tax or duty enforced on imported and exported goods.
- Customs duties: taxes enforced on imports and exports by customs authorities.
- Trade Barriers: restrictions that make trade harder. These can include tariffs, quotas (e.g. limits on the number of goods that can be imported), or non-tariff barriers (e.g. regulations).
2. Offer Something Unique:
Everyone has something to offer.
So, whether you’re creating a product from scratch, or attempting to sell a pre-existing one, you need to find an angle that sets you apart from the crowd.
That’s why you must find your unique selling proposition (USP). That could be the price point, quality, or features.
Once established, you can promote not just why people should want to buy from you, but why they need to.
3. Do Your Research:
No business has ever successfully traded internationally without doing its market research. Read widely and take notes.
Research your ideal customer’s preferences, the product demand, and your competition. Consider the market’s size and economic stability to analyze its growth potential. Ask yourself how your product will culturally fit into a foreign market.
You’ll also need a strategy before you embark on your journey.
One option could be to export your product directly to your target market. Another could be looking to license your products to a foreign partner to distribute for you.
Whatever your strategy is, use it to steer your way.
4. Build Bridges Abroad:
Reach out to foreign companies, banks, and other institutions to get you started. Meanwhile, trade events remain a great way to start in-person conversations with useful contacts.
If you are going to convince others to help you, you’ll also need a product that you believe in. If you know its value and can effectively communicate that, others will support you.
All it takes is one conversation and you never know, it could lead to a world of opportunities for your business.
5. Get to Grips With the Legal & Regulatory Requirements:
There are three broad sets of rules and regulations that you need to know.
First, understand the domestic laws in the country that you’re trading in. Second, learn the laws of the country that you’re aiming to trade in. Third, get to grips with the international laws that control global trade.
Ensure you prepare all the required trade documents and certificates for your products, such as invoices, bills of lading, certificates of origin, and import/export licenses.
Research customs regulations, tariffs, and other trade barriers that your product or service might face.
It’s always worth remembering that trade rules and regulations change like the wind. So, it’s critical that you stay up to date with the latest industry updates to ensure that you always meet legal requirements.
6. Explore Financial Options:
Naturally, a range of currencies are involved in international trade.
Establish what currency you’ll trade in and keep an eye on fluctuating exchange rates and your competitors’ pricing. These can all significantly impact your bottom line.
Bearing in mind production costs, market demand, and local competition, set an appropriate price for your product.
If you’re unsure what other financial options are available to you, you can explore support regarding insurance, export financing, and general funding from export credit agencies (ECAs) or government export development programs.
7. Sort Your Supply Chain & Logistics:
An efficient supply chain is vital if you want to successfully trade internationally.
Select the right shipping carrier to minimise lead times, reduce transport costs, and ensure that your product makes it to its destination in good condition.
Whether you plan to ship your goods by air, sea, or overland, each will have its benefits and drawbacks. Weigh these up and decide which one works for you.
A reliable stock control system is also vital to guarantee a smooth supply chain and logistics process. Local storage could be a good option for quick delivery, for example.
8. Consider Cultural Differences:
No two countries are the same.
Different cultures have different communication styles, business etiquette, and consumer behavior, so you must sensitively alter your communication and interactions toward the needs of your target audience.
Small things like translating your product materials into the local language are a good start. Learning local business customs and adapting your customer service will also put you in a strong position to grow abroad.
9. Start Marketing:
Depending on your target market, your marketing strategies will vary.
However, localizing your brand messaging is one way to appeal to your target audience as it helps your audience empathize and resonate with what you have to offer.
Consider using paid advertising, social media, and search engine optimization (SEO) to grow your brand online, or even do it the old-fashioned way by attending trade fairs to spread your message.
10. Manage Potential Risks:
Nothing in life is smooth sailing, let alone business.
So, know the risks of your international trade. Common ones include currency fluctuations, political instability, and supply chain disruptions.
Creating a mitigation plan will help reduce these risks. These could include undertaking risk assessments, diversifying suppliers, and creating financial reserves.
11. Learn & Adapt:
There’s no one-size-fits-all model to succeed in international trade.
Mistakes will happen. However, doing your research and expecting the unexpected is the best approach to take.
Learn from other businesses’ experiences. What worked? What failed spectacularly? Take inspiration and make sure you don’t repeat the same mistakes.
It’s always worth remembering that no single strategy works forever. That’s why it’s vital that you measure your progress and adapt as you go.
If you’re a small business, trading internationally might seem daunting. However, with the right research and know-how, it doesn’t need to be. Going global could be the spark that helps you embark upon a profitable journey in the future!
If your business is looking to trade internationally, why not try a 14-day free trial of EdgeCTP, the combined trading platform that makes trade simple?