If you’re a small business owner wondering about the potential of doing business overseas, you’ll be pleased to hear that this is something the government are currently trying to get behind as a part of their ‘Business is Great Britain’ campaign:
“Businesses who choose to sell overseas become 34% more productive in their first year while those already selling overseas achieve 59% faster productivity growth than non-exporters. UKTI can help you succeed overseas. The figures are compelling: on average businesses earn £100,000 in additional sales within 18 months of working with UKTI. This could be you.”
But what exactly are the benefits, risks, and considerations you should keep in mind before taking the plunge and expanding your (hopefully already successful) small business into new lands? According to the above-mentioned UKTI (UK Trade & Investment):
“With global online retail sales increasing by 17 per cent per annum, the opportunities for British businesses are huge.”
That’s reason enough, to start. So, here at TaxAgility, we decided to produce an informative piece on doing so.
The Benefits of Doing Business Overseas
There are, as we’ve already touched upon, many benefits to expanding your small business overseas, some of which are downright obvious, while others you may not even have considered:
- You open your small business up to more customers and, with it, more revenue.
- Your business won’t be dependent on the British market alone.
- You’ll improve your business’s efficiency abroad and at home.
- You’ll gain a competitive advantage at home thanks to the inspiration, learnings, and general skills you learn from the overseas side of your business.
The Risks of Doing Business Overseas
Of course, as with any reward comes risk, with the risks of expanding your small business overseas numerous. It’s always important to go into a foreign situation (both literal and metaphorical) with your eyes wide open:
- Do your research: Thoroughly research the countries you’re looking to expand your small business into. Contact an International Trade Adviser at UKTI; they’ll help you to research your target markets and new potential customers.
- Speak with your bank: There’s a good chance you won’t gain a return on investment in your first year.
- Perform a strong risk assessment: Assess the risks of everything from the likelihood of your new customers actually paying you on time (or at all), to the quality of the insurance options that are available to both you and your suppliers.
Considerations When Doing Business Overseas
There are an enormous number of things to consider before expanding your small business overseas, some of which were touched upon in the ‘risks’ section above, while others must be considered on a case-by-case basis.
If you haven’t already we would recommend you meet with an International Trade Adviser at UKTI. According to their website you can usually get an appointment with one within just a few weeks. In general, these advisers have all worked at senior levels in international commerce. Quoted from the UKTI website:
”Think of an ITA as a ‘facilitator’ to help you make an honest assessment of the potential of your business to sell overseas. An ITA can also point you in the right direction to take these conversations further.”
Your ITA can work with you on issues such as determining demand for your product or service overseas, researching suppliers, translators, and going through due diligence processes, as well as the helping you to look into tax withholdings and any dual taxation treaty between the UK and the country you’re looking to expand into.
Experienced Tax Accountants
To speak with a professional accountant to discuss the potential tax implications of expanding your small business overseas, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.
Alternatively, if you’re just reading our pieces out of curiosity in a bid to broaden your horizons, feel free to have a read of our blog for the latest information on the industry.