Exporting can be a great opportunity to develop new customers and increase profits. However, trading internationally presents extra risks and challenges. You can’t eliminate these risks altogether, but you can manage and minimise them.
Risks of exporting
Whenever you sell there are risks – your customer fails to pay, for example, or you get sued for harm caused by your product. But doing business with a customer in a different country, and perhaps using a different language and a different currency, can create extra risks and complications.
Minimise the risks of exporting
Market research helps you understand the risks of doing business in a particular country. You can then decide how you want to control those risks.
You should also check whether your country has any agreement with the country you are planning to export to, in order to help reduce export risks.
Reducing financial risk
Before agreeing an export deal, it’s a good idea to assess the impact on your cashflow and make sure you have enough working capital.
Risk management and insurance services
There are several products and services available to businesses that trade internationally. The type and level of insurance that will best suit your business’ needs will depend on a number of factors, such as the size and length of the contract and the amount of risk involved.
Agreements with overseas markets
Investment promotion and protection agreements between your country and other nations exist to protect investors with internationally recognised standards. These will minimise your exposure to financial and legal risk when exporting.
Double taxation can occur when a foreign country taxes your business as well as being taxed in your local country on the same income.