If you are a business within Liverpool City Region, there are excellent opportunities to start exporting your products to new markets. The region benefits from a port, an airport and a freeport, putting it at the front of global trade, with worldwide connections and specialist support on offer.
Not only does successful exporting help business growth, but it also mitigates risk as you start to diversify your customer portfolio. You could also see productivity gains, as well as increased international market share and profit.
However, post-Brexit, there are now different territory legislations to contend with, as well as cultures and policies that a business must adapt to. We know that exporting is not always the easiest to get right, but we are working with the Department of International Trade (DIT) and other local support partners to support local businesses with their export journeys.
5 steps to identifying a successful export opportunity
- Step 1: Research markets online
- Step 2: Undertake in-market research
- Step 3: Identify barriers and plan your route to market
- Step 4: Weigh up customer demand versus ease of entry
- Step 5: Be prepared to adapt your product or service
1. Research potential markets
It is crucial to thoroughly research the markets you’re considering exporting into, as you may find that there isn’t enough customer demand for your product, or the country may be too difficult or costly to enter.
Online research will allow you to gather information quickly and in a cost-effective way. It can help you to:
- Assess market size and demand
- Focus on the volume and value in the market, explore the number of online searches in that country, as well as regional demographics
Did you know that HMRC data shows that USA, Germany, China, Irish Republic, and France are Liverpool’s top 5 export locations? This suggests a level of demand for our region’s goods and services. It’s important to do your research though.
In addition to online research, it’s important to analyse customer trends and behaviours evaluate the competition and understand relevant rules, regulations, or risks.
Using the relevant overseas trade association(s), look for trends in sales and imports of similar products and consumer spending, as well as any focus groups or studies. The best place to start with this is your current UK customer base. Consider their demographics (age, gender, income, purchase behaviour) and then research these features in your different markets.
Online country factsheets will give an idea of if a similar customer base exists, as well as the number of potential buyers and their behaviour.
It’s crucial to also look at existing market leaders who may be your direct competitors, as well as smaller and niche players. Start on Google and search for your product in that country. Check their pricing, and then look over their social channels to see how they approach their marketing. It’s also beneficial to use Trade Associations’ directories, as they will have sector-based, country-specific information.
Trading overseas often involves regulations that the UK doesn’t practice. Look out for trade regulations and tariffs, ease of doing business (country-by-country data can be found on the World Bank website) and political stability within these markets (use Transparency International for this).
2. Undertake In-Market Research
Once you have an idea of the market(s) you want to export to, it is recommended that you visit the country first-hand. This will give you valuable context on whether it’s the right opportunity for you.
Local business, Richardsons Healthcare, a specialised theatre mattress manufacturer based in Bootle, unlocked the US market by identifying a customer need that they could fulfil. Today, 85% of their business comes from exporting, with 30% of their exports going to the US where they work with the world’s leading operating table provider. When asked on how they cracked the US market, they credited “going over there, attending trade shows, and finding out information about potential customers and competitors. It was valuable information that we’d never have found online.”
As well as finding out about customers and competitors, it’s important to get contacts for any potential buyers, intermediaries like distributors and agents, or regulatory advisers. This will give you the best understanding of your most accessible routes to market. The Department for International Trade (DIT) have a global network that can help you collate these contacts.
Make sure to time your visit so you get a feel for business as usual in the market. If you visit somewhere during a cultural or religious festival, for example, you may not get a typical picture of customer behaviour.
As well as industry trade shows, it is beneficial to attend an organised trade mission if possible. These are planned trips with government officials and potentially other businesspeople with the aim to explore international business opportunities.
Advisory firm, KI Partnerships, offer the following advice to those looking to embark on their first trade mission:
- Sign up for the government’s notifications and contact the DIT showing interest.
- Work with your assigned trade advisor and make sure that they understand your product or service. This allows them to provide tailored support for your business. If fortunate, you’ll be set up on your first mission in a starter country like Ireland, which is a great place to start given the same time zone, and limited culture and language barriers.
Paul Kallee-Grover MBE
Although Ireland’s market may not be your aim, KI Partnerships summed the purpose of the trip up perfectly, saying “If you can’t trade with your neighbour, then you may struggle to trade further afield.”
3. Identify barriers and plan your route to market
Once you have gathered all the information on the opportunities and struggles that present themselves about trading with your preferred country, you need to plan a route to break into the market.
To do this you will need to know:
- Your business’ exporting strengths and weaknesses
- The market’s barriers to entry
As a business based within Liverpool City Region, you have the advantage of a west-facing port with connections to the US, Europe and Far-East.
HMRC data from 2019 shows that there are 100 countries listed as locations where City Region businesses have exported at least £1 million worth of goods, with £1.1 billion worth of exported goods going to the US.
However, there are other factors at play. For example, if you have a product that relies on a specialised distribution model, then you may have a limited choice of routes to market.
Barriers to entry make the process of exporting a challenge, although these are not always long-term issues as market conditions can regularly change. Such barriers could include:
- Lengthy or expensive customs procedures
- Rules, regulations, environmental and safety standards
- Import quotas and restrictions
- Cultural and language differences
- Registered trademarks and designs – these are a requirement in certain countries
- Lack of territory infrastructure
- External economic and political conditions
Paul Kallee-Grover MBE of KI partnerships recommends checking to see if any of your existing advisors or partners (e.g., financial or banking partners) have a base in the market you’re planning to target. By doing so, they may be able to advise and guide you on how to tackle some of the barriers above.
The Department for International Trade have a trade barrier tool that allows you to easily identify challenges in your chosen market. What’s more, we’ve partnered with them and our region’s Chambers of Commerce to create an Export Plan that eases the barriers for exporting.
4. Weigh up customer demand versus ease of entry
At this stage, you should know the market and its challenges, so now it’s worth weighing up if it’s worth it. A common misconception is that the best markets to go after are those with most demand, but they can sometimes have the highest barriers to entry.
The best way to visualise this is plotting a graph with ease of entry and customer demand running along each axis. Any markets that sit in the top right quadrant will have the best export potential.
5. Be prepared to adapt your product or service
There are two types of adaptation that a business may make when entering a new market: mandatory and non-mandatory.
Mandatory is an adaption that conforms to laws and regulations of the country you are choosing to export to. This could be anything from including certain labels on packaging to adapting the actual product.
This type of adaptation is a business decision with an aim to add a competitive edge in a new country, especially if you’ve identified a clear difference in customer needs from the current UK market.
Local business, Richardsons healthcare, is a notable example of this. In their research phase in Scandinavia, they found that the market was having problems with Velcro fastenings to surgical tables. They adapted their product and created a suction cup design, and within 6 months, the market was buying from them.
It’s important to bear in mind that any kind of adaptation could come with manufacturing and resource costs that may increase overheads.
Need additional support?
If you’re looking for advice or guidance on a particular export opportunity, or where to start, do not hesitate to contact us or one of our partners:
Similarly, you can contact advisors at the Department for International Trade for support and advice. With years of experience, there are export experts on hand to help your business achieve its potential.