Considering the globalizing nature of the modern business world, many business owners and entrepreneurs are thinking about taking their businesses to the next level by doing business with other countries in the world and region. There are many benefits to doing business globally. Renowned companies do business on a global basis to benefit from lower labor costs in emerging markets and to sell end-products to a wide customer base. There are many entrepreneurs in the UK who are considering investing in a startup that imports and exports products to and from the UK. To build a successful import-export business in the UK, every entrepreneur should pay attention to avoid the mistakes that we discuss below.
Not paying attention to foreign exchange rates
When an entrepreneur is considering importing or exporting products into or out of the UK, he is essentially planning to do business with the outside world. This exposes import-export businesses to a new risk; the foreign exchange risk. If the local currency is expected to depreciate against a foreign currency, exporters will benefit as the value of the foreign currency in local currency terms would appreciate. On the other hand, an importer will benefit if the foreign currency depreciates against the local currency. In this situation, the importer would have to pay a lower amount in local currency to convert to a fixed amount in the foreign currency. This relationship needs to be thoroughly understood in order to build a successful import-export business in the UK.
An entrepreneur should continuously remain vigilant about foreign exchange rate movements to time imports and exports as well, which would result in foreign exchange gains.
Many startup companies in the UK who are specializing in import-export business activities fail to identify the importance of closely monitoring foreign exchange movements, which eventually results in significant losses or opportunity costs.
Failing to familiarize with different regulations in different jurisdictions
When doing business with overseas jurisdictions, it’s important to come to the realization that different regulators have different sets of rules governing import and export transactions. For an entrepreneur looking to establish an import-export business in the UK, it’s important to list down the countries that he is expecting to deal with and analyze the applicable regulatory guidelines in these countries and regions. A thorough understanding of the regulatorylandscape could prove to be a decisive factor in the success of the import-export business established in the UK.
Not paying attention to transit times and shipping times
When providing timelines for the other party involved in the transaction, it’s important to clearly define the expected delivery times of goods shipped from the UK. More often than not, novice entrepreneurs fail to include transit times in their calculations which eventually leads to a deterioration of trust of the other party involved in the transaction. To avoid this, importexport business owners in the UK should familiarize themselves with the applicable transit times and shipping times into and out of the UK.
Not building relationships with customs officers
The importance of relationships cannot be emphasized enough. Building long-lasting, strong relationships with customs officers are very important to the success of an import-export business in the UK. More often than not, these relationships could come in handy to clear goods with no delay or to process orders efficiently especially when an order is running with a delay. Many entrepreneurs fail to recognize the importance of building strong relationships with customs officers until it’s too late and are usually left wondering how successful importexport business owners in the UK get through the customs more efficiently.
Cross border transactions are on the rise and are increasingly becoming popular in all parts of the world. An entrepreneur looking to establish an import-export business in the UK should pay attention to avoid the mistakes that we discussed in this guide as these mistakes could lead to undesirable circumstances.