Considering trading overseas but worried about potential hurdles? While Brexit and other factors have created barriers for small businesses looking to break into these markets, it’s still possible to do so – and successfully.
Entering these markets effectively is all about being aware of the challenges, understanding how to tackle them, and good old fashioned planning. And that’s exactly what we cover in this blog. Read on to discover all you need to know before going global.
Brexit barriers
Before you look into foreign markets, you should be aware of all the different ways that Brexit has added roadblocks to the process. For starters, as tariffs have caused a rise in the price of imported goods, there are higher trade prices too – which then typically get passed on to the consumer. This can make it harder to be competitive.
Brexit has also created a new customs and regulatory border between the UK and EU. This has resulted in additional paperwork, as well as making it more costly to trade with the EU. Consequently, both UK exports and imports have decreased – permanently for some companies, and temporarily for others. It’s estimated that leaving the European single market and customs union has cut UK trade in goods by 13%. Plus, there have been numerous supply chain disruptions and delays.
What’s more, there are additional trade barriers. These include extra checks, some businesses being affected by different VAT regulations (depending on the EU jurisdiction), and trouble transporting goods.
The collective impact of these barriers, alongside high tariffs and customs issues, has caused significant upheaval – with almost 60% of SMEs finding them to be the most difficult challenge to trading overseas.
Other barriers to entry
While Brexit has had a big impact, it’s not the only aspect to affect businesses trying to go global. The war in Ukraine, the Israel-Gaza war, and the aftermath of the pandemic have all caused issues. With political instability in target markets continuing, this will only serve to exacerbate the problems faced.
Exchange rates are also constantly changing, which has caused nearly half of small businesses to lose out. There’s the overall high cost of doing business overseas too, which 49% of SMEs cite as a challenge. These include the cost of transportation, cross-border payments, and transfer fees. Plus, if there are delays in delivery, this can add to the expense and hassle.
Tackle these obstacles through financial planning
Evidently, there are quite a few challenges to going global. However, it’s still perfectly possible to make it overseas – you just need to prepare and plan ahead. Forewarned is forearmed, and with a little forward thinking, you can more easily combat threats to your success.
As part of this, we strongly recommend watertight financial planning. From budgeting and forecasting to tax, compliance, and VAT support, we’ve got you covered. Get in touch with the friendly team here at Nabarro Poole to discover how we can help your business enter new markets.
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