How Small Businesses Can Cut the Costs of Exporting
Are you considering exporting? Many countries rely on imports, especially for niche products, which means there are opportunities for making good returns – especially if you have great products that are successful in your domestic market and know how to export cost-effectively. A successful exporter needs to be well versed in risk management, tax codes, funding availability, and the small costs they may incur along the way.
Responsibly Borrow Capital
This is something you’ll want to consider from the beginning. As a small business, you may not be at the point where you have large amounts of money that are not already allocated. When you’re creating your exporting plan, think about how much funding you’ll require to get started. Always round your estimates up, and add ten percent for unexpected expenses. There are small business lending specialists in Australia, most notably Prospa.com, that may be able to help you with a loan, even in a tight timeframe. You’ll be able to start immediately, and doing so means you’ll be able to repay the loan faster.
Exporting means you need to establish relationships with people in the countries you want to target. If you can avoid travel by using conference calls or video chatting, that’s your best option, at least to get a relationship underway. If you need to meet in person, book your flight as far in advance as possible, and try to schedule meetings outside of the peak tourist times of the country you’ll be visiting. Flights, accommodation, and even food will be exponentially more expensive during that window. Only bring staff with you on these trips if absolutely essential, and set strict budgets. Make sure you keep a diary and all your receipts for the tax man.
Always Opt For Forward Exchange Contracts
Fluctuation of currency is one of the biggest risks you’ll be taking if you export. Forward exchange contracts will alleviate a lot of that risk. If you’re locking in your exchange rate, you’ll be immune to unexpected fluctuations caused by political circumstances and major economic shifts. You’re also able to plan better, knowing what costs to include in your budget.
Select The Right Target Countries
When you’re a small business, you don’t have endless funds to experiment with. You need to carefully research your target countries and familiarise yourself with their regulations. If you need to do some expensive overhauling in order to export in a particular country, you should consider starting in a different country. And always research the local trends, buying attitudes, culture and consumer needs in any country you are considering to figure out where you fit in – before you start implementing any plans.
Hire a Lawyer or Accountant
It’s never worth taking risks with tax situations. One small slip up can cost an exorbitant amount of money. You’ll want to find a reputable tax lawyer or accountant who specializes in working with small export businesses and get them to assess your situation. Export taxes get complicated, and you really need someone who knows what they’re doing. Your lawyer can help you protect yourself from risk, and interpret any small print you may have misunderstood. Any costs incurred here can be considered a sound investment as they will reduce your risk and increase your likelihood of success.
The whole idea of exporting may seem completely intimidating. It is a complicated process often fraught with unforeseen difficulties and it can take time to establish a successful export market. However, the upside is you can exponentially grow the size of the market for your product or service and therefore grow your business exponentially. If you’re making wise decisions and exporting safely, the risk is more than worth the reward.